September 2007© 2007 University of Denver1 UNIVERSITY OF DENVER Contract Review Process Policy and...

September 2007 © 2007 University of Denver 1

UNIVERSITY OF DENVERUNIVERSITY OF DENVER

Contract Review Contract Review ProcessProcess

Policy and ProceduresPolicy and Procedures


DISCLAIMERDISCLAIMER

The University of Denver Office of University The University of Denver Office of University Counsel has prepared this training module for Counsel has prepared this training module for general information and use by University of general information and use by University of Denver employees only. The pages are not Denver employees only. The pages are not intended to provide legal advice for any intended to provide legal advice for any particular situation. Legal advice can be particular situation. Legal advice can be provided only in the course of an attorney-client provided only in the course of an attorney-client relationship with reference to all the facts of a relationship with reference to all the facts of a specific situation. Accordingly, this information specific situation. Accordingly, this information must not be relied on as a substitute for must not be relied on as a substitute for obtaining legal advice from a licensed attorney.obtaining legal advice from a licensed attorney.


Contract Review Process: Contract Review Process: BackgroundBackground

Board Approved Policy 2.10.030 regarding Board Approved Policy 2.10.030 regarding Limits of Authority was aLimits of Authority was adopted by the dopted by the Board of Trustees on October 18, 1993.Board of Trustees on October 18, 1993.

Last amended with respect to designating Last amended with respect to designating specific individuals with signing authority specific individuals with signing authority on April 14, 2007.on April 14, 2007.

See hSee http://www.du.edu/bfa/policy/index.htmlttp://www.du.edu/bfa/policy/index.html


Contract Review Process: Contract Review Process:

BackgroundBackground Policy 2.10.030 requires the review of Policy 2.10.030 requires the review of

“contracts” that have “contracts” that have (1) performance by University of (1) performance by University of

obligations over a period of one year or obligations over a period of one year or more; or more; or

(2) University commitments in an amount (2) University commitments in an amount of $20,000 or more; orof $20,000 or more; or

(3) possible indemnification or (3) possible indemnification or reimbursement by the University or the reimbursement by the University or the creation of a University liability creation of a University liability (including from a lawsuit) in an amount (including from a lawsuit) in an amount of $20,000 or more.of $20,000 or more.



Policy 2.10.030 defines Policy 2.10.030 defines “CONTRACTS” as any contract “CONTRACTS” as any contract or agreement, whether written or agreement, whether written or oral, which is intended to or oral, which is intended to create a University obligation. create a University obligation.


Contract Review Process : Contract Review Process : BackgroundBackground

It is not the name or description It is not the name or description given to a document or the given to a document or the specified amount that dictates specified amount that dictates the University’s requirement for the University’s requirement for contract review. It is the contract review. It is the intention of the document, i.e. intention of the document, i.e. to create an obligation for the to create an obligation for the University that meets the University that meets the threshold established by the threshold established by the Board of Trustees.Board of Trustees.


Contract Review Process : Contract Review Process : BackgroundBackground

In general, obligations that should be In general, obligations that should be submitted for contract review include, but submitted for contract review include, but are not limited to:are not limited to: Goods and servicesGoods and services Real estateReal estate EmploymentEmployment Professional and consultant servicesProfessional and consultant services Affiliations (i.e. memoranda of understandings)Affiliations (i.e. memoranda of understandings) Amendments of existing contractsAmendments of existing contracts Assumption of risk and releasesAssumption of risk and releases Registration forms for eventsRegistration forms for events



Contracts may only Contracts may only be signed by be signed by individuals with individuals with authority from the authority from the Board of Trustees. Board of Trustees.


Contract Review Process: Contract Review Process: Limits of Limits of AuthorityAuthority

Chancellor (unlimited)Chancellor (unlimited) Vice Chancellor for Business and Financial Vice Chancellor for Business and Financial

Affairs (unlimited)Affairs (unlimited) Provost (up to $250,000) Provost (up to $250,000) Controller (up $250,000, up $1.5 million Controller (up $250,000, up $1.5 million

related to sponsored programs)related to sponsored programs) Assistant Vice Chancellor for Business and Assistant Vice Chancellor for Business and

Financial Affairs ( up to $50,000)Financial Affairs ( up to $50,000) Director of Sponsored Programs (up to Director of Sponsored Programs (up to

$500,000 related to Sponsored Programs)$500,000 related to Sponsored Programs) Vice Chancellor for Communications (up to Vice Chancellor for Communications (up to

$50,000 for media and publications)$50,000 for media and publications) Vice Chancellor for University Technology Vice Chancellor for University Technology

Services (up to $50,000 for computer related Services (up to $50,000 for computer related activities)activities)


Contract Review Process: Limits of Contract Review Process: Limits of AuthorityAuthority

University Counsel (up to $50,000 for University Counsel (up to $50,000 for engagement letters for legal or litigation engagement letters for legal or litigation services)services)

Director of Athletics (up $100,000 for contracts Director of Athletics (up $100,000 for contracts for athletic participation)for athletic participation)

Vice Chancellor of University Advancement (up Vice Chancellor of University Advancement (up $500,000 for IRS form 8283- Non-cash $500,000 for IRS form 8283- Non-cash Charitable Contribution Form)Charitable Contribution Form)

Director of University Events (up to $250,000 for Director of University Events (up to $250,000 for matters involving University events)matters involving University events)

Executive Director, Newman Center for Executive Director, Newman Center for Performing Arts (up to $100,000 relating to the Performing Arts (up to $100,000 relating to the Newman Center)Newman Center)

Associate Vice Chancellor of University Associate Vice Chancellor of University Advancement (up $500,000 for IRS form 8283- Advancement (up $500,000 for IRS form 8283- Non-cash Charitable Contribution Form)Non-cash Charitable Contribution Form)


Contract Review Process: Contract Review Process: Limits of Limits of AuthorityAuthority

Deans and Vice Chancellors and one Deans and Vice Chancellors and one other departmental designee (other other departmental designee (other than the Budget Officer) up to $50,000.than the Budget Officer) up to $50,000.

The Vice Chancellor for Business and The Vice Chancellor for Business and Financial Affairs may designate others Financial Affairs may designate others in writing with the amounts determined in writing with the amounts determined annually.annually.

Requests for additional Authority must Requests for additional Authority must be made through the Office of be made through the Office of University Counsel.University Counsel.


CONTRACT REVIEW PROCESSCONTRACT REVIEW PROCESS

Policy 2.10.030 requires Policy 2.10.030 requires that all “CONTRACTS” be that all “CONTRACTS” be submitted to the submitted to the Controller and University Controller and University Counsel for review and Counsel for review and approval approval BEFOREBEFORE execution. execution.



Policy 2.10.030 requires the Policy 2.10.030 requires the Controller, or Controller’s Designee Controller, or Controller’s Designee (Budget Officers) to review each (Budget Officers) to review each contract to confirm that contract to confirm that

(1) funds are available for any (1) funds are available for any payment obligations; and payment obligations; and

(2) insurance or similar coverage is (2) insurance or similar coverage is available for insurable risks, in available for insurable risks, in cooperation with Risk Management.cooperation with Risk Management.


CONTRACT REVIEW PROCESSCONTRACT REVIEW PROCESS UNIVERSITY INSURANCE POLICIES AND UNIVERSITY INSURANCE POLICIES AND

PROCEDURESPROCEDURES University requires a 3rd Party to have

at a minimum general liability coverage of $1 Million per occurrence and $2 Million aggregate and to name the University as an “additional insured.”

Contracts with more inherent risks may require additional insurance coverage, i.e. workers’ compensation, automobile liability, liquor liability.


CONTRACTCONTRACT REVIEW PROCESS REVIEW PROCESS UNIVERSITY INSURANCE POLICIES AND UNIVERSITY INSURANCE POLICIES AND

PROCEDURESPROCEDURES

Tenant User Liability Insurance Tenant User Liability Insurance (TULIP), is available for 3(TULIP), is available for 3rdrd parties parties who do not have insurance that are who do not have insurance that are using University facilities. TULIP is using University facilities. TULIP is event specific and does not provide event specific and does not provide continuous coverage for the 3continuous coverage for the 3rdrd party. TULIP provides a $1 Million party. TULIP provides a $1 Million layer of protection to the University layer of protection to the University for General Liability coverage. for General Liability coverage.



PROCEDURESPROCEDURES

The University’s insurance The University’s insurance requirements should always requirements should always be part of the initial negotiation be part of the initial negotiation of a contract. of a contract.

For additional information go to For additional information go to www.du.eduwww.du.edu/risk/risk



PROCEDURESPROCEDURES Modification and/or waiver of the

requirement of insurance may be approved by the appropriate Dean or Vice Chancellor if after discussion with Risk Management and University Counsel it is shown that the activity or project serves the best interest of the University and the risk to the University is otherwise mitigated.



Policy 2.10.030 requires University Policy 2.10.030 requires University Counsel, or University Counsel’s Counsel, or University Counsel’s Designee (Assistant University Designee (Assistant University Counsel or outside counsel), to Counsel or outside counsel), to review each contract to confirm that review each contract to confirm that (1) the contract accomplishes the (1) the contract accomplishes the intended purposes; and intended purposes; and (2) does not present any (2) does not present any burdensome or unintended liability burdensome or unintended liability risks.risks.



Policy 2.10.030 further requiresPolicy 2.10.030 further requires Controller and University Controller and University

Counsel to endeavor to Counsel to endeavor to conduct reviews on a timely conduct reviews on a timely basis and that the University basis and that the University employee initiating the employee initiating the contract, whenever possible, to contract, whenever possible, to provide a provide a reasonable period of reasonable period of timetime for such review. for such review.


Contract Review ProcessContract Review Process University Counsel approval is only University Counsel approval is only

one step in the University Contract one step in the University Contract Review ProcessReview Process

Other administrative review and approval Other administrative review and approval may be required by University rules, may be required by University rules, policies, and procedures, i.e. New policies, and procedures, i.e. New Technology Application, Capital Technology Application, Capital Improvements, Sponsored Programs. Improvements, Sponsored Programs.

It is the responsibility of the Originator to It is the responsibility of the Originator to ensure adherence to such rules, policies ensure adherence to such rules, policies and procedures.and procedures.

Not complying with other administrative Not complying with other administrative or departmental reviews will delay review or departmental reviews will delay review of the contract by University Counsel.of the contract by University Counsel.

www.du.edu/bfawww.du.edu/bfa



Modified Contract Review Modified Contract Review Process Process

Exceptions to ProcessExceptions to ProcessOffice of Research and Office of Research and Sponsored ProgramSponsored Program

Purchasing (i.e. Purchase Purchasing (i.e. Purchase Orders)Orders)



PROCESS FLOW CHARTPROCESS FLOW CHART


* NOTE: If 3rd party does not provide contract, Originator works with Budget Officer and University Counsel to draft a DU-originated contract for review by the 3rd party.

Reviews contract terms. Completes contract routing form checklist and confirms receipt of entire contract.If an addendum, attach copy of original contract.

Obtains & completes paperwork (including contract routing form)

with assistance of Budget Officer

Obtains departmental

signatures

Origin

atorB

ud

get Officer

Risk

Mitigation

(form

al reviewers)

Obtains authorized DU & 3rd

party signatures

3rd P

arty

Revises contract

Accepts contract

revisions?

Proposes contract

revisions?

Signs and returns to

Originator at DU

Sends signed contract to Budget

Officer (department or division keeps

original)

Office of University Counsel performs legal review

(includes review by other experts as needed)

Contract revisions?

Y

Retains copy for

files

N

Counsel approves

contract and

signs contract routing form

NY Y

Sends copy of contract to Purchasing for processing, if necessary, and final copy

to University Counsel

Assists originator with paperwork

(including contract routing

form), if necessary

Performs budgetary and

insurance review

Further review by Budget Officer & Originator

Approved?

Y

N

If required, (1) obtains competitive bids and/or (2) completes specific reviews mandated by the University’s Board of Trustees BEFORE a contract is initiated with a 3rd party (e.g., new technology application review, capital projects review, etc.)

Paperwork complete?

Y

Stakeholders and administrative reviewers

advise originator of feasibility of product,

service, program, event, etc.

EndN

Identifies 3rd Party & conducts initial

discussion of service (product) to provide

or to be provided (creates relationship)

N

Obtains authorized DU

signatures

Identifies need; discusses feasibility

with stakeholders and administrative

reviewers

Provides DU with contract *

End


CONTRACT REVIEW PROCESSCONTRACT REVIEW PROCESS University Counsel ProceduresUniversity Counsel Procedures

Originator submits contract to Originator submits contract to Office of University Counsel for Office of University Counsel for reviewreview

Contract logged in and referred to Contract logged in and referred to attorney for review (University attorney for review (University Counsel, Assistant University Counsel, Assistant University Counsel or outside counsel)Counsel or outside counsel)

Confirmation of receipt of contract Confirmation of receipt of contract for review sent to Originatorfor review sent to Originator



CONTRACT ROUTING FORMCONTRACT ROUTING FORM

..\Forms\DUContractRoutingForm04.01...\Forms\DUContractRoutingForm04.01.2007_003.doc2007_003.doc



University Counsel reviews University Counsel reviews contractcontract If no changes required, If no changes required,

contract approved.contract approved. If changes required, University If changes required, University

Counsel prepares modification Counsel prepares modification memo or revises contract.memo or revises contract.



University Counsel reviews University Counsel reviews contracts for form and legal contracts for form and legal sufficiency, for examplesufficiency, for example What is the contract term?What is the contract term? Are the deliverables clearly Are the deliverables clearly

outlined?outlined? When is payment due? When is payment due? What are the termination What are the termination

provisions?provisions?



Other considerations:Other considerations: Does the person signing the Does the person signing the

contract have authority to sign it?contract have authority to sign it? Does it contain dispute resolution Does it contain dispute resolution

provision?provision? Does the contract require the Does the contract require the

University to do something it University to do something it cannot legally do or is against cannot legally do or is against University policy? University policy?



University Counsel does not University Counsel does not determine the substance of a determine the substance of a contract, e.g.contract, e.g. The deliverables.The deliverables. The amount of fees to be paid.The amount of fees to be paid. When services will be When services will be

performed (the term).performed (the term).



University Counsel review ensures University Counsel review ensures that specific contract provisions that specific contract provisions protecting the University are protecting the University are included in the contractincluded in the contract

University Counsel may draft a University Counsel may draft a contract and, if needed, participate contract and, if needed, participate in the negotiation of contract termsin the negotiation of contract terms

Modification Memo and/or contract Modification Memo and/or contract returned to Originator for changes returned to Originator for changes and approval of changes by 3rd partyand approval of changes by 3rd party



Originator is responsible for making or Originator is responsible for making or submitting to 3rd party changes to the submitting to 3rd party changes to the contract and the return to University contract and the return to University Counsel of the revised contract for Counsel of the revised contract for approvalapproval If all changes are not made, University Counsel If all changes are not made, University Counsel

returns contract to originator for additional returns contract to originator for additional changeschanges

If all changes are made, contract and approved If all changes are made, contract and approved contract routing form forwarded to Originator to contract routing form forwarded to Originator to obtain authorized signatureobtain authorized signature

Once approved, contract may be sign Once approved, contract may be sign by authorized signatoryby authorized signatory



Form contracts that have been Form contracts that have been previously reviewed and approved by previously reviewed and approved by University Counsel do not have to be University Counsel do not have to be submitted for review before each submitted for review before each execution unless substantive changes execution unless substantive changes have been made.have been made.

Please confirm with University Please confirm with University Counsel regarding the use and Counsel regarding the use and execution of approved form contracts.execution of approved form contracts.



Consequences of failure to Consequences of failure to follow policy:follow policy: Contract may be void or voidableContract may be void or voidable Employee may be subject to Employee may be subject to

disciplinary action and/or personal disciplinary action and/or personal liabilityliability

University subject to audit findings (an University subject to audit findings (an area of potential control weakness, area of potential control weakness, policy violation, financial policy violation, financial misstatement, or other issue identified misstatement, or other issue identified during the University’s audit and during the University’s audit and reported to the Board of Trustees.) reported to the Board of Trustees.)


CONTRACT REVIEW PROCESSCONTRACT REVIEW PROCESS For more informationFor more information

The Contract Review policies and The Contract Review policies and procedures are located at the procedures are located at the Office of University Counsel’s Office of University Counsel’s website at:website at:

http://www.du.edu/counselhttp://www.du.edu/counsel

September 2007© 2007 University of Denver1 UNIVERSITY OF DENVER Contract Review Process Policy and...

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