1. OGC Purchasing Contract Basics and Best Practices Office of the General Counsel – November 2017

2. Session Overview Contract Basics & Best Practices
What contract to use, and what to do before sending a contract for review to the OGC.
What Units/Departments should be looking for in contracts.
Understanding of business terms vs. legal terms of a contract.
OGC Contracting Process
What information does OGC need from you to review a contract?
How do you submit a contract for review?
What to do after the first review.
Delegations of Authority
OGC tools, current and future, to help with contract review and process.

3. What Contract do I use?
ALWAYS try University Terms and Conditions first.
What are the University Terms and Conditions? Ex.
Copies of all University Terms and Conditions can be found in the Contracts Library.
If a vendor want to redline University Terms and Conditions the OGC for a redlinable copy.
Most Frequently Used Agreements
Contract for Professional Services
Purchase Order (purchase of goods)
U Wide Agreements

4. What Contract do I use?
Exceptions to the requirement to use University templates:
Software
Unique service or good that would require extensive edits.
Some IT services
The Vendor says it is easier or faster to use their agreement. What do I do now?
Insist again that we use University Terms and Conditions.
Use long turnaround time and the size of University as leverage.
What if a vendor will absolutely not agree to use our Terms and Conditions?
OGC will need an editable Word version of the contract.

5. Contract Review Flow Chart

6. Before Sending Agreement to OGC
Finalize Business Terms
Pricing, Payment Terms, Deliverable, etc.
Read the contract – Are the business terms correct?
Understand what you and/or your department/unit are agreeing to.
Check business terms and highlight areas where you have concern.
Make notes to the OGC or to the vendor using comments tool
If editing text use the redlining tool.

7. Before Sending Agreement to OGC: Legal vs. Business Terms
Legal Terms
Term of Agreement
Termination
Price & Payment
Deliverables
Delivery Terms & Timeline for Delivery
Limitation on Liability
Warranty
Indemnification
Assignability
Termination Requirements
Confidentiality
Intellectual Property
Jurisdiction

8. Contract Business Terms
Contract Considerations
Term
Best practice < 3 years, software: 1 year
No auto renewals.
Consider if your service is in a rapidly changing industry.
Do you know this is a reputable company and quality of work product?
Do you get better pricing if you take a longer term?
Do you have a right to terminate?
Termination
Do you want a right to get out of the contract at any time?
Is it ok if the supplier has the right to terminate at any time?
What happens to you data, or information when the contract terminates?
Price & Payment
Does the agreement reflect the price and payment terms you agreed to?
Best practice is not to pay up front, or at least not 100%.
Intellectual Property
Who will own what is being produced or any product of the services? Do you want the vendor to have any right to the IP or license?

9. Contract Business Terms cont.
Contract Considerations
Timeline, Milestones, Delivery Terms
What is the date you want the work completed or product completed? Penalties if not completed on that day?
Is this a long term or complex project, should there be milestones?
How and where should the product or deliverable be sent or delivered?
Deliverables
What is the end product?
Who will own it and/or the intellectual property rights?
Be detailed.
Warranty
What is your expectation of what this product can do?
How long or to what extent to you want the supplier to warrant their services or goods?
Limitation on Liability
If something goes wrong this amount would be the maximum the University could recover in the case where we had to sue the supplier

10. Submitting to the OGC for Review
How do I get my agreement in line in the legal queue?
Send the following items to the OGC:
Complete the Contract Review Form.
CRF
Redlined University Terms and Conditions or Vendor Agreement (in Word) reviewed by department or unit.
Any attachments (Statement of Work/Scope of Services, Invoice, PO, etc.)
Send to:
also copy Jean Schatz at
After Jan, 1, 2018 send all purchasing agreements under $50K to over $50K to

11. Contract Timing Average turnaround is 2 weeks.
Plan accordingly
Use University templates and forms
If no changes do not need OGC review.
Allow time for negotiation and review on both sides.
Not every contract can be an emergency.

12. After the First Review by OGC
Send the agreement back to the vendor
Be certain all “internal” comments are removed.
What if the vendor makes additional redlines, or doesn’t accept the OGC proposed changes?
Review all redlines and any comments to see if you agree or disagree and/or have any comments or input.
Send back to the OGC for review.
OGC must review any ongoing edits to legal terms.

13. Who can sign the Agreement?
Delegation of Authority
Only authorized personnel in your school/unit/department are permitted to sign legal agreements and bind the University in contract.
You can find who is authorized by searching the Delegation of Authority
If you sign and are not authorized, you could be personally liable for the contract under Minnesota law.

14. Future OGC Tools for Contracting
Videos
Contract Review Flow Chart Updates
Updates to Contracts Library
Addendum to Contractor’s Form
Updated OGC Website
Additional training opportunities or guidance to allow for further unit/departmental independence with low risk, low dollar value agreements.

15. Thank you!
Questions?