Contract Parameters by evn13501

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									           Procured, Negotiated and
          Executed. Are we done yet?
            Contract Management


   I.    Introduction
   II.   Contract Owner and Contract Manager
   III.  Performance Criteria and Performance Measures
   IV.   Monitoring, Review and Payment Clauses
         a. Monitoring Clauses
         b. Review Clauses
         c. Payment Clauses
   V.    Monitoring & Review
   VI.   Payment
   VII. Iowa Code 8F
   VIII. Contract File Contents and Quality Assurance




Bureau of Purchased Services
                                           Jon Wetlaufer    515-242-5970
                                           Eloise Gardner   515 2817556
                                           Fax               515-281-6237




March 29, 2007                   1
You’ve gone through the procurement process, negotiated and executed
the contract, so what do you do now? Managing a contract is unique to
each particular contract and program, some contracts require more
monitoring and Department involvement than others.

Each contract will have a contract owner and one or more contract
managers.

The Accountable Government Act requires regular monitoring and review
of all contracts. To this end, the AGA requires all contracts include
monitoring, review and payment clauses, except under certain
conditions.

Ongoing monitoring and review will be needed to determine whether you
are getting the services for which you are paying and that payment
should be made.

Contract Owner and Contract Manager
The contract owner is usually a Service Area Manager (SAM), Institution
Superintendent, or Division Administrator. The contract owner has
overall corporate responsibility and accountability to ensure the
procurement aligns with the department's strategic plan. The contract
owner has the authority to sign payment authorizations and other key
and binding documents. The contract owner has the authority to
delegate the technical and day-to-day operational management of the
contract to one or more subordinate staff. The contract owner retains
responsibility for providing direction, support and guidance to those
engaged in management of the procurement, and for providing leadership
in the resolution of any disputes with contractors. Although the Director
may sign a contract and other documents, the actual ownership rests
with the SAM, Superintendent, or Division Administrator. In the case of
formal competition, the contract owner may act as Issuing Officer for the
procurement or may delegate this role to subordinate personnel or to a
Decat Coordinator. Contract ownership cannot be delegated.

Contract managers are accountable to the contract owner, the SAM,
Superintendent, or Division Administrator, acting under direction and
receiving guidance and support from the contract owner.

There may be one or more contract managers. Contract manager duties
include, but are not limited to the duties and responsibilities delegated
by the contract owner which are required for the day-to-day operational
maintenance of the procurement process associated with contracting for
services. These duties may include:




March 29, 2007                      2
     predetermination of need for the procurement
     requests for exceptions to competitive selection, e.g., sole source
      or emergency procurements (the contract owner must initiate
      such requests)
     acting as the issuing officer
     preparation and distribution of solicitation or contracting
      documents
     selection of, and negotiation with, vendors
     implementation of both informal and formal competitive selection
      processes
     review and approval of contractor invoices (contract owner signs)
     monitoring and review of contractor performance and compliance
     dispute resolution (in consultation with the contract owner)
     maintenance of contract files
     and other activities or duties designated by the contract owner.


Performance Criteria and Performance Measures
Performance criteria are the standards for measuring contractor
performance. Performance criteria provide a means to monitor
performance, measure satisfaction with the contractor, and provide data
for program evaluation. The criteria provide an objective means to
determine if the contractor is adequately fulfilling the terms of the
contract. Performance criteria are the starting point for your monitoring
and review activities. The criteria define the end product, how to
determine if the contractor is pursuing the end product, and provide
benchmarks to verify that services are being provided.

Performance measures are mathematical evaluations that document the
contractor’s inputs, outputs, efficiency, quality and/or outcome, the
contractor’s success at implementing the contract. Performance
measures are criteria that provide an objective means to monitor a
contract. Not all performance criteria are performance measures.
Performance measures relate to the objective of the contract.
Performance measures:
      Clearly identify the purpose of the contract
      List the services/activities that are the basis for the contract
      List the contract parameters,
      Define success,
      List specific measures
      Determine reporting requirements and where the data will come
       from, and
      Set the target and performance thresholds.




March 29, 2007                      3
Mathematical performance measures do not assure adequate and
competent contract management. Many other aspects of contract
management must be included to assure full value is received from a
specific contract.

Monitoring, Review and Payment Clauses
All contracts must have monitoring clauses, review clauses, and payment
clauses. Monitoring clauses describe the methods to oversee contractor
compliance with the conditions of the contract. Review clauses describe
the methods to review the contractor’s performance. Payment clauses
describe the amount of, or the basis for, payment. Payment clauses
should be dependent on monitoring and review clauses and procedures.
Performance measures, milestones and benchmarks should be clearly
defined in the contract to avoid confusion and minimize disputes.

Monitoring Clauses
Once the contract is signed and the contractor has started the work, it is
important to monitor the contractor’s performance. Promptly deal with
any problems that arise.

Monitoring clauses describe the methods to oversee compliance during
the performance of the contract, and include any planned, ongoing, or
periodic activity that measures and ensures contractor compliance with
the terms, conditions, and requirements of a contract. Monitoring also
includes unplanned activities.

A weekly or monthly contact should be scheduled between the contract
manager and the contract project manager.

Monitoring activities include but are not limited to:
    Periodic contractor reporting: Require the contractor to submit
       progress reports or other appropriate data, based on pre-defined
       criteria. Review the contractor’s reports for verification of
       services provided and adherence to the contract. Substandard
       performance should be identified and addressed timely and
       appropriately.
    Invoice reviews: Compare billings with the terms of the contract.
       Ensure the costs being charged and the payments being made
       are within the contract parameters.
    Periodic contact with contractor: Maintain contact with the
       contractor. Review progress on a regular basis. Establish a
       continuous dialogue with the contractor. Every communication
       with the contractor is an opportunity to monitor activity.




March 29, 2007                      4
Review the performance criteria and performance measures when
monitoring the contract.

Review Clauses
Review clauses provide for comprehensive evaluations of performance
measurements that include but are not limited to, outcome measures,
output measures, efficiency measures, quality measures, or a review
plan. The Contract Review and Evaluation form (Attachment #1)
provides a template to use for review evaluations.

Reviews should be completed:
     For one-year contracts with no review clauses, within 30-60 days
       of the execution of the contract, semi-annually thereafter.
     For on-going multi-year contracts with no review clauses, within
       30 to 120 days of the execution of the contract, annually
       thereafter.
     For all new one-year contracts the review clause should provide
       for a review within 30 to 60 days of the execution of the contract
       and at least semiannually thereafter.
     For all new multiyear contracts the review clause should provide
       for a review within 30 to 60 days of the execution of the contract
       and at least annually thereafter.
     If monitoring and/or review indicate problems or issues, the next
       review date should be scheduled to within the next 30 to 90 days
       of the current review. Once problems and issues are resolved the
       next review should be in accordance with the contract terms but
       no later than six months from the execution of the contract for
       one-year contracts and annually from the date of execution for
       multi-year contracts.
     Complete comprehensive close out review at the time a given
       contract terminates.

If there are issues with a particular contract, close monitoring and
scheduled reviews can be set according to the need for closer monitoring
and review. Require the contractor to draft a corrective action plan. Use
and further develop the plan for further monitoring and review activities.

Review activities should focus on selected deliverables for each review.

Payment clauses
Based on the AGA requirements, payment should be tied to the
contractor’s performance. Clearly define performance measures,
milestones and benchmarks in the contract to avoid confusion and
minimize disputes. When payment is dependent on meeting certain




March 29, 2007                       5
performance measures, milestones and benchmarks the contract should
specify the amounts and other standards to be applied for each payment.

The contract should state the maximum value for the term of the
contract period. Make payments in accordance with the contract
payment clauses.

The PCQ should state the maximum value for each fiscal year and the
total contract period.

The contract should state how often invoices should be submitted and
require that the invoice include sufficient detail and documentation to
determine the appropriateness of the charges. Make payments in
accordance with these clauses when invoices and adequate
documentation are provided.

Use the contract’s established performance criteria to determine payment
availability and amount, the contractor’s performance determines when
and how much the contractor should be paid.

In no case should the total amount paid out exceed the contracted
amount.

Monitoring & Review
All contracts should be monitored on a regular basis. All contracts
should be reviewed on a regular basis with a focus on monitoring
activities and performance measurements semi-annually or annually,
depending on the length of the contract. Reviews should include an
evaluation of the contractor’s performance in meeting the terms of the
contract and basic financial reviews to determine whether the services
listed on invoices were provided and whether payments made to the
contractor are within the limits of the contract payment clauses.

Annual on-site reviews should be done for all contracts with specified
vendors when the total cumulative value of a given contract is $100,000
or more and when the total cumulative value for all contracts with the
specified vendor are equal $100,000 or more.

Fiscal monitoring includes a review of the contractor’s invoices and
supporting documentation. Verify the contractor has adequately
demonstrated the satisfactory delivery of services as detailed in the
contract before authorizing payment. Verify the accuracy of the
contractor’s invoices and documentation, whether billings are consistent
with contract requirements, whether total payments are within the limits




March 29, 2007                      6
set by the contract and whether the contractor has met all criteria for
approval of payment. Ensure that payment documentation is on file.

When completing a review, list the services, tasks, benchmarks and
timelines, and review regular contractor meeting notes. Determine the
criteria to be used to measure the contractor’s performance. Review a
sampling of the services, invoices, and charges provided under the
contract. Determine the method used to select a sample. Note any
claims forms or invoices submitted and the documentation to support
them. Determine whether the contractor:
      Met expectations
      Delivered services timely,
      Had any issues or problems occur and how they were resolved.
      Experienced unforeseen complications and if so, how the
         contractor resolved the complications
      Delivered reports on schedule
      Did not meet deliverables or benchmarks within specified
         timeframes.

Payment
Prior to processing a claim for payment, carefully review each invoice and
verify that the costs being billed are accurate and that the deliverables
and performance measures as outlined in the contract were met.

The Bureau of Payments & Receipts process contract claims for payment
using the General Accounting Expenditure (GAX) form (Attachment 2).
FISCPUB provides an overview regarding the procedure for submitting
claims, attachment #3 and instructions (Attachment #4) to complete the
GAX form.

To process a contracting claim, complete the GAX form. Include copies of
the contract signed by both parties, the Pre-Contract Questionnaire
(PCQ), the Report of Sole Source Procurement or Report of Emergency
Procurement, if applicable, and the original claimant signature on the
GAX or original invoice. Subsequent claims should include the contract
number, payment number of the total contracted sequence, if known, the
claim number and paid date of the initial voucher and dates of service for
the claim being submitted.

Iowa Code 8F
Iowa Code 8F provides for increased agency oversight for certain
contracts. The change provides for additional contract reporting and
accountability requirements. The changes apply to all service contracts
with a value of $500,000 or more and to all contracts in which a given



March 29, 2007                       7
contractor has two or more services contracts with an aggregate value of
$500,000, unless the contract(s) fall under one of the listed exceptions.

Exempt contracts include:
   Transportation-related contracts;
   public utilities;
   retirement system;
   Title XVIII, XIX, or XXI of the federal Social Security Act;
   Court appointed attorneys;
   A federally insured financial institution subject to mandatory
    reporting;
   Vendor services defined as services or goods provided by a vendor
    that are required for the conduct of a state or federal program for
    an organization's own use or for the use of beneficiaries of the state
    or federal program and which are ancillary to the operation of the
    state or federal program under a service contract and not
    otherwise subject to compliance requirements of the state or
    federal program; and
   Contracts with entities licensed by the state and regulated by the
    Insurance Division of the Department of Commerce.

New contract provisions:
   The contractor must certify that the following information is
     available for inspection by DHS and the legislative services agency:
      1. Information documenting the legal status of the contractor,
          such as agreements establishing the entity pursuant to
          chapter 28E or other intergovernmental agreements, articles
          of incorporation, bylaws, or any other information related to
          the establishment or status of the contractor. In addition, the
          information shall indicate whether the contractor is exempt
          from federal income taxes under section 501(c), of the Internal
          Revenue Code.
      2. Information regarding the training and education received by
          the members of the governing body of the contractor relating
          to the duties and legal responsibilities of the governing body.
      3. Information regarding the procedures used by the governing
          body of the contractor to do all of the following:
          (a) Review the performance of management employees and
          establish the compensation of those employees.
          (b) Review the contractor's internal controls relating to
          accounting processes and procedures.
          (c) Review the contractor's compliance with the laws, rules,
          regulations, and contractual agreements applicable to its
          operations.



March 29, 2007                      8
           (d) Information regarding adopted ethical and professional
           standards of operation for the governing body and employees
           of the contractor and information concerning the
           implementation of these standards and the training of
           employees and members of the governing body on the
           standards. The standards shall include but not be limited to a
           nepotism policy, which shall provide, at a minimum, for
           disclosure of familial relationships among employees and
           between employees and members of the governing body,
           policies regarding conflicts of interest, standards of
           responsibility and obedience to law, fairness, and honesty.
        4. Information regarding any policies adopted by the governing
           body of the contractor that prohibit taking adverse
           employment action against employees of the contractor who
           disclose information about a service contract to DHS, the
           auditor of state, or the office of citizens' aide and that state
           whether those policies are substantially similar to the
           protection provided to state employees under Iowa Code
           70A.28. The information provided shall state whether
           employees of the contractor are informed on a regular basis of
           their rights to disclose information to DHS, the office of
           citizens' aide, the auditor of state, or the office of the attorney
           general and the telephone numbers of those organizations.
        5. The certification required by this section shall be signed by an
           officer and director of the recipient entity, two directors of the
           contractor, or the sole proprietor of the contract, whichever is
           applicable. The certification must state that the contractor is
           in full compliance with all laws, rules, regulations, and
           contractual agreements applicable to the contractor and the
           requirements of Iowa Code 8F.

      The contractor shall file an annual report within ten months
       following the end of the contractor’s fiscal year. The annual report
       shall contain:
         1. Financial information regarding the expenditure of state and
            federal moneys for the prior year. The financial information
            shall include but is not limited to budget and actual revenue
            and expenditure information for the year covered.
         2. Financial information relating to service contracts during the
            preceding year, including the costs by category to provide the
            contracted services.
         3. Reportable conditions in internal control or material
            noncompliance with provisions of laws, rules, regulations, or
            contractual agreements included in external audit reports of
            the contractor covering the preceding year.


March 29, 2007                        9
            4. Corrective action taken or planned by the in response to
               reportable conditions in internal control or material
               noncompliance with laws, rules, regulations, or contractual
               agreements included in external audit reports covering the
               preceding year.
            5. Any changes in the information submitted in accordance with
               section 8F.3.
            6. A certification signed by an officer and director of the recipient
               entity, two directors of the recipient entity, or the sole
               proprietor of the recipient entity, whichever is applicable,
               stating the annual report is accurate and the recipient entity
               is in full compliance with all laws, rules, regulations, and
               contractual agreements applicable to the recipient entity and
               the requirements of this chapter.

         Prior to entering into a service contract DHS must determine
          whether the vendor can reasonably be expected to comply with the
          requirements of the service contract. If DHS is unable to
          determine whether the vendor can reasonably be expected to
          comply with the requirements of the service contract, DHS shall
          request additional information from the vendor to make a
          determination. If DHS determines from the information provided
          that the vendor cannot reasonably be expected to comply with the
          requirements of the service contract, DHS shall not enter into the
          service contract.

          If a contract does not establish a separate legal entity to conduct
         the joint or cooperative undertaking, the agreement shall also
         include:
             1. Provision for an administrator or a joint board responsible for
                administering the joint or co=operative undertaking. In the
                case of a joint board, public agencies party to the agreement
                shall be represented.
             2. The manner of acquiring, holding and disposing of real and
                personal property used in the joint or cooperative
                undertaking.

         If an entity is created, the entity or the administrator or joint board
          specified in the agreement shall be a governmental body for
          purposes of Iowa Code Chapter 21 and a government body for
          purposes of Iowa Code Chapter 22 unless the entity created or
          agreement includes public agencies from more than one state.

         All proceedings of each regular, adjourned, or special meeting of
          the entity created or the administrator or joint board specified in


March 29, 2007                           10
      the agreement, including the schedule of bills allowed, shall be
      published after adjournment of the meeting in a newspaper of
      general circulation within the geographic area served by the entity
      created or the administrator or joint board specified in the
      agreement. The entity created or the administrator or joint board
      specified in the agreement shall furnish a copy of the proceedings
      to be published to the newspaper within one week following
      adjournment of the meeting. The publication of the schedule of
      bills allowed shall include a list of all salaries paid for services
      performed, showing the name of the person or firm performing the
      service and the amount paid. However, the names and gross
      salaries of persons regularly employed by the entity created or the
      administrator or joint board specified in the agreement shall only
      be published annually. This subsection shall not apply if the
      entity or the administrator or joint board specified in the
      agreement includes public agencies from more than one state.

New contract owner/manager duties include:
   Track and receive certification that the following information
     available for inspection by DHS:
      1. Information documenting the legal status of the contractor,
          such as agreements establishing the entity pursuant to
          chapter 28E or other intergovernmental agreements, articles
          of incorporation, bylaws, or any other information related to
          the establishment or status of the contractor. In addition, the
          information shall indicate whether the contractor is exempt
          from federal income taxes under section 501(c), of the Internal
          Revenue Code.
      2. Information regarding the training and education received by
          the members of the governing body of the contractor relating
          to the duties and legal responsibilities of the governing body.
      3. Information regarding the procedures used by the governing
          body of the contractor to do all of the following:
          (a) Review the performance of management employees and
          establish the compensation of those employees.
          (b) Review the contractor's internal controls relating to
          accounting processes and procedures.
          (c) Review the contractor's compliance with the laws, rules,
          regulations, and contractual agreements applicable to its
          operations.
          (d) Review information regarding adopted ethical and
          professional standards of operation for the governing body and
          employees of the contractor and information concerning the
          implementation of these standards and the training of
          employees and members of the governing body on the


March 29, 2007                      11
            standards. The standards shall include but not be limited to a
            nepotism policy, which shall provide, at a minimum, for
            disclosure of familial relationships among employees and
            between employees and members of the governing body,
            policies regarding conflicts of interest, standards of
            responsibility and obedience to law, fairness, and honesty.
        4. Information regarding any policies adopted by the governing
            body of the contractor that prohibit taking adverse
            employment action against employees of the contractor who
            disclose information about a service contract to DHS, the
            auditor of state, or the office of citizens' aide and that state
            whether those policies are substantially similar to the
            protection provided to state employees under Iowa Code
            70A.28. The information provided shall state whether
            employees of the contractor are informed on a regular basis of
            their rights to disclose information to DHS, the office of
            citizens' aide, the auditor of state, or the office of the attorney
            general and the telephone numbers of those organizations.

      Track and receive contractor’s annual report within ten months
       following the end of the contractor’s fiscal year. Verify the report
       contains:
         1. Financial information regarding the expenditure of state and
            federal moneys for the prior year. The financial information
            shall include but is not limited to budget and actual revenue
            and expenditure information for the year covered.
         2. Financial information relating to service contracts during the
            preceding year, including the costs by category to provide the
            contracted services.
         3. Reportable conditions in internal control or material
            noncompliance with provisions of laws, rules, regulations, or
            contractual agreements included in external audit reports of
            the recipient entity covering the preceding year.
         4. Corrective action taken or planned by the in response to
            reportable conditions in internal control or material
            noncompliance with laws, rules, regulations, or contractual
            agreements included in external audit reports covering the
            preceding year.
         5. Any changes in the information submitted be in accordance
            with section 8F.3.
         6. A certification signed by an officer and director of the recipient
            entity, two directors of the contractor, or the sole proprietor of
            the contractor, whichever is applicable, stating the annual
            report is accurate and the contractor is in full compliance with
            all laws, rules, regulations, and contractual agreements


March 29, 2007                        12
           applicable to the contractor and the requirements of Iowa
           Code 8F.

      Performance measurements must include an assessment of
       whether:
        1. Adequate control procedures in place,
        2. Control procedures are operating effectively,
        3. The contractor is providing services of adequate quality,
        4. Public resources are being used effectively and efficiently, and
        5. Public resources are being used for appropriate and
            meaningful activities.

Contract File Contents & Quality Assurance
Contract File
Regular file content upkeep is required. Rules at 106.12(4) require the
department maintain a contracting file for each contract. Your contract
file should contain:
     The Pre-Determination of Contracting document
     A copy of the Informal Bid Selection Document or the RFP
     Documentation of the TSB posting
     Documentation of the eservices posting
     Documentation of Sole Source or Emergency Procurement when
       applicable
     All PCQs
     The Notice of Intent to Enter into Contract Negotiations,
     The RFP Mandatory Requirements Checklist, if an RFP was issued
     The contract and any amendments
     Documentation of all contacts and meetings with the contractor
     Documentation of all monitoring and review activities.
     Documentation of all payments and GAX forms.
     Documentation of sole source or emergency procurement.

Both the Auditor of State and BPS will randomly pick contract files to
review.

Always check your contract file to be sure all necessary information is
included with the contract and included in the contract file. In the event
of a contract issue or an audit, being able to timely access and reference
accurate information is imperative to good contract management.

Quality Assurance
BPS conducts internal quality assurance reviews each month. The
purpose is to identify where a contract meets the requirements, where a
contract is lacking or weak in meeting requirements, and what is done



March 29, 2007                       13
well. The intended outcomes are to provide feedback to contract
developers and to learn where additional training may be needed.

The BPS reviews are looking for:
         The necessary signatures and dates on the contract and any
           amendments are before the start date of the contract and/or
           any amendments.
         PCQ signatures and dates before the start date of the
           contract and/or any amendments.
         The reason the contract was procured, statutory changes,
           staff shortages, etc. A copy of the enabling legislation, notes
           and information regarding any circumstances surrounding
           the need to contract should be on file.
         The procurement method used, informal or formal.
         The selection method used, on what basis was the contract
           awarded to this particular contractor.
         Proof that procurement was properly posted on the TSB and
           eservices website. Please note for formal procurements if the
           eservices posting was not done the contract is void and must
           be re-bid.
         Monitoring and review clauses, whether they are realistic,
           and whether performance be measured using the clauses.
         A payment clause that ties payment to actual performance.
         Documentation that the contract is being monitored and
           reviewed.
         Payments, how much, is documentation to verify billing, and
           whether the amounts in compliance with the terms of the
           contract.

Auditor of State reviews look for various clauses, both state and federal,
that are required in all contracts, i.e., was the procurement properly
posted to the TSB and eservices website, has the contractor executed and
are copies on file for attachments such as the Pro-Children Act of 1994,
Suspension and Debarment, and Certification Regarding Lobbying
attachments, etc.




March 29, 2007                      14

								
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