Contract Administration Training Presented By The Department of

Contract Administration Training Presented By The Department of Procurement Services

Welcome! This training will provide an overview of Contract Administration at Old Dominion University. Contract Administrators will be held accountable for understanding and complying with the full Contract Administration Policy located on the Procurement Service website. 2

What is a Contract? A legally enforceable agreement between two or more competent parties in which an offer is made and accepted, and lawful consideration is exchanged. 3

What is Contract Administration? Contract Administration includes all actions taken by the Contract Administrator related to a specific contract after the award is made through contract closeout. Its purpose is to assure the Contractor and the University fulfill their contractual obligations. After issuance of a formal contract award document, the Department of Procurement Services designates, when applicable, a Contract Administrator in writing. 4

Who is a Contract Administrator? The Contract Administrator should generally be the end user of the contract or one who has a vested interest in the procurement and who will be responsible for the proper adherence to all contract specifications by the Contractor. The Contract Administrator is responsible for ensuring that the goods or services are provided in accordance with the terms of the contract. • Formal contracts: As appropriate, the Procurement Officer will delegate in writing a specific individual to act as the Contract Administrator via a Contract Administration Memo. • e. VA POs: A Contract Administrator will generally not be designated in writing for e. VA purchase orders, and the department requestor is considered the Contract Administrator. 5

What is the Contract Administrator Responsible for? At a minimum, the Contract Administrator is responsible for ensuring: • • • the contract in use is still applicable and valid, the review and approval of invoices submitted for payment by the Contractor is accurate and complete, the Contractor is providing timely goods and/or services in accordance with the contract requirements, the contract file is current and complete, and the contract renewal surveys are completed in a timely manner. 6

What is the Contract Administrator Responsible for? (continued) The designated Contract Administrator is responsible for ensuring that they and any staff members having duties related to administering the contract, adhere to the policies in Article 6. , Ethics in Public Contracting, as described in the Virginia Public Procurement Act, Chapter 43 of Title 2. 2 of the Code of Virginia. (See link on resource page. ) Failure to follow the guidelines specifically defined and related to their role and responsibilities as Contract Administrator may result in removal as Contract Administrator, and, depending on the nature of the violation, may result in further disciplinary action. 7

What needs to be in the Contract Administration File? The Contract Administrator’s file must contain, at a minimum, • • • the Contract Administration designation letter, a complete copy of the contract, the Contract Administration Action Plan (“CAAP”), contract modifications, all related invoicing and payment records, vendor performance documentation, Copy or copies of completed Contractor Evaluation Survey, signed renewal forms, and any reports required by the contract terms. 8

Shipping and Delivery of Goods Receiving personnel, Contract Administrators, and vendors must comply with shipping terms contained in the purchase order or contract document. Shipping terms: The general policy of the University is to request all goods be shipped F. O. B. Destination, with all shipping charges pre-paid and allowed. F. O. B. Origin may be considered and agreed to if the Contractor agrees to be responsible for filing and tracking any ‘claims’ for lost or damaged goods with the applicable insurance provider. Delivery must be made by the date specified in the contract or the Contractor may be considered to be in default. 9

Inspection, Receiving and Acceptance Inspection – Examination of goods or services delivered. Receiving - Personnel who receive the goods/services are responsible for appropriate inspection prior to accepting an order. They are also responsible for completing and submitting the Banner e. Receiver in an accurate and timely manner. Acceptance - Ordering departments are responsible for accepting goods or services purchased by their department, except: • ETF purchases and other purchases that require delivery to the Property Control Warehouse. Property Control will accept and process e. Receivers for items delivered. 10

Rejection Goods/services that arrive damaged or do not comply with the contract should be rejected by receiving personnel. Receiving personnel who reject some or all of a shipment or service should notify the Contractor immediately and document the action. When warranted, receiving personnel should submit a Procurement Complaint Form to the vendor, with a copy to Procurement Services, documenting reasons for rejection and requesting prompt action to correct the problem within a reasonable timeframe. Concealed damage or latent defects should be reported to the Contractor within 7 days of receipt and prior to removal from the point of delivery, if possible. If latent defects are found, the Contractor is responsible for replacing the defective goods within the delivery time originally stated in the solicitation and is liable for any resulting expenses incurred by the University. 11

No-Fault Rejection of deliveries by receiving personnel due to no fault of the Contractor may be considered breach of contract. Restocking, storage and/or additional delivery charges may be assessed. The value of these additional charges should be identified analyzed prior to making the decision to return goods. Code of Virginia § 8. 2 -710 allows the seller incidental damages after the University’s breach. Both the University and the Contractor may be guilty of breach of contract should they be responsible for violation of the terms and conditions of the contract. 12

Overshipments/Overruns Receiving personnel should not accept goods in excess of those specified on the purchase order or contract unless it is recognized as a custom of that industry, such as printing, cable, fabric, carpet, and/or the Procurement Officer has deemed it acceptable. If overruns will be accepted, they shall not exceed 10% of the purchase order amount, or $500 whichever is less, and the overrun price must not exceed the quoted base price or agreed upon price for additional units. 13

Invoicing Defective Invoices - Accounts Payable must notify the Contractor within 15 days of an invoice defect or impropriety if the defect or impropriety would prevent payment by the due date. Examples of impropriety in the invoice include missing purchase order number, changes in unit price, extension errors, totaling errors, etc. 14

Prompt Payment The University is required to pay for delivered goods or services by the required payment date. If no payment date has been established by a contract, then payment is due 30 days after receipt of a proper invoice or receipt of the goods or services. 15

Contract Modifications and Change Orders Requests for changes affecting price, quality, quantity, delivery or cancellation require a written justification by the department. All change orders should be evaluated for contract validity and price reasonableness. Change orders exceeding a Contract Administrator’s delegated purchasing authority and all contract modifications require Procurement Services review and approval. e. VA users process change order requests via e. VA. Non-e. VA users submit requests for change orders to the appropriate Procurement Services Procurement Officer via email from the appropriate Budget Unit Director. University personnel should wait to notify a Contractor that a change is approved until authorized by the appropriate Procurement Services Procurement Officer. 16

Contract Modifications and Change Orders (continued) Change orders for budget or subaccount codes should not be done in e. VA. These changes should be made by IDT, ASR or budget adjustment. Change orders are not necessary for 100% per line item or $100 per purchase order. AP is authorized to pay invoices in excess of the purchase order amount up to 100% per line item, not to exceed $100 per purchase order, without the requestor processing a change order. Accounts Payable is responsible for obtaining Budget Unit Director approval for overpayment. There is a zero tolerance for cost variation for Equipment Trust Fund purchases of any amount. 17

Contract Renewal Contract renewals can only be done if provided for in the original contract. However, Procurement Services and the Contractor may re-negotiate the contract term, including any extensions and additional renewal periods if adequate and appropriate compensation for all parties can be agreed upon. Price Increases are not automatically given at renewal. If provided for in the contract, and requested by the vendor, Procurement Services may review, negotiate and approve an increase. Price Decreases should be considered by the Contract Administrator and/or Procurement Officer to ensure pricing is in line with market conditions. 18

Contract Extension Procurement Services may, in extenuating circumstances, extend the term of an existing contract for services up to six months to allow completion of any work undertaken but not completed during the original term of the contract. This action should be documented in writing. No additional consideration exceeding the contracted price may be paid to the Contractor. Failure on the part of the Department to provide updated scopes of work/specifications in a timely manner does not justify extension of a contract. 19

Cancellation Contract Administrator’s do not have authority to cancel contracts. Any request for cancellation should include an explanation of the basis for the request. A Contractor may request cancellation, and the University shall grant relief, if the Contractor is prevented from specific performance including timely delivery, by an act of war, order of legal authority, act of God, or other unavoidable causes not attributed to the contractor’s fault or negligence. Cancellation of contracts may only be authorized by Procurement Services, which shall be in writing via an appropriate change order document - purchase order or formal contract. 20

Vendor Performance Complaints or discrepancies on Contractor performance should be reported as they occur using the Procurement Complaint Form. (See reference page for link. ) • A Contractor is considered in default/breach if they fail to perform in accordance with the terms and conditions of the contract (e. g. , late delivery, nonconformance to specifications). Contractors are required to respond within 10 days with a corrective action plan. A Cure letter is used when a Contractor has failed to perform or deliver in response to a Procurement Complaint Form. It provides the Contractor a period of time to correct or “cure” the deficiency and places the Contractor on notice as to the consequences for failure to take the required corrective action, which may include debarment or enjoinment from conducting future business with the University and/or other Commonwealth of Virginia agencies. 21

Termination for Default If a Contractor notifies the University that they refuse to or are not able to deliver or complete performance on a contract, it is not necessary to follow the procedure of using a cure notification. In these cases, a Procurement Complaint Form may be submitted to the Contractor with a copy to Department of Procurement Services to provide a historical file for future determinations of responsibility, etc. , and Procurement Services will issue to the Contractor a “Notice for Termination for Default”. Debarment is action taken to exclude vendor from contracting with the institution for particular types of goods, services or construction for specified periods of time. 22

Summary The purpose of Contract Administration is to protect the institution from risks associated with awarding contracts to persons or vendors having exhibited an inability or unwillingness to fulfill contractual requirements, and to protect the institution's interests and the integrity of the procurement process by preventing individuals or vendors which have displayed improper conduct from participating in the institution's business for specific periods of time (Commonwealth of VA Purchasing Manual for Institutions of Higher Education and their Vendors. May 2018, pages 26 - 33). 23

Congratulations! You have completed the training portion of the online Contract Administration Training. Please use the following link to submit verification of your attendance. You will need to log into the forms directory using your Midas ID and password. Click Here 24