E-12 Contract Administration - University of Houston-Victoria

Contract Administration

SECTION: Index E - Purchasing
POLICY NUMBER: E-12

POLICY

This policy was created to comply with Board of Regent Policy 55.01 and Board of Regent Policy 53.04, UH System Administrative Memorandum 03.A.05, and applicable state and federal statutes, regulations and directives. The purpose of this policy is to provide guidance and procedures for the proper administration of contracts, executed on behalf of the University of Houston-Victoria for and on behalf of any unit of the University. Excluding certain exceptions, this includes any contract that is binding upon the University and to which the University is a party or signatory in any capacity, regardless of the funding source, amount of funds expended or generated, and whether or not remuneration, either monetary or in kind, is involved.

It is University policy that:

No person has the authority to bind the University contractually except in accordance with this policy;
All contracts shall have all applicable administrative and legal reviews completed and be signed by all parties prior to commencement of any services as set forth in the agreement;
Contracts shall be legally binding on the University only upon the execution of the contract by the University official(s) with delegated contractual signature authority;
The originating unit assumes primary responsibility for a contract, from inception to completion, including monitoring and performance in accordance with contract provisions;
Amendments, changes, extensions or renewals to non-standard contracts shall be processed in the same manner as the original contract.
All vendor contracts must be reviewed and approved as to form by the System Office of General Counsel (OGC) before execution; unless an approved standard contract can be executed between both parties with no modifications to the standard form and the amount of the contract is $50,000 or less.

NOTE: For further information and links to State and System policies, see Reference section at the end of this policy.

DEFINITIONS

Approve as to form: The UH Office of General Counsel requires review of non-standard contracts prior to execution and approval, for proper form and legality including compliance with applicable state law, constitutional requirements and Board and System policy.

Consulting services: To advise or study and provide a written or oral report in regard to an existing operation or proposed project or other undertaking. Consulting services do not include services connected with the routine work necessary to the functioning of the University’s programs or certain professional services defined in Texas Government Code, Section 2254. A consultant generally does not provide any finished product other than an oral or written report.

Contract: A legally binding written agreement usually of a business or administrative nature entered into by two or more parties. Money does not have to be the consideration between the parties to create a contract.

Execute: Acceptance of the contract terms and conditions is evidenced by the signing of the contract by authorized individuals representing each party to the agreement.

Professional services: Those within the scope of the practice of accounting, architecture, optometry, medicine or professional engineering or those performed by any licensed or professional engineer in connection with his/her professional employment or practice. Professional Services are defined fully in Texas Government Code Chapter 2254.

Sponsored activity: Includes research and development projects which usually involve the preparation of specialized contracts such as grants, sub recipient agreements or sub-contract agreements with other entities, including outside consultants and other service providers.

Uniform or standardized agreement: Contractual agreements that have been previously reviewed and approved as to form and legality by the Office of General Counsel, and denoted by OGC-S-XXX. These uniform agreements, also referred to as standardized agreements, may be used by components without further OGC review and approval.

PROCEDURE

Common Types of University Contracts

University contractual agreements include but are not limited to purchasing, contract services, Interlocal agreements, cooperative agreements, memorandums of understanding, interagency contracts, grants and grant sub-recipient agreements, software licensing agreements, consortium agreements, professional services agreements and consulting agreements. Contracts are classified as either standardized contracts or non-standard contracts.

These procedures do not include the following types of agreements:

Contracts pertaining to sponsored projects, programs, activities for research and/or intellectual property which are funded by grants or other funding sources and coordinated through Research Administration;
Procurement of supplies, goods or equipment that are normally provided by the university Purchasing Department through a purchase order;
Contracts for real estate or lease space must be routed through the UH Office of Real Estate;
Employee contractual agreements administered through the Human Resources Department.

Internal Reviews Required

All contracts require institutional review from other than the originator. This review includes at a minimum, review by the unit head and the Department of Business Services. Other internal reviews may also be indicated.

Legal Review Required of Contracts

Many legal documents impose binding obligations upon the University, some with significant liability and financial consequences. Board Policy 55.01 requires that the Office of General Counsel (OGC or Counsel) review and approve as to form all contracts before execution. However, OGC may approve uniform or standard contracts which, thereafter, may be used without additional review and approval, providing that no changes or alterations have been made to the contract and the contract does not require board approval.

Summary of Originating Unit Responsibilities

The originating unit assumes primary responsibility for a contract, from inception to completion, and is responsible for the following:

Reviewing the business terms and conditions to ensure that those terms are reasonable, proper, clearly defined and in the best interests of the university:

the scope of work should be detailed enough so that all expectations are clearly set forth;
term may be written up to five (5) years;
the date(s) that services are to be performed or concluded need to be stated;
the amount of payment and conditions for partial payments, if any, explained
reimbursable, if any, should be defined by type and amount for each;
the agreement should have a cancellation/rescheduling provision if appropriate.

Checking the vendor status with the State of Texas and/or PeopleSoft prior to contract execution. If the contractor is not in good standing with the State, contract processing will be delayed until the contractor’s status is in good standing. The originating unit may choose to contact the contractor directly to make them aware of the problem.
Preparing a contract coversheet and submitting appropriate documentation for each contract, regardless of the dollar amount or source of funds:

if an OGC standard agreement will satisfy needs and accepted by Contractor, complete and submit the contract coversheet. Business Services will prepare the appropriate standard agreement or may delegate to the department/school;
if the contractor’s agreement must be used, an electronic version is preferred, or submit an original of the completed but unsigned agreement to Business Services with a contract coversheet and page 2 contract certifications with departmental signatures and initials as required;

Allowing sufficient time for the contract to be reviewed and executed in a timely manner in advance of start date.
Ensuring that services and/or delivery of goods do not start until the contract has been properly reviewed and executed.
Adhering to prompt payment law whereby payment is due on the 30^th day after the latest of: 1) the date the department receives the goods; 2) date the performance of the service is completed; or 3) date the agency receives an invoice for the goods or services. Although there are limited exceptions for paying contractors in advance, this is not good business practice and should be avoided.
If Contractor is not a supplier in PeopleSoft, department will send the PaymentWorks invitation for supplier setup.
Signature on page 2 of the Contract Coversheet or signing the Contract Monitoring Acknowledgement Form indicates responsibility for monitoring of contract performance through its completion.
Reporting promptly any contractual non-compliance to the unit head and Business Services.
Cooperating with auditors, providing requested information to internal and external auditors.
Monitoring of renewals if contracts allow for additional terms.
Requesting department prepares a purchase requisition and Purchasing issues the purchase order for expenditure contracts $15,000 and over to facilitate required state reporting.

Departmental responsibilities during the payment phase include:

ensuring that the terms of the contract have been met;
ensuring that the University has received the contracted goods and services as invoiced; if a Purchase Order is processed confirm by printing and signing the PeopleSoft Receiving Report and attach to the Purchase Order voucher;
ensuring that the payment amount requested is according to the contractual terms;
ensuring that the payment voucher(s) states the amount of the total contract award and the amount paid-to-date to avoid overpayments; non-PO contracts may require the completion of a contract payment record log to record all payments.

Summary of Department of Business Services/Contract Administration Responsibilities

The Department of Business Services responsibilities include:

Advising, assisting and reviewing information submitted by the department to help insure compliance with campus contract policy and procedures.
Reviewing the business terms and conditions (not legal terms) for reasonableness, consulting as necessary with other departments, including Human Resources, Accounts Payable, the System Office of Contract Administration or other offices as appropriate.
Preparing original contracts, amendments or addendums based upon the information and scope of work provided by the initiating department.
Assigning an identification number to each contract, or if responsibility is delegated to the department, Contract Administration will provide a number sequence.
Maintaining a contract administration log sheet and contract file for each contract routed through Business Services.
Tracking the status of pending contracts through execution.
Requesting legal counsel reviews of all non-uniform agreements through UH Office of Contract Administration/Office of General Counsel.
Assisting in the preparation documents (cover sheets, duplication) when Board approval is required.
Having a responsible individual in the initiating department sign off on the Contract Acknowledgement Monitoring or Contract Certification form.
Serving as the university repository for all contracts and supporting documentation, excluding payment vouchers and invoices, and retaining per UH Records Retention Schedule requirements.
Coordinating the execution of the agreement by all parties and then distributing the signed electronic copy, including:

one to the contractor(s);
one copy to the Office of General Counsel (non-standard contracts);
one copy to the originating unit;

Maintaining a Contract Administration website as a resource for departments;
Providing training or coordinating Contract Administration training as needed;
At the discretion of the Contract Administration the requesting department may be assigned the contract management of certain OGC Standard agreements.

Board of Regents Reviews and Approvals

As noted in the UH System Administrative Memorandum 03.A.05, the following contracts must be approved by the Board of Regents in an open meeting:

Contracts for the purchase, gift or acquisition of real property;
Contracts for the sale of real property or conveyance of any rights in real property; expressly excluded are utility easements to serve one or more component universities;
Real estate leases, lease renewals and extensions, as lessee if the obligation of the lease is equal to or greater than $1,000,000;
Oil and gas leases with an expected bonus exceeding $100,000;
Banking agreements for financial institutions which serve as primary depositories for operating or investment purposes of the System or any of the component universities;
Any single procurement or revenue contract for construction, equipment, goods and/or services, not specified above, that is expected to exceed $1,000,000 ;
Any extension, modification, or renewal of an existing contract that would cause the revised aggregate contract amount to exceed $1,000,000, or that increases the value of a contract already approved by the Board by over 25%;
Any series of contracts that are initiated in the same department for the same goods or services with the same party within a fiscal year, that if combined in one contract, would require Board approval or reporting; and
Any other contract the Board might designate as having significant importance to require Board approval.

In order to submit a contract for Board approval, follow procedures as noted in SAM 03.A.05.

Length of Contracts

The duration of any contractual transaction as recommended by legal counsel should not extend beyond a cumulative period of five (5) consecutive years, including all renewal terms.

Contractual Delegation and Signatory Authority

Contracts are legally binding on the System and/or its component universities only upon execution of the contract by the System and/or component university official with delegated contractual signatory authority. In the absence of specific written delegation by the President, employees do not have authority to execute contracts on behalf of the University. Employees who do so can incur disciplinary action and/or financial responsibility for costs resulting from unauthorized contract approval.

President has delegated to department heads, deans and other positions, as approved to execute contracts up to $25,000. Each fiscal year Business Services will update the delegation of authority for approval by the President and provide a copy to the UH Office of Contract Administration;
University Vice President's delegated to execute contracts up to $300,000;
President delegated by Chancellor to execute contracts up to $500,000;
All real estate leases, lease renewals and extensions, as lessor or lessee must be routed through the System Office of Real Estate Services and Office of Contract Administration for the Chancellor’s approval and execution. Delegated authority is not given to the campus President.

These delegations do not waive the need for internal reviews, OGC review, Board approvals and/or Chancellors execution when required, as set forth in Board, System or campus policies.

NOTE: Acceptable execution preferred, although original signatures are preferred, legible facsimile or scanned signature copies are acceptable, if both parties agree.

Historically Underutilized Businesses (HUB)

The University will comply fully with the letter and spirit of Texas Government Code, Chapter 2161 of the Texas Government Code (refer to UH System Board of Regents Policy 55.04 and System Administrative Memorandum 03.B.02, and Title 34 Texas Administrative Code, Chapter 20). It is the originating unit’s responsibility to be mindful of campus Historically Underutilized Business goals and make a good faith effort to utilize HUB vendors for contractual services whenever possible. Unit heads should work with the campus HUB Coordinator, the Purchasing Manager in Business Services, to meet these goals.

Designation of Central Contract Repository and Records Retention

Original contractual agreements and all supporting documentation will be retained in accordance with the state approved UH Records Retention Schedule. The Department of Business Services will serve as the central repository for original executed agreements with the exception of employee personnel contractual agreements which will be retained by the Department of Human Resources.

Contractual Amendments, Extensions and Renewals

Amendments, changes, extensions or renewals to an original non-standard agreement must be processed in the same manner as the original contract and may require OGC review. A copy of the original contract must be included with the amendment, change, extension, or renewal at the time the documents are processed for approval with a new or updated contract coversheet, if necessary.

Amendments, changes, extensions or renewals to standardized agreements shall use the OGC approved standardized amendment/extension form.

In some instances, use of an institutional Purchase Order in lieu of a contract for the delivery of goods or services may be preferable.

Audit Clause Required for Certain Contracts

All revenue-generating contracts and all contracts where payment by the University is contingent upon records processed and maintained by another party to the contract shall contain an audit clause. This clause shall give the University the right to access and audit any and all documents pertaining to the contractual relationship held by any party to the contract.

Special Contracting Requirements

Competitive Procurement Requirements are as follows:

Certain contracts may require bidding or have other procurement requirements. The department should consult with the Purchasing Department if there are questions in this regard. Upon receipt of a contract coversheet, Business Services shall consult with Purchasing as necessary to determine if other procurement requirements apply;
The University may acquire goods or services by various methods including best value, competitive bidding, competitive sealed proposals, sole source, catalogue purchases or purchases through membership in a purchasing coop or other group purchasing program, or through State contracts.

Leasing of Space

The Chancellor or designee must approve all leases, regardless of the cost or source of funding. An originating unit that desires to lease space will work through the Department of Business Services. Business Services will work with the UH System Office of Real Estate Services and provide the required information. Department should allow a minimum of 90 days prior to the proposed effective start date for a lease agreement to be executed for existing space. Adequate time is required to develop and advertise lease specifications, evaluate bids or proposals and then finalize an appropriate lease agreement.

Contracts for Consulting Services

All consulting services, regardless of state or local funds or dollar amount, require a standard purchasing agreement OGC-S-2010-06 Form;
Refer to Texas Government Code, Section 2254 for statutory information and the Contract Administration website for detailed instructions;
When a contract involves a mix of deliverables, it is considered a consulting contract only when consulting services are a majority of the services provided;
For consulting contracts over $25,000 there are numerous state reporting requirements in compliance with the Texas Government Code, Chapter 2254.021. The originating department will follow contract procedures through the Department of Business Services and Purchasing and allow sufficient time to complete publication and notice requirements.

Contracts for Professional Services

“Professional Services” are those services directly related to the professional licensed practices such as accounting, architecture, landscape architecture, land surveying, medicine, optometry, professional engineering, real estate appraisal, or professional nursing. Services provided by professionals outside the scope of their profession, e.g., management-consulting services provided by accounting firms, are not considered professional services for the purposes of this policy.
State law requires that selection and award of contracts for professional services be based on the professional’s demonstrated competence and qualifications for the type of services to be performed, and a fair and reasonable price rather than on the basis of competitive bids.
The originating unit must work with the Department of Business Services and Purchasing when these services are required.

Contract Reporting Requirements

The University is required to report certain contracts. Purchasing in Finance department is responsible for reporting contracts to the Legislative Budget Board and reporting to the Board of Regents as requested. Reference SAM No. 03.A.05 for details.

Revenue Generating Contracts

All contractual transactions for which revenues will be generated for the University and/or any originating unit must comply with requirements set forth in this policy. Departments are authorized to arrange for contractual opportunities that generate revenue if the transaction is directly related to furthering the University’s educational, research, extension, public service, or campus support functions;
Revenue agreements may require consultation with the UH Office of Tax Compliance and/or System Office of Contract Administration;
All revenue-generating contracts shall contain an audit clause giving the University the right to access and audit any and all documents pertaining to the contractual relationship held by any party to the contract;
Department requesting a revenue contract will be required to maintain a checklist of the revenue contract terms and conditions relating to the revenue payments. Checklist will include procedures to verify source documentation against vendor sales reports. Contract Administration in the Department of Business Services will train the department to establish monitoring procedures.

Contracts for Outside Legal Services Prohibited

The University cannot initiate or approve contracts for legal services. All contracts for legal services are initiated only by the Office of General Counsel and only after approval has been obtained from the Office of the Attorney General for the State of Texas (refer to SAM 01.D.02, Employment of Outside Legal Counsel).

Electronic State Business Daily

When there is a need for competitive bids, and the expected procurement will be $25,000 or more, regardless of funding source, the University will post a notification on the Electronic State Business Daily (ESBD) for a minimum of 14 days. Purchasing will facilitate required ESBD postings.

Contractor Standing, Indebtedness and/or Tax Delinquencies

The originating department is responsible for verifying that a prospective contractor is in good standing with the State of Texas prior to forwarding a contract to Business Services. If a contractor is not in good standing, a contract cannot proceed. The originating department can advise the contractor that they are not in good standing with the state but it is the contractor’s responsibility to correct any problems. Department is responsible for assuring vendor completed forms for vendor setup in PeopleSoft to expedite contract payments. Department of Business Services will verify vendor is setup for payment in PeopleSoft or accepts credit card payments.

Interagency Agreements (agreements between two or more state agencies)

The University may contract with another state agency for the provision of necessary and authorized services and resources by Interagency Agreement. Statutory authority for interagency agreements can be found in Texas Government Code, Chapter 771. The originating unit shall work with Business Services, who shall prepare the agreement. Whenever possible, the OGC standardized interagency agreement will be used.

Interlocal Agreements (agreements with local governmental entities)

The University may contract with other local governmental entities such as community colleges, city or county government and other types of local governmental entities for the provision of necessary and authorized services and resources by Interlocal agreement. Statutory authority for Interlocal agreements can be found in Texas Government Code, Chapter 791. The originating unit shall work with Business Services in the preparation of the agreement. The standardized Interlocal agreement form will be used whenever possible.

Agreements Associated with Sponsored Research Activities

Agreements associated with grants or other sponsored funding are to be coordinated through the Grants and Contracts Director, Research and Sponsored Programs Department, either using standardized agreements or non-standard agreements approved as to form and legality by the UH Division of Research or the System Office of Contract Administration.

Deviations from Policy

Any deviation or exception from this policy and procedures, where it does not conflict with law, board or UHS policy, must be approved on an individual basis by either the President or the Vice President for Administration and Finance.

SUPPORTING DOCUMENTS

Approved by:

Signature Obtained 01/21/2022
Robert K. Glenn, Ph.D.
President

Next Review Date: January 2025 (3 years)
Origination: Business Services

COMMENTS/QUESTIONS

If there are any comments and/or questions regarding this policy, please contact the Director of Business Services.