1. What to do when vendors don’t do what they said they’d do… Second Annual Statewide Contract Manager’s Conference October 5, 2011 – Texas Capitol Extension Auditorium

2. Presenter Wes Ogilvie, Assistant General Counsel, Texas Procurement and Support Services, Texas Comptroller of Public Accounts

3. The first two steps Review the contract and supporting documents. “What does the contract say?” Documentation, documentation, documentation. “If you don’t write it down, it never happened.”

4. Next step… Talk to the vendor. Equally important, talk to the right person! Does the contract identify key personnel on both sides? If you don’t hear what you want, escalate the problem to someone else…with the authority to resolve the problem. The vendor also needs the appropriate contacts at the agency

5. Vendor Performance Why? –Required by rule –Documentation of the problem –Vendor is supposed to respond to Vendor Performance Report –Provides rationale for awarding/not awarding future contracts –Shares information with other agencies

6. Contract Management Office TPASS Contract Management Office –Provides management of all TPASS contracts –Investigate vendor performance reports –Serve as an intermediary between the agency and the contractor

7. Referral to Counsel Consider involving agency counsel Shows the vendor that the problem has been escalated internally Allows agency counsel to provide advice on options Involve counsel early

8. Corrective Action Plan “Probation” for your contractor/vendor Should provide for specific steps to remedy defects or non-performance Consider incorporating the plan as a contract amendment Ensure the plan has measurable, enforceable goals

9. Liquidated Damages Must be specified in the solicitation/contract Only allowed when ordinary damages are difficult to calculate Cannot be used as fines or penalties Requires significant attorney involvement in drafting liquidated damages provisions

10. Cure Notice Newsworthy cure notice Provides a set period of time for the vendor to fix the problem before termination of the contract Actually, a cure notice may be considered “pro-vendor” If you’re at this point, it may be time to think about lead time to get an alternate vendor

11. Paying the Bill Disputing the invoice Partial payment –Must be an actual dispute Set-off –Rarely used, not favored in state contracts

12. Termination Cause –Usually immediate –Must have a reason –Cost of cover Convenience –Usually, but not always 30 days in state contracts –No reason required Funding –Funding out clause

13. Non-Renewal When to consider? Neutral on its face Negative – need to be thinking about re-procurement well in advance

14. Uncommon Remedies Audit –Performance or financial audit of the vendor –State Auditor’s Office Calling the bond –Performance bonds –Payment bonds

15. Debarment Severe remedy Provided for by statute and rule Investigation by TPASS Decision made by TPASS Director with appeal to Deputy Comptroller Agencies may request a debarment investigation

16. Calling the Cavalry Attorney General referral –Requires significant management and legal buy-in –Uncertain process –Ordinarily requires significant damages to make it worthwhile Criminal investigation –Rarely used, most commonly for fraud, particularly in invoicing

17. An Additional Caution Offers to remedy almost always require involvement from program staff, procurement staff, and legal counsel Danger of waiving remedies for breach