NEGOTIATING AND ENTERING INTO CONTRACTS OR LEASES

Purpose

To ensure timely and appropriate formulation and internal review of contracts and leases entered into by Seton Hall University.

Review and Approval Process – General

Contracts and leases will generally involve either the University’s obtaining or supplying of goods or services. Depending on the planned arrangements, contracts or leases may have been preceded by a Request for Proposal (RFP) and both may require review and revision by Business Affairs, Compliance and General Counsel. Contracts or leases for goods or services totaling over $500,000 must be approved by the university’s Board of Regents. Only the President and the Vice President for Finance and Technology shall have authority to sign non-standard contracts or lease agreements as discussed below. Appropriate time frames need to be incorporated into planning processes, leading up to contract or lease signing, as discussed herein.

Types of Agreements and Contracts

In addition to contracts or leases involving the purchase or supply or goods or services, other examples may involve the maintenance of capital equipment or affiliation with another organization. Contracts or leases can also involve, but are not limited to, the following: licensing arrangements; property leases; research, articulation or exchange agreements involving transfer of credits; contracts involving special services such as immunization clinics; event-related arrangements or agreements with speakers being brought to the University; commitments involving entertainers including individuals, groups of performers and/or musicians, or theater groups; and agreements involving consultants or other "independent contractors".

In general, all types of contracts or leases mentioned above will hereby be classified into two (2) main types :

1. Standard – those entered into by Seton Hall University that will contain standard terms and conditions as developed by the university and previously approved by Legal Counsel, Compliance Officer and Business Affairs.
2. Non-standard – those entered into that do not contain standard terms and conditions as developed by Seton Hall University. These are typically agreements where the vendor selected presents their own terms and/or agreement to the university for review and approval.

Requests for Proposals

When formulation of a contract or lease is preceded by a Request for Proposal (RFP), a formal bidding process will take place. The need for bidding will be determined by the level of financial commitment in question, and on the outcome of discussions between the requesting department and the Procurement Department. If an RFP is contemplated in connection with a business arrangement that will result in a contract, discussions with Procurement and initial formulation of the RFP needs to begin at least three (3) months prior to the planned effective date of the contract, so as to ensure appropriate time frames for review by the Board of Regents (if required), Procurement, General Counsel and Business Affairs.

Bid policy for the university is as follows:

All acquisitions of goods or services (with or without a contract or lease involved) that total over $10,000 must be transacted with at least two (2) bids being obtained. It is recommended, however, that for orders over $25,000 that a total of between three (3) to five (5) bids be obtained, but two (2) shall be the minimum. Bidding can be waived if the item or service being provided is being provided by a university preferred vendor (i.e. a vendor listed on the Procurement Department’s preferred vendor list) or if the vendor is a sole provider of the good or service in question. Additionally, bids involving contracts or leases that total over $250,000 must be approved by the President of the University and bids involving contracts or leases that total over $500,000 must be approved by the Board of Regents.

Insurance and Indemnification

The type(s) and levels of insurance coverage required for a given contract or lease will be determined based on discussion between the requesting department and Business Affairs. The Compliance Officer is also available for technical assistance, in determining appropriate terms of insurance and indemnification.

The indemnification provision of a contract or lease outlines the management and transfer of risk, by establishing the circumstances in which parties to the contract will hold each other harmless in the event of a claim or suit that results from the activities or transactions specified in the contract. Typically each party to the contract or lease agrees to hold the other party harmless if it is determined that the issue that triggered the claim or suit was the result of the sole negligence of one or another signatory to the contract. The wording of an indemnification provision will be determined through discussion between the requesting department and Business Affairs, and, in turn, with the Compliance Officer and General Counsel.

Specific Steps to be Taken Prior to Contract or Lease Signing

1. The first step in initiating a contract or lease is to determine if bids are required. To make that determination, review the bid policy terms mentioned above or contact the Procurement Department for assistance. If a lease is requested, the department and Procurement must additionally work with the Controller to determine if a lease or purchase is the better financial option for the university to entertain. After conducting the bid process (if necessary), a vendor is selected and contracted for product/services using either a non-standard university agreement or a standard university agreement.
2. If a non-standard university agreement is entered into, a discussion concerning the intended business arrangement should take place with the Office of Business Affairs. That office will assist relative to contract language/format, and clarify, if required, the contract review process. Any and all proposed non-standard contracts or leases must be forwarded with a completed Contract Review Checklist (see Attachment A) and a Contract Review Routing Form (see Attachment B) to the Director of Business Affairs. The Checklist assists in ensuring that all relevant and necessary contract provisions have been incorporated into the draft document. The Director of Business Affairs will forward all non-standard contracts or leases to the university’s Office of General Counsel. A concurrent financial review will be carried out by Procurement and the University Controller if necessary. If the contract or lease is for goods or services over $25,000, it must additionally be approved by the university’s Board of Regents.
3. If a contract is to be entered into and it is a standard university contract, the agreement should be forwarded to the Office of Business Affairs for review and approval. Any and all standard contracts or leases must be completed and include a Contact Review Routing Form (see Attachment B). Since the agreement is of standard format and it has been previously approved by Legal Counsel a Contract Review Checklist is not necessary. All standard contract should be signed by the parties being contracted prior to University approval and signature.
4. Upon completion of review, the General Counsel will forward the non-standard contract to the Office of the Vice President for Finance and Technology for signature. Only the President and the Vice President for Finance and Technology are authorized to enter into and sign any contracts or leases for goods or services.
5. Original signed contracts or leases and pertaining documents are to be kept on file in Business Affairs. Copies of all signed contracts or leases are to be forwarded to the Office of General Counsel and the University Controller’s Office.

Time Frames for Steps Within Review Process

Planning for a contract or lease requires adherence to the following time frames:

If it is planned that a Request for Proposal will precede the review process, it should be anticipated that a period of lead time of at least three (3) months prior to the expected contract or lease start date would be appropriate to begin bidding, but contact the Procurement Department for assistance and advice.

The review process for a standard university contract or lease in which standard contract language (as currently approved by the Office of General Counsel) is used does not require Legal, Business Affairs or Compliance review but should commence at least two (2) weeks prior to the anticipated effective date of the contract.

The review process for a non-standard university contract or lease for a new agreement that does require Legal Counsel, Business Affairs or Compliance review needs to commence at least one (1) month prior to the anticipated effective date of the contract.