Dated: 6/29/07
Replaces: 12/18/02
Internal Policy and Procedures
Contract Management, Development and Administration
Policy:
To provide timely and cost efficient service, Purchasing Services establishes and maintains contracts for commonly used supplies and services. These competitively established contracts provide our customers with sources for products and services, in support of the mission of the University.
Procedure:
1. Establishing a contract - A contract should be established as a result of any of the following:
1.1 Department requests - End user notifies purchasing of a requirement for products or services to be delivered repeatedly with consistent quality, service, quantity, delivery, and/or price.
1.2 Administrative requests - A request to agent through the Director or Associate Director of Purchasing Services.
1.3 System or DOA contracts - Non-renewal or cancellation, by UW System or DOA, of a contract for which a need exists.
1.4 Expiring contract list - A monthly list distributed to agents to notify them of contracts that are due to be renewed or rebid within the next 120 days.
1.5 Need identified by agent - Agent identifies need by recognizing repeated new requests for like products or services, or by auditing completed transactions.
2. Communication - Agent is encouraged to obtain information and clarify needs now, or at any time during the process, by meeting or conferring with vendors, end users, and Accounts Payable. Other sources of information might be other agents, state agencies, brokers, distributors, manufacturers, etc.
3. Contract appropriateness - Determine appropriateness of initiating a new contract or renewing/rebidding an existing contract, by considering the following criteria:
3.1 A minimum $10,000 annual expenditure
3.2 Frequent purchases of like products and services identified by the following:
- simplified bids
- requisitions
- vendor report of purchases
- blanket order report
3.3 To ensure the availability of a product or service
3.4 To meet specified delivery requirements
3.5 To establish pricing structure ensuring consistent prices
3.6 To meet product requirements
In some instances, meeting any one of the criteria may indicate a contract is appropriate. Generally, if two or more are met, it is appropriate. If in doubt, consult other team members, agents, or supervisors.
If none of the criteria is met the contract process ends and all interested parties must be notified. If it is determined not to renew an existing contract, a contract cancellation letter is issued in compliance with the contract terms. Bid processing must be notified of the action (renew, rebid, cancel, extend) to update the bid system.
4. Review elements to develop contract bid (If a Request for Proposal (RFP) is appropriate, refer to IPP 50)
4.1 Adequate information about the market, governmental regulations, and end user requirements is required to develop a contract. The following information may be obtained from manufacturers, sales representatives, department technical staff, trade journals, and other market/trade publications available at libraries (Business School, etc.):
A. Required Special Approvals (refer to IPP 26/PPP 4).
B. Timing of building trades labor contracts (effective every June 1st), must be considered when establishing contract effective dates (refer to PRO-D-17).
C. Consider changes in technology and industrial trends, to allow the addition of new products and to minimize the potential need to rebid the contract.
D. Seasonal/cyclical factors (e.g., commodities and manufacturing cycles) must be considered when establishing contract effective dates.
E. Industry price cycles may affect allowable price increases and contract effective dates.
F. Industry licensing, certifications, or standards must be specified in bid.
G. Quantity consistent with how an item is packaged.
H. Price increase time frame consistent with the market.
I. Delivery (e.g., schedule, method, quantity, or minimum) requirements of end user must be clearly stated.
J. Product or Service quality based on what is available and user needs.
K. Quantity or dollar price breaks from vendors must be reviewed to establish appropriate price and delivery structure.
L. If rebid of an existing contract, consult with contractor, Accounts Payable and end user to be sure all needs are being met as well as reviewing past usage by item and dollar.
4.2 Bid lists are prepared by consulting the following resources and buyers guides:
A. Minority Business Directory (refer to PRO-D-1)
B. Manufacturer or Broker
C. Requests from vendors
D. Sheltered work centers (refer to PRO-K-2)
E. Suggested vendor
F. Existing bid lists (select viable bidders only). Ensure that your bid lists are viable to keep administrative cost down. Bid lists should be neither too restrictive nor too broad.
G.Previous contracts, trade publications, Thomas Register, and periodicals
NOTE: Interested non-bidding parties such as manufacturers and brokers, may be added to bid lists and be sent informational copies of bids.
4.3 Prepare Special Conditions of Bid for Contracts by reviewing, analyzing, and modifying (before or after a vendor meeting) (refer to IPP 23).
5. Process and Award Bid (refer to IPP 23)
6. Publish Contract - Agent should publish all terms and conditions necessary to ensure end users know how to process their requisitions and Accounts Payable can audit the invoices. If any conditions change, amendments must be issued (refer to IPP 17).
7. Administer and analyze activities of contract(s) to ensure all parties are providing and receiving products and/or services as specified in the contract. Many administrative actions require updates to the bid system as well as amendments to the publication. Relevant documentation must be retained in the bid jacket. (All information in the bid jacket is open for public inspection, and may be viewed at any time.) The following are suggested activities to ensure a viable contract and to provide for future improvements:
7.1 Analyze and review contract purchases (post audit) by reviewing vendor sales report (as required in the bid) and paid invoices (refer to IPP 53), to determine whether the:
A. Vendor is billing correctly
B. Products or services meet the end user’s needs
C. Total expenditures warrant price re-negotiation
7.2 Keep abreast of market conditions and regulatory changes by consulting the following:
A. Periodicals
B. Vendors or sales representatives in the commodity area
C. Other purchasing or technical professionals
D. End users
E. Internet
7.3 Periodically communicate with end user, contractor, and Accounts Payable to ensure:
A. Products are meeting specifications
B. Delivery requirements are met
C. Contractor and end user are complying with all terms and conditions of contract
D. Awareness of market or technology changes
E. Awareness of end user overall satisfaction with contract
F. Invoice requirements are met
7.4 Price changes (accept or deny) - Review each request to ensure compliance with contract, and that it accurately reflects market conditions.
7.5 Price list distribution - Upon receipt of acceptable price lists distribute to accounts payable and appropriate departments. Distribute to agent, bid jacket or other parties, as appropriate.
7.6 Insurance - An insurance certificate for high risk services with the coverage contained in the original bid must be on file at the Risk Management office during the entire contract period (refer to IPP 12).
7.7 Complaints or problems within the scope of the contract must be addressed.
A. Research and determine whether valid.
B Attempt to resolve by contacting vendor or department. If a reoccurring problem, request documentation (refer to IPP 33/PPP 22)
C.Document the complaint and the facts of the resolution for the contract file.
D.If warranted, send a non-compliance letter stating expected results and a resolution date (refer to Appendix 1).
E. If complaint or problem is not resolved through this process, move on to Breach of contract, section 7.9.
7.8 Contracts for Service – Before renewal, agent must perform a Cost Benefit Analysis (CBA) (refer to IPP 60 and PRO-I-15).
7.9 Breach of contract - When the contractor fails to perform within the terms and conditions of the contract and all steps within 7.7.E. have been exhausted, it becomes a legal issue. See your supervisor to determine next steps.
7.10 Automatic Renewals - Review the monthly expiring contract list. Determine whether to automatically renew contracts entering their second or succeeding years by:
A. Ensuring the need exists based on experience and by reviewing the bid/waiver usage report, accounting payment books, and/or vendor sales reports.
B. Consulting with appropriate end users to ensure their needs are being met. A Contract Information Request (CIR) may be issued at this time (refer to IPP 56).
C. Checking the bid file to ensure complaints and issues have been resolved.
Advise bid processing of your decision so the bid system may be updated accordingly.
7.11 Extension of contract termination date - Contract termination date may be extended, generally 1 to 3 months. Contractor may be contacted verbally, but confirmation must be in writing. Prices may need to be negotiated (refer to appendix 2). Reasons for extensions may include the following:
A. Department response is untimely.
B. To coordinate termination dates in order to consolidate contracts.
C. Agent research has not been completed.
8. Re-award, re-bid, or cancel a contract - This action (partial or in total) may be the result of any of the following by the contractor or the University, when the contractor:
- withdraws from the contract
- is no longer able to supply any of the items awarded
- goes out of business
- ownership changes
- is not complying with contract terms
- or the University requests changes to the terms or specifications
8.1 Re-award to next lowest responsible bidder without re-bidding, after taking appropriate cancellation action with the current contractor, if all of the following apply:
- Agent determines that the terms and conditions and product specifications have not changed
- End user agrees
- Bidder will agree in writing to the terms, conditions, and pricing of the original bid (consider any price changes allowable by the contract since award)
- After agent review of the market it is determined it would not be beneficial to re-bid
8.2 Re-bid after taking appropriate cancellation action with the current contractor, if any of the following apply:
- Contractor was the only bidder
- Next lowest bidder will not hold pricing of the original bid (consider any price changes allowable by the contract since award)
- Market is volatile
- Contractor ownership changes and the new owner will not honor all terms, conditions, and prices of the existing contract
- University or contractor request changes to the terms and specifications that will reduce the contractors’ requirements or increase the contractors’ requirements and raise prices.
8.3 Cancel, totally or in part, if re-awarding or re-bidding is not appropriate and the contract is no longer needed.
9. Return to process starting point - When a contract is nearing the end of its term consult with appropriate end users to ensure their needs are being met. A CIR may be issued to assist in the determination whether a contract is needed.
References:
IPP 12 - Liabilities (Insurance, Worker Compensation, Tax, Loaner Equipment)
IPP 23 - Sealed Bid Process
IPP 26 - Special Approvals Process
IPP 33 - Complaint Response Process
IPP 56 - Contract Information Request (CIR)
PPP 4 - Special Approvals Process
PPP 22 - Vendor Complaint Process
PRO-D-1 - Minority Business Enterprise Policy
PRO-D-17 - Limited Trades Contracts
PRO-K-2 - Sheltered Work Center Solicitation of a Contract
PRO-I-15 - Contracting for Services
IPP60 - Contractual Services