What is Puget Sound’s policy for contracts?
As highlighted in Puget Sound’s Code of Conduct, entering into contracts and agreements creates legal obligations on the part of the University of Puget Sound (“Puget Sound” or “the university”). Consistent with board resolution, only individuals who have authority delegated by an appropriate university official are authorized to enter into agreements (“contracts”) on behalf of the university.
Before any commitment is made for service arrangements with individuals (including sole-proprietor businesses), guidance must be obtained from Human Resources or, if for students, from Career and Employment Services, to ensure that the person is properly classified as an employee, student leader, or independent contractor according to federal and state regulations.
Contracts to acquire software, software as a service (i.e. “cloud” or “online”), hardware (computer equipment), and web-related services must be co-signed by Puget Sound’s Chief Information Officer (CIO) and the CIO must also be consulted regarding equipment that would interface with computers.
What is a contract?
A contract is any legally enforceable agreement between two or more parties that creates an obligation to do or not do particular things, whether or not it is titled a “contract.” Agreements, leases, purchase orders, engagement letters, and memos of understanding are examples of contracts. A contract does not always need to be in writing to be legally enforceable, but a well-drafted written contract helps clarify the obligations of each party and increases the likelihood that the purchase of goods or services will meet the objectives of both parties to the contract. Contracts do not necessarily involve the exchange of money (although they often do). If there is an exchange of promises or commitments, a contract may exist.
Why are contracts important to the university?
Written contracts document a shared understanding that promotes smooth operations and provides legal and financial protections. Use of contracts is a way to:
- clarify your needs and expectations;
- negotiate the best possible comprehensive arrangements including price, quality of product and service, timing of delivery or milestones, payment terms, delivery costs, ongoing maintenance and service costs, and more;
- insure that departments receive the products or services that meet their needs;
- prevent costly disputes by providing a clear description of expectations, obligations, and remedies;
- minimize Puget Sound’s exposure to unanticipated costs or litigation.
What is contract authority and delegation?
“Contract authority” is the authority to enter into contracts and to sign and deliver contracts in the name of and on behalf of the university. The Board of Trustees grants contract authority to the following officers: President; Provost; Vice President and General Counsel; Executive Vice President and Chief Financial Officer; and other financial officers elected by the Board (currently Associate Vice President for Finance and Associate Vice President for Financial Planning and Analysis). These six university officers are referred to as “designated officers.”
In general, the Board of Trustees permits designated officers to delegate contract authority if the contract is within the scope of their normal duties and activities, within constraints of Corporate Bylaws or other resolutions of the board, and meets certain conditions.
- All delegations of contract authority must be in writing with both the name and title of the delegetee specified.
- All delegations are made to specific individuals, and individuals receiving such authority shall have demonstrated competency in the negotiation, analysis, review, and execution of contracts.
- The delegation must include specification of the scope, terms, and limitations of the delegation, including the types of contracts the delegetee is authorized to sign; the extent of monetary authority; the maximum allowable term; and the duration of the delegation.
- The delegation of authority must relate to a contract or instrument that the designated officer is authorized to execute and deliver under the Contract Authority Resolution of the Board of Trustees and this policy.
- The delegation is not effective until signed by the Vice President and General Counsel, Executive Vice President and Chief Financial Officer, or other financial officer elected by the Board of Trustees.
What is a purchase order?
A purchase order (PO) is an official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. Acceptance of a purchase order by a seller forms a contract between the buyer and seller. A PO is used to control purchasing of products and services from external suppliers.
- Puget Sound utilizes an approved form of contract for purchase orders that is maintained by the Office of Finance (“standard university purchase order”).
- Standard university purchase orders are created in the ERP system (currently PeopleSoft Financials) by authorized staff from approved requisitions.
- Staff who are authorized to create standard university purchase orders, from approved requisitions or directly, are determined by the Associate VP for Finance or the Executive VP and Chief Financial Officer, consistent with effective internal controls to prevent, deter, and detect fraud or material errors.
- The authority to approve, sign, or issue purchase orders other than standard university purchase orders is subject to the conditions for delegating contract authority described above.
Who should complete and sign vendor credit applications?
When a division or department makes a purchase from a vendor or supplier, the vendor may ask Puget Sound to complete a credit or direct billing application (“vendor credit application”). The authority to sign vendor credit applications has not been delegated. To ensure Puget Sound is able to comply with the terms, a university financial officer must sign vendor credit applications. Send all requests to establish new vendor accounts and/or complete vendor credit applications to Office of Finance, Procurement Services at firstname.lastname@example.org.
- Individuals with Contract Authority are responsible for adhering to the parameters in their written authorization to enter into contracts.
- Designated Officers should have the applicable budget manager or department head co-sign contracts with them to ensure the budget manager or department head is aware of all terms and conditions.
- Individuals with contract authority are responsible for submitting a scanned copy of the fully-signed (by all parties) contract to the central Puget Sound contract file at email@example.com.
- The department or area that initiates a contract and that is receiving most of the benefits is responsible for ensuring that the vendor delivers as promised and that the university fulfills its obligations, including the timely submission of payment requests to the Office of Finance in conformance with the contract and university accounts payable procedures.
- The Office of Finance is responsible for remitting payment as specified in payment requests that are properly completed, approved, and submitted in a timely manner to the Office of Finance.
- The Vice President and General Counsel is responsible for initiating a periodic review of this policy.
- Together, the Vice President and General Counsel and the Executive Vice President and Chief Financial Officer will approve modifications to this policy.
- Code of Conduct
- Contract planning and review checklists
- Approved template agreements (Puget Sound’s standard forms of contract)
- Other types of purchasing authority
Last revised: July 15, 2019; Last reviewed: July 15, 2019
Questions? Please direct questions to firstname.lastname@example.org or contact General Counsel and Risk Management at campus extension 2735.