Contracting Challenges and Negotiation Principles

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Contracting Contracting Challenges and Challenges and Negotiation Negotiation Principles Principles Presented by: Dana L. Hollingsworth The University of Texas System Office of General Counsel September 29, 2005

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Contracting Challenges and Negotiation Principles. Presented by: Dana L. Hollingsworth The University of Texas System Office of General Counsel September 29, 2005. Contracting Challenges. Indemnity Provisions Confidentiality Provisions Social Security Numbers - PowerPoint PPT Presentation

Transcript of Contracting Challenges and Negotiation Principles

  • Contracting Challenges and Negotiation PrinciplesPresented by: Dana L. HollingsworthThe University of Texas SystemOffice of General CounselSeptember 29, 2005

  • Contracting ChallengesIndemnity ProvisionsConfidentiality ProvisionsSocial Security NumbersLimitation of Liability ProvisionChoice of Law/Venue ProvisionCriminal Background ChecksDelegation of Authority to Execute Contracts

  • Indemnity ProvisionsDefinition: insurance or other security against possible loss or damageProvides Breach-of-Contract Claim in addition to Common Law Cause of ActionMay Cover Claims that are Excluded by Insurance Policy or are otherwise Not Covered by InsuranceMay Expand Scope of Indemnifying Partys Liability (i.e., liability for acts of unrelated third parties)

  • Indemnity ProvisionsWho?Limit indemnity to losses caused by indemnifying party, its agents, or its employeesWhat?Limit indemnity to losses caused by negligence and willful misconduct of indemnifying party, its agents, or its employeesWhen?Limit indemnity to losses incurred during performance of indemnifying partys contractual duties

  • When UT Gives an Indemnity: Always qualify the indemnity with the phrase to the extent authorized by the laws and Constitution of the State of Texas (ref. AG Opinion MW-475)

    Never indemnify Contractor for its own negligence or the negligence of its employees, agents, or subcontractors

  • Confidentiality ProvisionsUT Institutions must comply with the Texas Public Information Act (Ch. 552, Gov. Code)

    Always qualify confidentiality provisions with the phrase subject to the Texas Public Information Act and other applicable law

  • Confidentiality ProvisionsGeneral Rule = All Information is PublicExceptions to the General RuleInformation Confidential by LawInformation Confidential by Judicial DecisionCertain Personal InformationInformation Relating to Competition or BiddingCertain Law Enforcement RecordsInformation within Attorney-Client Privilege

  • Confidentiality ProvisionsDetermination regarding whether an exception applies is fact specific

    Texas Attorney Generals Office (not the UT institution) makes the determination regarding whether an exception applies

  • Social Security NumbersBusiness Procedures Memorandum (BPM) 66: Protecting the Confidentiality of Social Security NumbersProvides requirements and guidelines for the protection of the confidentiality of social security numbersDoes not prohibit or restrict the collection, use, and maintenance of social security numbers as required by applicable lawBest Practice = Do not include Social Security Numbers in UT contracts

  • Social Security Numbers

    Section 3.2 of BPM 66 requires compliance with the following:Each time a UT institution requests that an individual disclose his or her social security number, the institution shall provide the notice required by Section 7 of the Federal Privacy Act of 1974 (5 U.S.C. 552a), that requires the institution to inform the individual whether the disclosure is mandatory or voluntary, by what statutory or other authority the number is solicited, and what uses will be made of the numberThe notice shall use the applicable text from Appendix 3 of BPM 66 or such other text as may be approved by the SSN Coordinator or the Office of General Counsel

  • Social Security NumbersAppendix 3 of BPM 66 includes:Disclosure for the employment processDisclosure for the student application processGeneral mandatory disclosureGeneral voluntary disclosure

  • Social Security Numbers General mandatory disclosure:

    Disclosure of your Social Security Number (SSN) is required of you in order for The University of Texas at _________ to __[state intended use of SSN]_________, as mandated by [Federal] [State] law. Further disclosure of your SSN is governed by the Public Information Act (Chapter 552 of the Texas Government Code) and other applicable law.

  • Limitation of Liability ProvisionTypical Limitation of Liability provision:

    Contractor shall not be liable under any circumstances for any special, indirect, incidental, consequential or other damages resulting from any loss of use of the Software or any loss of revenues or profits related to the Software.

  • Limitation of Liability ProvisionMake every effort to delete limitation of liability provisionsIf the provision is not deletedQualify the limitation with the phrase to the extent authorized by the laws and Constitution of the State of TexasMake the limitation mutual

  • Limitations of Liability Provision Example of properly qualified, mutual limitation of liability provision

    To the extent authorized by the laws and Constitution of the State of Texas, Contractor shall not be liable under any circumstances for any special, indirect, incidental, consequential or other damages resulting from either any loss of use of the Software or any loss of revenues or profits related to the Software. Customer shall not be liable under any circumstances for any special, indirect, incidental, consequential or other damages resulting from Customers performance under this Agreement or any related agreements.

  • Choice of Law/VenueBest Practice = include a choice of law/venue provision in every contract that: Specifies Texas law as the law that will govern the contractSpecifies the Texas county in which the UT institution is located or Travis County as the proper location for venue

  • Choice of Law/VenueVenue; Governing Law. Travis County, Texas, shall be the proper place of venue for suit on or in respect of the Agreement. The Agreement and all of the rights and obligations of the parties hereto and all of the terms and conditions hereof shall be construed, interpreted and applied in accordance with and governed by and enforced under the laws of the State of Texas.

  • Choice of Law/Venue OGC does not recommend expressly agreeing to the law of another state or nation as the law that will govern the contract

    Likewise, OGC does not recommend expressly agreeing to venue in a another county, state, or nation

  • Choice of Law/VenueIf a UT institution excludes the choice of law/venue provision from the contract (going silent) then: a court will decide which law applies to a dispute under the contract the UT institution may incur additional costs, delay, and other difficulties the UT institution may need to hire local counsel in the event the court finds that Texas law does not apply, the outcome of the dispute may not be the same as the result would have been under Texas law

  • Choice of Law/VenueIf a contract is governed by laws of a jurisdiction outside the United States, local counsel should be consultedBeware: Some foreign countries retain formalistic contract requirementsContract must be read aloud from beginning to end by a notaryContract must be bound by a ribbon which is affixed to both the cover page and the back page with a wax seal

  • Criminal Background Checks BPM 29 Criminal Background Checks for Security-Sensitive Positions

  • Criminal Background Checks

    According to Section 3.2.2 of BPM 29, a UT institution should not automatically disqualify from employment all individuals with conviction records. The institutions procedures should provide that, in the event the investigation reveals criminal convictions or other relevant information, the hiring official will determine on a case-by-case basis whether the individual is qualified based on factors such as:Specific duties of the position; Number of offenses; Nature of each offense; Length of time intervening between the offense and the employment decision; Employment history; Efforts at rehabilitation; and Accuracy of the information that the individual provided on the employment application.

  • Criminal Background ChecksWhen contracting for security-sensitive services, UT institutions should consider requiring that the contractor perform background checks on its employees and agents, as well as the employees of subcontractorsthe contractor notify the institution of felony convictionsUT institutions should analyze convictions in accordance with Section 3.2.2 of BPM 29 to determine if the conviction poses an unacceptable business risk

  • Delegation of Authority to Execute ContractsLegal Authority for DelegationSections 65.31 and 65.34, Education CodeSeries 10501 of the Regents Rules and Regulations

  • Delegation of Authority to Execute ContractsTwo Types of DelegatesPrimary Delegates receive authority to sign contracts directly from the BoardPrimary delegates may further delegate their authority to sign contracts in writing unless otherwise specified in the RulesPrimary delegates must permanently maintain, or cause to be maintained, evidence of all such delegationsSecondary Delegates receive authority to sign contracts from a primary delegate (not from the Board)Secondary delegates may not further delegate their authority to sign contracts

  • Delegation of Authority to Execute ContractsPrimary delegates must maintain, or cause to be maintained, necessary and proper records of all contracts, agreements and documents executed and delivered pursuant to his or her delegated authority in accordance with any applicable record retention schedule or policy adopted by the Board or the U.T. institution

    (Section 6.1, Series 10501 of the Regents Rules)

  • Delegation of Authority to Execute ContractsDelegates executing documents on behalf of the Board are responsible for assuring that they have authority to act on behalf of the Board and that such authority is exercised in compliance with applicable conditions and restrictions

    (Section 5.7, Series 10501 of the Regents Rules)

  • Negotiation PrinciplesNegotiation DefinitionRole of Negotiation in Texas Procurement ProcessNegotiators ChallengeRoles Negotiators PlayPreparing for NegotiationTools of PersuasionNegotiation TipsNegotiation Resources

  • Negotiation Definition

    The exchange of information and ideas with the intent to change the relationship of the parties

  • Role of Negotiation in Texas ProcurementTexas law permits negotiation in the following procurement situations:Catalogue Purchase through an Information Systems VendorEmergency PurchaseSole Source PurchaseCompetitive Sealed Proposal Purchase Texas law does not permit negotiation when the procurement is based on competitive bids

  • Negotiators Challenge

    To create a process likely to produce a mutually acceptable balance of interests

  • Roles Negotiators PlayCompetitive SportsmanObjective = Winning

    DefenderObjective = Protecting Against Loss

    Problem-SolverObjective = Working Together to Find a Solution

  • Negotiation PreparationRule of Thumb: 4 hours of preparation for every 1 hour of negotiation (4:1)

    The party that is most prepared is typically the most successful

  • Negotiation PreparationKnow the alternatives to negotiationYour alternativesWays to improve your alternativesTheir alternativesWays to test and, if appropriate, worsen their alternatives

  • Negotiation PreparationLook beyond the position of a party to that partys underlying interest or needOursTheirsOthersLearn to invent many options for mutual gain, before committing to any one option

  • Negotiation PreparationSearch for standards of legitimacy by which to evaluate the optionsMake clear, careful commitments at the end of the processMaintain clear, effective two-way communicationFocus on: What will they hear? Not: What do we intend?

  • Negotiation PreparationBuild a good working relationshipTrusting Them: Assess risk/rewardAbsent good reason, deal independently of trustBeing Trustworthy Ourselves: Being trustworthy is an investment in our relationship powerA reputation for reliability is powerfulBuilding trust is more difficult that losing itDo not react in kind without thinking

  • Persuasion ToolsLogic use of facts and proof by reasoningPower use of direct or implied threatEmotion use of feelingsBargaining use of tradingCompromise acceptance of a different, often lesser, position

  • Negotiation TipsBefore you start negotiating, understand why you are thereMake sure you are negotiating with the decision makerIf you want people to listen to you, you must listen to themUse confidence-building measures to get the negotiation going (resolve easy issues first)

  • Negotiation TipsLook at the situation from the other partys point of viewDo not let a deadline force you into a bad decisionDont agree to something if it is not fair

  • Negotiation ResourcesThe Fine Art of Negotiating (1995) by Steven P. CohenTexas Negotiations (2000), Texas Building and Procurement Commission Training Presentation, William D. Agee & Associates, Inc. and Lallatin & AssociatesNegotiation Workshop, Harvard Law School, Program of Instruction for LawyersGetting to YES: Negotiating Agreement Without Giving In [Second Edition], Roger Fisher, William Ury, and Bruce Patton (1991)Getting Together: Building Relationships As We Negotiate, Roger Fisher and Scott Brown (1989)