Contracts and Purchasing FAQ
16. I have been negotiating this contract for months, and gave my negotiated contract to Purchasing last week. I told Purchasing that it was a rush and that the pricing is only good for one more week, why isn’t it done yet?
1. What is a contract?
Answer: An agreement between two or more people that is enforceable by law. It can be in a written formal agreement, on a napkin, in an email, online, or in an order form. Be careful because a contract doesn’t have to have the words “Agreement” or “Contract” at the top of it to be a legally binding agreement. A contract may have any of the following headings- Statement of Work, MOU, Letter Agreement, Grant, Facility Use Agreement, Employee Separation Agreement, Lease, Rental Agreement, Proposal, Invoice, Order Form, Work Order, Purchase Order, Terms and Conditions, Estimate- but still be a contract. If you don’t have signing authority, you cannot sign a contract on behalf of UNLV, no matter what it is titled.
2. This is a simple deal, so why do I need a long contract?
Answer: A contract that spells out all the specifics makes the contracting process easier for all parties so there is no confusion. A good contract should be drafted so that if you won the lottery tomorrow, a new employee reading it in your place could determine everything necessary from the contract- the Who, Whats, Wheres, and Whys of the contract. At minimum a contract needs the following:
- legal names of the parties
- the date/time/deadline for the services or goods to be supplied
- the scope
- the term or length of the contract
- the contact information of both parties
- the delivery method for notices (i.e., via email, certified mail)
- pricing and whether there is a maximum price or charges for additional services
- which parties are responsible for which expenses
- what happens if a party defaults
- whether a party must indemnify the other party
- whether there is a limitation of liability
- choice of law
- all NSHE mandated clauses
Keep in mind that if you expect something from a contract, it must be spelled out explicitly in the contract. If a contract ends up in litigation, a judge won’t know what the parties discussed, rather the judge may read a clause in the contract stating that the “contract is the entire understanding of the parties” and refuse to consider any conversations the parties had. For instance, if you expect a consultant to provide weekly updates, or that the report should be provided by a specific date, the contract must spell out these expectations to make them legally binding. Vague short contracts make business dealings more complicated, and can result in more litigation. Detailed contracts help communication between the parties and ensure business dealings go smoothly.
3. What types of contracts must go through Purchasing?
Answer: The following are examples of contracts that must go through Purchasing:
- Purchase of software
- Purchase of goods
- Contract for services, i.e. window washing, auto repair
- Consulting Agreement, i.e. engineer, architect
- Hiring of outside counsel
- Revenue contracts
- Agreements to license the use of UNLV’s name, trademarks, or indicia of ownership for any purpose other than merchandise for the Department of Athletics. For Department of Athletics’ merchandise licensing go to - http://www.unlv.edu/web/unlv-licensing-program.
- Unless excluded in the list set forth in Answer No. 4 below, any contract that requires performance (legal obligation to do something) by UNLV or potentially could cost UNLV an expense or cost
- Any contract that could possibly conflict with existing exclusive UNLV agreements
- Any contract for hotel room blocks, group reservations, banquet/events/meeting space/food and beverage/catering (Even if attendees are using their own credit cards to book rooms, UNLV could be on the hook if less people show up, or if the event is cancelled)
- NDAs and confidentiality agreements
The above list is not exhaustive. If you are unsure, contact Purchasing at purchasingUNLV@UNLV.edu or contact the applicable Purchasing Representative for your department. See http://www.unlv.edu/purchasing/directory. Purchasing can quickly assist you in determining whether a contract should be processed through Purchasing or not. Even if a similar contract might not typically go through Purchasing, you may need a particular contract to have legal review or want assistance negotiating certain terms or pricing. All contracts that go through Purchasing benefit from our Purchasing Representatives’ expertise and UNLV attorney review.
4. What types of contracts do not go through Purchasing?
Answer: The following are examples of types of contracts that do not go through Purchasing. If you have any doubts, please contact your designated Purchasing Representative as identified on- http://www.unlv.edu/purchasing/directory before contacting the Office of General Counsel.
- Facilities agreements/permits and location usage for filming and the media should be directed to UNLV’s Media Relations- http://go.unlv.edu/mediarelations/contact.
- Externally funded research, scholarship, and creative activities. Please see Office of Sponsored Programs- http://www.unlv.edu/research/osp.
- Educational Affiliation Agreements
- Certain Collaboration Agreements with no potential costs
- Certain Memorandums of Understanding with no potential costs
- License Agreements for the Department of Athletics’ merchandise which go through UNLV’s merchandise Licensing Agent, The Licensing Resource Group, Inc. (“LRG”)- http://www.unlv.edu/web/unlv-licensing-program
5. What is the fastest way to get a contract processed?
Answer: The fastest way to process a contract is through the Fast Track Contract process. Please see the Fast Track page for more information.
6. To get the ball rolling on the project, I signed the supplier’s proposal or invoice, but not a “contract,” is that OK?
Answer: No. If a proposal or invoice contains terms and conditions it can be a legally binding contract. Do not agree in writing (including email), click an online acceptance of terms, or even verbally to a particular proposal, business proposition, or to do business with a particular supplier. Always let a potential supplier know that a contract must go through Purchasing and be signed by the appropriate UNLV signatory to be legally binding. While you may not have actual authority to sign, a court could hold UNLV responsible for a proposal/online terms/invoice/or contract signed by you if a court believes that a supplier could reasonably believe that you had “apparent authority” to sign the proposal/online terms/invoice/or contract. Remember, a few sentences signed by both parties on a napkin could be considered a contract. A document doesn’t always have to have the words “Contract” or “Agreement” to be a legally binding contract.
7. I don’t have a contract from the supplier, only a statement of work, so I only need a Purchase Order, right?
Answer: Wrong. If UNLV doesn’t have an active master agreement with that particular supplier then the “statement of work” is actually a contract that simply doesn’t have sufficient terms and conditions. Even if a master agreement between the parties exists, statements of work must be reviewed, approved, and signed by an authorized UNLV signatory.
8. My department negotiated this same contract last year, why can’t I just have the supplier sign the same contract, rather than go through Purchasing?
Answer: While most times the same contract can be used, there are many instances where it can’t be, such as listed below:
- In any given year NSHE may change contract requirements, or there may be local, state or federal changes to the law that result in changes to the UNLV standard contract, so last year’s contract may not work this year.
- UNLV sometimes signs exclusive contracts that bar UNLV from using competitive suppliers. Other times, UNLV signs contracts in which it contractually agrees to guarantee that certain minimums are met to a particular supplier (i.e., UNLV agrees to spend X dollars per year in office products with a particular supplier). No matter how proficient you are in contract law, you won’t be aware of these exclusive or minimum spend contracts since you do not have easy access to all the signed contracts in Purchasing. Contracts executed outside of Purchasing could result in UNLV being in breach of an exclusive agreement, and could result in litigation or penalties.
- Renewing the contract may increase the overall lifetime cost of the contract, which may result in a formal competitive bid being necessary.
- And lastly, contracts cannot be properly signed and purchase orders cannot be generated without going through Purchasing.
For many reasons, including the reasons cited above, you need to go through Purchasing.
9. Who has signature authority?
Answer: Only a handful of people at UNLV have the requisite authority to legally bind UNLV to a contract, and some of the signatories are limited to approvals of a certain type or dollar amount. The only permitted signatories or approvers are: the Chancellor, the President, the Executive Vice President and Provost, the Senior Vice President for Finance and Business, Vice Presidents, the Director of Athletics and certain permitted delegations. See the Signature Authorization page.
10. What is delegation authority?
Answer: As with signature authority, only a handful of positions at UNLV have delegation authority (such as the Executive Director of the Office of Sponsored Programs or the Director of Purchasing), and even then, the delegation authority is limited. For the most part, if you don’t have a signed delegation letter from the President, you do not have delegation authority. NSHE Procedures and Guidelines Chapter 5, Q14 states: “The President may delegate his or her signature authority on contracts, providing that such delegation is in writing and is specific to a position rather than a person. A copy of the written delegation of signature authority shall be kept by the institution in a secure and accessible location or established archive for inspection and audit purposes.”
“Purchase contracts pursuant to Purchase Orders issued by NSHE to the lowest responsive bidder” are delegated to the institutional Vice President of Finance. Delegations to Vice Presidents/Director of Athletics are only for matters within their respective areas of responsibility only. Delegations to positions below Vice Presidents/Director of Athletics must be in writing, signed by the President, and on file with the President’s office, Division office, and the Office of General Counsel. Any contract with serious political, social, financial or public impact should be reviewed above their formal approval level.
Note that an official delegation is different than a temporary written authorization from your supervisor to sign on their behalf during their absence. Provided your supervisor has signing authority and circulates a written authorization with a limited timeframe (i.e., 5 days) in accordance with your department’s practice, you may sign on their behalf within the scope of their signing authority. Whenever you sign on behalf of an authorized signatory pursuant to a temporary written authorization, you should sign: your name, “signing on behalf of X” so it is clear you signed on their behalf. All such written authorizations must be retained on file and readily available for review. Open ended or long term signing authorizations are not permitted.
11. What if I signed a contract when I don’t have signing authority?
Answer: If you sign a contract when you don’t have signing authority to sign contracts or signing authority for the amount you improperly authorized, you could be held personally liable for the full amount of the unauthorized contract. In addition, you could be subject to discipline up to and including termination in accordance with UNLV/NSHE policies and procedures. Almost no one at UNLV has actual signing authority. If you are unsure, the most likely answer is “no.” Please see the Signature Authorization page to locate the right signature authority.
Answer: No. As part of UNLV’s signatory process, certain contracts require the signature of one or more recommenders, but only a party with the proper approval authority can legally bind UNLV. Please see the Signature Authorization page to locate the right recommending party.
13. The director in my department approved the contract amount, but I did not include the travel costs, or the total cost for all the year(s) of the contract, could this be a problem?
If the total contract amount for any type of contract (goods and general services, professional services, or construction services) is less than $25,000 (including any automatic renewal terms and expenses), there are no competitive requirements, but the contract must still go through Purchasing.
If the total amount of the contract is $25,000 or more, but less than $50,000, then the department must get at least two (2) informal proposals for goods and general services or professional services contracts (three (3) informal proposals are required for construction contracts) and provide Purchasing with a written explanation as to why one supplier was selected over the other.
If the total amount of the contract is $50,000 or more and is for general goods and services, then Purchasing will have to draft and publish a sealed formal competitive bid or proposal as part of an official solicitation process.
If the total amount of the contract is $50,000 or more, but less than $75,000 and is for professional or consulting services, then the department must get at least three (3) informal proposals and provide Purchasing with a written explanation as to why one supplier was selected over the other.
If the total contract amount is $75,000 or more and is for professional or consulting services, then Purchasing will have to draft and publish a sealed formal competitive bid or proposal as part of an official solicitation process.
If the total amount of the contract is $100,000 or more and is for construction services, then Purchasing will have to draft and publish a sealed formal competitive bid or proposal as part of an official solicitation process.
It will waste everyone’s time if the actual amount is not funded or disclosed to your Purchasing Representative upfront.
14. If it is a software contract and all the terms are online do I need to go through Purchasing?
Answer: Yes, online terms are still terms. UNLV cannot agree to terms that can be changed at anytime online by the supplier because the terms may violate Nevada State law or NSHE requirements. Be careful of order forms or invoices that reference online terms and conditions.
15. I don’t need to go through Purchasing because my contract is a revenue contract and will not cost UNLV any money, right?
Answer: No. Zero cost does not mean zero liability. There are high value contracts that have very little liability risk of personal or financial injury. On the flip side, there are zero or low value contracts that could increase potential liability for UNLV, such as contracts that involve people coming on campus, that give suppliers access to confidential information, or that violate an existing exclusive UNLV agreement. Also, if a revenue contract fails to address which party bears the cost of expenses if there is no revenue, UNLV can be left with an expense that has not been properly approved. Thus, Purchasing needs to ensure that any monetary or liability risks are minimized by specifying contingencies, such as who pays for expenses if there is no revenue, and requiring the appropriate insurance and indemnification provisions.
16. I have been negotiating this contract for months, and gave my negotiated contract to Purchasing last week. I told Purchasing that it was a rush and that the pricing is only good for one more week, why isn’t it done yet?
Answer: Salespeople always state that it is an “exploding offer” to try and make a sale. It is Purchasing’s experience that we have been able to get the same or better pricing, regardless of timeframe and that “exploding offers” mean very little. The best practice is to contact and involve Purchasing at the beginning of the process, rather than waiting until the contract actually becomes a rush, or the salesperson tries to create an artificial time pressure to close the sale. Moreover, you may have wasted your time if a solicitation is needed, or if different legal terms are required.
17. I negotiated the terms and conditions of the contract myself so why doesn’t Purchasing just send it for signature?
Answer: If a contract qualifies as a Fast Track Contract, none of the legal terms and conditions can be negotiated by the supplier, rather all legal terms and conditions must be accepted as provided on the Fast Contract page. If the contract does not qualify as a Fast Track Contract, you may actually slow the process down by negotiating certain legal terms and conditions if the terms have to be renegotiated by Purchasing. Purchasing may be aware of certain existing contractual obligations, Office of General Counsel or NSHE policies/ requirements, or local, state, or federal laws or regulations that preclude UNLV from agreeing to certain clauses. If you try and negotiate your own legal terms and conditions, you may want to warn the supplier that any terms and conditions may need to be renegotiated by Purchasing so that the supplier isn’t surprised. The best recommendation is to provide any redlines you may have to a supplier’s proposal to Purchasing before sending redlines to the supplier. It is much quicker to only go to the supplier with one set of redlines.
18. Do all Purchasing contracts go through the Office of General Counsel?
Answer: Yes, all Purchasing contracts are required to be reviewed by Contracts Counsel or another attorney from the Office of General Counsel, after completing the Purchasing process. Certain high value contracts must be signed and approved as to legal form by the General Counsel. See the Signature Authorization page. If a contract is forwarded directly to the Office of General Counsel it will be returned to Purchasing since all Purchasing contracts must first go to your department’s designated Purchasing Representative before being forwarded by your department’s Purchasing Representative to Contracts Counsel for review and approval. All UNLV attorneys, including Contracts Counsel, report to the General Counsel and will automatically refer any contracts requiring the General Counsel’s signature or review to the General Counsel as needed or required.
19. Can I get my contract finished quicker if I go directly to the Office of General Counsel?
Answer: No. Contracts must go through Purchasing to ensure that, depending on the dollar amount, it is competitively bid if needed, that supplier registration has been filled out by the supplier, that a copy of the contract is retained, that the correct funding source is provided, and that any insurance certificates are collected. Our Purchasing Representatives are trained to go through all of these processes and to negotiate all needed terms. There are two full-time attorneys (Contracts Counsel) from the Office of General Counsel that sit in Purchasing and support the Purchasing Representatives. If there is a particular legal issue of concern, bring it to your Purchasing Representative’s attention.
20. I filled out a requisition, why is my Purchasing Representative requesting additional information?
Answer: Some requisitions provide very little information. Your Purchasing Representative needs to have a full understanding of information, such as the type of product/service your department needs, how many servers the software may be loaded on, whether the department has ever done business with the supplier, whether OIT or a department IT personnel has reviewed the potential product, etc., to better contract for you and your department. Put all the relevant information someone would need to contract on your department’s behalf in the requisition. And even if you provide a detailed requisition, your Purchasing Representative may have questions that would not occur to you. To shorten the contracting process, always respond quickly to your Purchasing Representative’s requests for information.
21. I put “Rush” on my requisition, why isn’t it finished?
Answer: The majority of the requisitions that come through Purchasing are designated as a “Rush” and the Purchasing staff supports a very large campus. If you have an important service or product, put in your request as soon as possible. Frequently, departments know that a renewal is coming up, but wait until the last minute to enter their request. Is it only a “Rush” because a salesperson has extended an “exploding offer”? If it really is an unexpected “Rush,” clearly detail to your Purchasing Representative, what any applicable deadline actually is, and what happens if the deadline is not met. Does the contract auto-renew at a higher rate? Will the campus email stop working?
22. What can I do on my end to ensure the contract is processed quickly?
Answer: Get Purchasing involved early. You don’t want to waste time negotiating with a supplier, only to find out that UNLV is required by law to formally bid it out, issue a Request for Proposal, etc., or that UNLV already has an exclusive contract or a master agreement with a different supplier for that same service/good.
Be prepared to answer the following questions:
- Did you provide all of the background in your requisition order, or email to your Purchasing Representative?
- If it is a consulting contract, do you expect weekly reports or an in person presentation? How do you want to receive the final report- email, disk, or hardcopy?
- Did you provide a budget/funding account number (Provide one even if there is only a chance that UNLV will be charged, such as with a hotel room cancellation)?
- Did you provide the appropriate contact name, extension and email? (If there is more than one contact that has the necessary information for your Purchasing Representative, provide both with description).
- Is there funding for the project and have you included all potential costs, such as travel?
- Does UNLV have an existing master agreement with the supplier? See http://www.unlv.edu/purchasing/contracts and https://oit.unlv.edu/software-and-computers/employee-computer-purchases
- Has UNLV or NSHE used the supplier’s services previously?
- Have you researched other suppliers in the field?
- Is the purchase likely to cost over $25,000 for the life of the contract (including travel expenses and additional add-on costs, such as training or possible service calls)?
- Have you researched the supplier online? Did you review their website, or research the supplier on websites such as- http://www.dnb.com ?
- Has the supplier filled out the mandatory supplier registration available at https://supplierregistration.purchasing.unlv.edu/?
- Has the supplier worked with state institutions before and are they aware that UNLV has certain mandatory insurance and contract requirements?
- Even if a vendor is not eligible for a Fast Track Contract, you can direct them to a copy available at the Fast Track Contract page to ensure that they can agree to our minimum general terms and conditions.
- If you spoke to the supplier, did you make them aware that UNLV is required to use our own contract in most instances, and that certain deviations require approval which slows the process down?
- Will the supplier step foot on campus? If so your Purchasing Representative must be informed because additional insurance may be required.
- Does the supplier have the requisite license to provide the service?
- Will the supplier have access to any personally identifiable information, such as emails, social security numbers, health information, or student information?
- Does the service or product involve processing financial or credit card information?
- Who will own the final work product (the report, computer code, artwork, survey information, accounting application, etc.), the supplier or UNLV?
Questions for Software/Website Contracts:
- Has your department IT person or OIT reviewed whether the software is compatible with existing systems?
- If you discussed term with the supplier, did you make them aware that UNLV is restricted from open-ended evergreen terms?
- Do you understand if any proposed pricing is for one desktop, or whether it can be used on additional devices owned by the same user, if it is per department, per user id, per CPU, per server, per IP address/range, campus-wide, or limited in some other way?
- Are there hidden costs such as software maintenance?
- Is it software as a service, hosted services, web-based software, or software that will be installed on UNLV systems?
- Will the software supplier come on campus?
- Will the supplier have access to sensitive information on UNLV servers?
- In the case of services provided via the web, will addresses, student emails, or phone numbers be typed in online?
23. Why does the Purchasing process sometimes take a long time?
Answer: The #1 reason that the Purchasing process can take a while is that the supplier refuses to agree to UNLV’s standard terms and conditions. If all suppliers accepted UNLV’s standard terms and conditions without any modifications the process would go quickly. UNLV is a state entity, and is bound by state, local, and federal law, NSHE requirements and the Office of General Counsel policies. Some suppliers deal primarily with private companies and do not understand that state universities have to abide by certain specific laws, polices, and requirements. The Purchasing Representative cannot simply waive these contractual requirements and it often takes time for certain suppliers to appreciate the contractual restrictions imposed on many state universities. Many times UNLV’s contracts are accepted without any changes, but it takes a supplier’s legal department a long time to review the contract because their legal department is very busy. Sometimes we have suppliers that do not return contracts for weeks, or even months, despite regular follow-up by our Purchasing Representatives. The 2nd most common reason is that the department has failed to provide your Purchasing Representative with all the information they are required to obtain to reasonably complete the contract. The 3rd most common reason is that your Purchasing Representative is required to follow certain processes either by statute; NSHE requirement; or by policies set by OIT, Risk Management and Safety, Finance, or the Office of General Counsel which can take time. There are actually very few requirements that are set by Purchasing.