TENNESSEE TECHNOLOGICAL UNIVERSITY

PURCHASING POLICIES AND PROCEDURES

10.  General Instructions on Form and Execution of Contracts

10.1   Approval Required. 

In general, the President is the final approving authority for any contract which is prepared consistent with these guidelines, except that the approval of the Chancellor or designee shall be required for:

10.1.1 contracts, including grant agreements, which do not conform to these guidelines, 

10.1.2 dual services agreements in which the Tennessee Board of Regents (“TBR”) Central Office is the vending or procuring party,

10.1.3 certain real property agreements (as provided in other University/TBR policies and guidelines),

10.1.4 any agreement required to be approved by the Chancellor under TBR Policy 1:03:02:10 Section 6, 

10.1.5 the primary operating agreement between the University and its foundation and any other agreement between the University and its foundation which does not conform to the requirements of these guidelines,

10.1.6 banking and other financial services agreements required by the vendor which do not conform to the requirements of these guidelines, and

10.1.7 any other agreement, including purchase orders, for more than $249,999.99 in annual revenue or expense (Renewals of such agreements do not require approval at the TBR Central Office if no substantive changes have been made; in addition, purchase orders issued pursuant to purchase orders and/or contracts which have already received approval by the TBR Central Office do not require additional submission to the TBR Central Office); however, grants which conform to the requirements of these guidelines do not have to be approved at the TBR Central Office.

10.2    Agreements must be processed in compliance with applicable legislative fiscal review requirements, as they may be amended from time to time.

10.3    Articulation agreements should be developed in compliance with instructions or guidance from the TBR Central Office, Office of Academic Affairs.

10.4    The President must sign contracts required to be submitted to the TBR Central Office. 

10.5    Generally, it is the responsibility of the University to negotiate with the other party to bring an agreement into conformity with these guidelines and determine that the terms are acceptable to the vendor before the agreement is sent to the TBR Central Office for approval.

10.6    The University shall maintain a written contracts manual (may be in electronic format) which sets forth any procedures of the University or technology center which are in addition to and necessary to comply with these guidelines.

10.7    The purpose of a written contract is to embody the complete agreement in writing.  Whether the document is called an agreement, contract, memorandum of agreement (or memorandum of understanding), or purchase order (see TBR Policy 4:02:10:00), it is subject to the requirements of these guidelines.  No relevant terms should be left to an unwritten "understanding" or verbal agreement; no oral representation of any official agent, or employee of either party, either before or after the execution of an agreement is binding on the parties. The document should be explicit and clearly state the rights and duties of each party and clearly identify all parties.

10.8    All relevant documents should be incorporated by reference, with the order of interpretation clearly set forth.

10.9    Amendments and addenda to existing contracts shall clearly state the additions, deletions and modifications to the contract, including a statement as to whether the new terms are in place of or in addition to terms expressed in the original contract.  The University shall negotiate the terms, draft the amendments and/or addenda, execute them properly, then forward them to the TBR Central Office for approval, if required, along with a copy of the original agreement and any prior amendment or addendum. 

10.10  All necessary signature approval lines should be prepared by the University, including that for the TBR.

10.10.1 If the other party or contractor is a corporation, its name must be stated in the contract exactly as it appears in its charter. The person signing on behalf of the corporation must have legal authority to do so, and his/her title/position should be shown on the signature page. If the other party is a state agency, signature approval lines are necessary for the Department Commissioner or official of equivalent rank.

10.10.2 The President or designee must sign all University contracts.

10.10.3 When approval by the Chancellor is not required, that signature blank  should be marked "not applicable" or should be deleted.

10.11  Other Approvals Which May be Required.  All inter-agency agreements (with other Tennessee state agencies; does not apply to agreements with other TBR schools or UT), including dual service agreements for over $1,500.00, with  other state agencies must be approved by the Commissioner of the Department of Finance and Administration.  Only Dual Service Agreements in which the TBR Central Office is the vending or procuring party or which do not comply with the requirements of these guidelines are required to be submitted to the TBR Central Office.

10.12  The University should prepare a sufficient number of originals of all contracts as desired/required by the parties and an original for the TBR Central Office if TBR Central Office approval is required.  Each of the originals of the contract shall bear the original signatures of the parties.

10.13  All contracts required to be submitted to the TBR Central Office should be submitted prior to the beginning of the contract's original term or renewal date.

10.14  A contract cannot be extended or amended after the original term has expired.

10.15  A Contract Summary Sheet as well as all relevant attachments must accompany all agreements submitted to the TBR Central Office for review.  Contract Summary Sheets are prepared by the Purchasing Office and must be signed by a University official verifying purchasing compliance.  The department is to complete a  Non-Competitive Procurement Justification Form if applicable.

10.16  Agreements containing blank spaces or omitting required contract provisions will be returned to the University for correction and must be resubmitted to the TBR Central Office for approval.

10.17  Food and Vending Services Contracts

10.17.1 Purchasing Policies & Procedures, Section 12 and bidding requirements outlined in TBR Guideline B-030 for the Acquisition of Hardware, Software and Related Services should be used, when applicable, for food and vending services contracts.

10.17.2 Note that State law prohibits the University from establishing a vending contract for new or existing vending facilities, nor may the University perform these services itself, without first notifying the Division of Blind Services for the State of Tennessee.

10.18  Telephone Systems

TBR Guideline B-030 for Acquisition of Hardware, Software and related services should be adapted and used when applicable for telephone systems and services contracts.

10.19 Real property lease agreements are covered by separate procedures found in TBR Guidelines B-025 and B-026.

10.20  Required Contract Provisions

Whenever possible, one of the form contracts in the following sections of these guidelines should be followed in order to assure that an agreement conforms to the requirements University/TBR policies and procedures.  

10.20.1 Purpose/Duties

Every contract must contain language regarding its purpose and the duties of the parties.

10.20.2 Term of Agreement

10.20.2.1  “Contract Term - A contract shall be entered into for a period or contract term sufficient to adequately accomplish the state’s procurement objectives, provided that the contract contains appropriate termination provisions for performance failures, funding changes, and state convenience. However, no contract term shall exceed sixty (60) months.”  (Finance and Administration Regulations, Chapter 0620-3-3 and General Services Regulations, Chapter, 0690-3-1-03.)

10.20.2.2. Every agreement must provide a beginning and ending date or clear language as to how these dates will be determined.  No contract may provide for automatic renewal unless the agreement is cancelable for convenience upon a specified period of days notice by the University; in which case, the contract may renew automatically for up to five (5) years total term if the agreement also contains annual legislative appropriation language or requires no expenditure of state funds.

10.20.2.3  The University is encouraged to seek terms of longer than one (1) year but not more than five (5) years for clinical affiliation agreements (See Section 10 of these guidelines).

10.20.2.4  If a contract calls for payments or expenditures by the University from funds appropriated for more than a single fiscal year, the following language (or equivalent language) must be added:

“Continuation of this Agreement is subject to annual allotment of state and/or federal funds.”

10.20.3  Payments. 

All agreements must provide that payments are to be made only upon submittal of invoices by the contractor, and after performance of the portion of the services which the invoiced amount represents, except that agreements with tax-exempt non-profit organizations may provide for periodic advance payments (see also Purchasing Policies & Procedures, Section 9.4.5 for additional exceptions).

If the contractor is a non-resident alien, payment for any portion of the contract from any source will not be made by the University until an Internal Revenue Service Individual Taxpayer Identification Number (ITIN) has been assigned to the contractor by the Internal Revenue Service and presented to the University.  Final payment shall not be made until the contractor has completed performance. Adequate documentation to support all payments must be maintained by the University.

Sales/Ownership/Ethnicity Information.  As part of the purchasing and contracting process, the University shall attempt to collect:  type of business, annual sales, business ownership and ethnicity information before payment is made to the vendor.   Information shall be collected in accordance with TCA  § 2-3-8 and TBR Policy No. 4:02:10:00.

10.20.4  Conflict of Interest

If the Contractor is an individual:

"The Contractor warrants that he/she is not and during the term of the contract will not become an employee of the State of Tennessee."

If the Contractor is an organization:

"The Contractor warrants that no part of the total contract amount provided herein shall be paid directly or indirectly to any officer or employee of the State of Tennessee as wages, compensation, or gifts in exchange for acting as officer, agent, employee, subcontractor, or consultant to the Contractor in connection with any work contemplated or performed relative to this contract."  (Note that this provision must be omitted if the personal, professional and consultant service contract form in Purchasing Policies & Procedures, Section 12  is used between the University and another TBR institution, a UT institution or any other state entity.)

10.20.5  Civil Rights Clause

“The parties agree to comply with Titles VI and VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, Executive Order 11,246, the Americans with Disabilities Act of 1990 and the related regulations to each. Each party assures that it will not discriminate against any individual including, but not limited to, employees or applicants for employment and/or students because of race, religion, creed, color, sex, age, disability, veteran status or national origin.

The parties also agree to take affirmative action to ensure that applicants are employed and that employees are treated during their employment without regard to their race, religion, creed, color, sex, age, disability, veteran status or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection available to employees and applicants for employment.”

(The second paragraph may be omitted if the other party does not receive federal or state funds in excess of $50,000.00 annually.

10.20.6  Audit and Documentation Clause

10.20.6.1 "The Contractor shall maintain documentation for all charges against the state under this contract. The books, records and documentation of the Contractor insofar as they relate to work performed or money received under this contract, shall be maintained in conformity with generally accepted accounting principles for a period of three full years from the date of the final payment, and shall be subject to audit, at any reasonable time and upon reasonable notice, by the University or the State Comptroller of the Treasury, or their duly appointed representatives, or a licensed independent public accountant."

10.20.6.2  See Purchasing Policies & Procedures, Section 12.4 for audit language for grants.

10.20.6.3  No audit clause is required for a one time, fixed payment agreement.

10.20.7  Payment for Travel, Meals, Lodging

If a contractor is to be paid/reimbursed for travel, meals or lodging, such payment shall be in the amount of actual cost/per diem, and shall be expressly subject to the limits and rules set forth in the University’s General Travel Policies and Procedures.

10.20.8  Governing Law

Language shall be included which provides that the agreement is subject to the governing law of Tennessee, unless the other party will not accept this provision.  In that case, the contract may be silent as to governing law.

10.20.9  Maximum Payment Clause

If the University is required to make payments, the agreement must state the maximum dollar amount that may be paid under the agreement.

10.21 Unacceptable Provisions

The Director of Purchasing and Contracts in the TBR Central Office and the Office of General Counsel are available for assistance in negotiating modifications with the vendor when the University has been unable to secure agreement of the vendor. The University’s Purchasing Office may consult with the Director of Purchasing and Contracts in the TBR Central Office or the Office of General Counsel prior to contacting the vendor regarding modification.  The following provisions should not be included in any contracts:

10.21.1 Provisions requiring the University to pay taxes (TCA §§ 67-5-203 and 67-6- 322), late penalties, cancellation fees, liquidated damages, incidental or consequential damages, or punitive or exemplary damages.  The University is liable for actual damages only (TCA § 9-8-101 et seq.).  

10.21.2   Payment of travel/per diem expenses in excess of maximum limitations set forth in the University’s General Travel Policies and Procedures.

10.21.3   Provisions designating the governing law of a state other than Tennessee.

10.21.4   Provisions requiring the University to make deposits or payments before goods are received or services are performed (TCA § 12-4-703), except that the University may pay for computer software or computer software/hardware maintenance and other similar maintenance services upon the signing of an agreement. (Such maintenance services are considered fully delivered upon execution of a contract because they are available regardless of whether or not the service is ever used.)  The University may also make payment for subscriptions upon execution of an agreement.   (See also Section 10.20. c above.)

10.21.5   Provisions requiring the University to purchase or obtain liability, property or other insurance or a performance bond.   If the University is unable to negotiate for the deletion of such provisions, the Office of the General Counsel should be consulted as it may be possible to purchase insurance or a performance bond in appropriate circumstances.

10.21.6   Provisions requiring the University to insure, guarantee, or indemnify or hold harmless any party from claims which may arise out of the agreement or be brought by third parties. (Tenn. Const. Art. l, §17; Tenn. Const. Art. ll, §31; and Tennessee Rules of Finance and Administration Chapter 0620-3-3-.07 (13)).

10.21.7   Provisions requiring the University to obtain or pay for outside labor of persons not employed by the University (for example, union stage-hands, teamsters, etc.) are prohibited unless such cost is included as part of the total contract price.

10.21.8  Provisions requiring the University to consent to binding arbitration by a third party of claims arising out of or relating to the agreement.  (TCA §§ 8-6-301 and 20-13-103.)

10.21.9  Disclaimer of vendor's liability for incidental, exemplary, or consequential damages.

10.21.10 Disclaimer by vendor of express or implied warranties of merchantability and fitness for a particular purpose. Certain warranty disclaimers are permissible subject to the approval of the Office of General Counsel.

10.21.11 Limitation on dollar amount of damages recoverable by state from vendor.

10.21.12 Unless vendor or University provides shipment protection in the University's interest, passing of risk of loss or title to University before delivery and/or installation of products.

10.21.13 Right of vendor to enter University's premises without notice to remove equipment or product upon alleged default by University.

10.21.14 Award of attorneys' fees or costs to vendor in the event of legal action against University.  (TCA § 9-8-307(d)).

10.21.15 Consent to jurisdiction in courts outside Tennessee.

10.21.16 Provisions requiring the University to pay late charges, finance charges or interest in excess of that provided under the Tennessee Prompt Pay Act (TCA § 12-4-701 et seq.).

10.21.17 Provisions permitting the vendor to take a secured interest in personal property under the agreement.

10.21.18 Limitation on time in which state may bring suit.  (TCA § 28-3-109).

10.21.19 Provisions requiring confidentiality and nondisclosure that violate the Tennessee Open Records Act.  (TCA § 10-7-101 et seq.).

10.22   Reporting Requirements

The University shall report quarterly to the Office of Purchasing and Contracts at the TBR Central Office the following information (in the format provided by the TBR Central Office):

10.22.1  Small/Minority/Woman-Owned Business Report - in accordance with TCA § 12-3-8.

10.22.2   RFP Diversity Report – report of contracts issued from requests for proposal for goods and/or services pursuant to TCA § 12 -3-807(b).

10.22.3   Quarterly Contracts Report for Personal, Professional, and Consulting Contracts – in accordance with Fiscal Review Requirements, the University shall submit the following two (2) reports*:

Contracts Ranging from $2,000.00 to $50,000.00

Contracts Ranging from $50,000.00 to $249,999.99

10.22.4   Senate Finance, Ways, and Means Report – the University shall submit an annual report of all existing service contracts.

 *dollar amounts reported for each contract shall be based on total term of contract, including all renewals.

10.23 Exceptions

The Chancellor or designee may approve exceptions to the requirements of these guidelines in appropriate cases.

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