Contract Policies and Guides

Collaborative Contracts

Please visit the sites below to view existing contracts already in place:

State Contracts
CoStars Contracts
PASSHE Contracts

Consultant Contracts in Excess of $5,000

Consultant contracts in excess of five thousand dollars ($5,000.00) require Chancellor's Office and/or Board of Governors approval. Such contracts are also subject to special processing.

Contracts less than five thousand dollars ($5,000.00) follow the same review and approval procedure as standard contracts such as bluebacks and SPCs.
University Legal Counsel will review the contract and forward it, when necessary, to the Vice Chancellor for Finance and Administration. The Vice Chancellor has approval authority for contracts between five thousand and seventy five thousand dollars ($5,000.00 and $75,000.00), but must seek approval from the Board of Governors for consultation contracts in excess of seventy five thousand dollars ($75,000.00).

If the Vice Chancellor or the Board of Governors rejects the contract, it will be returned to the university by the Vice Chancellor's office, with notice to the Chief Legal Counsel.

Contracts Exempt from Bidding

Act 188, as well as Act 57 , generally exempts contracts of twenty thousand one hundred dollars ($20,100.00) or less from competitive bidding. However, procurement requirements must not be artificially divided so as to constitute small procurement.

Although no formal bidding is required, universities must contemplate prudent business practices and should solicit at least three telephone bids, when possible, with at least one such potential contractor being a woman-based or minority-based entity. It should be the university's practice that, despite no obligation for formal bidding, certain cases for economic benefit may dictate that formal bidding is utilized. Regardless, the selected contractor should not only be the lowest responsive bidder, but a responsible one as well.

Contracts funded by federal funds or private donations are exempt under Act 188 from competitive bidding, regardless of amount; but if any federal bidding requirements apply, they must be followed. Contracts funded by state or local government funds must be competitively bid and if federal funds flow through a branch of state government, bidding is required.

Unless authorized by law, all Commonwealth agency contracts are to be awarded by competitive sealed bidding, except as specifically provided in regard to:

competitive sealed proposals
small procurements (contracts under $20,100.00)
emergency procurement
multiple awards
competitive selection procedures for certain services
supplies manufactured and services performed by persons with disabilities
procurement of design professional services

Bidding requirements are to be met by bids, Requests for Proposals or Requests for Information.

Contracts Subject to Legal Review

A contract exists whenever a Commonwealth agency enters into an arrangement with another party under which there are obligations or exchanges of consideration. Arrangements, such as affiliation agreements, might or might not require a university to pay money or receive money, but are still considered contracts. With limited exceptions, University Legal Counsel is required by the Commonwealth Attorneys Act to review and approve contracts and agreements entered into by the State System of Higher Education.

Legal review and approval is required for any contract between a university and another party unless the contracts are less than $1,500.00. Some university personnel have expressed the view that if the university is not expending funds, it is merely engaged in an "agreement" and not a contract. All contracts/agreements unless specifically exempted, are subject to legal review.

Contracts are submitted to the Office of University Legal Counsel for review and signature. It is the policy of the Office of University Legal Counsel to sign and forward or return contracts within two business days. Once signed by University Legal Counsel, contracts are generally forwarded for review to the Office of the Attorney General. The Office of Attorney General may take up to thirty days to approve or reject a contract.
If required, after review and approval by University Legal Counsel, a contract may first be sent to the Office of General Counsel (OGC). As of the date of last revision of this manual, only contracts in excess of five hundred thousand dollars ($500,000.00) must be sent to OGC. This limit is subject to change, and a notice will be issued if and when changes occur. At least an extra thirty days should be added by the university for the processing of contracts that require the additional approval from OGC.

No action by a contractor regarding a tentative contract should be taken until all parties have executed it including all appropriate legal entities. "After-the-fact" contracts (i.e., contracts submitted after the goods and services have been provided) will be rejected unless the contract meets the strict statutory requirements of an emergency contract. This is extremely important because the Attorney General will not give legal approval to late contracts and neither can University Legal Counsel. Additionally, since no Commonwealth agency can pay on an unlawful contract, the contractor's only alternative is to proceed against the university in the Pennsylvania Board of Claims.

Pursuant to Act 57 (the New Procurement Code), no contract shall be effective until executed by all necessary Commonwealth officials as provided by law.

Emergency Contracts

Emergency procurements are permissible when the head of the purchasing agency determines that a threat to public health, safety and welfare or circumstances outside the control of the agency create an urgency of need which necessitates the suspension of normal bidding requirements. The Presidents are the heads of purchasing for each university, as delegated by the Chancellor. The Presidents, in turn, may delegate their authority to an administrator on campus.

When possible, Act 57 looks to securing two bids. There is no requirement that these bids be in writing under these circumstances. However, a written determination of the basis for the emergency and for the selection of the contractor must be included in the contract file and sent in the form of a certification when the contract is submitted for legal review. If University Legal Counsel does not agree with the substantiation of the emergency procurement or should the certification of emergency procurement not be forwarded with the contract, the contract will be rejected. Contracts will still require the signature of the Office of Attorney General and, if warranted, the Office of General Counsel.

Memorandum of Understanding

An agreement between Commonwealth agencies is often referred to as a Memorandum of Understanding, or MOU. Such MOU's are generally exempt from Attorney General review. However, such memorandums of understanding are not exempt from review by university legal counsel. Legal counsel for both agencies must review the document. There is one exception to this rule; federal monetary grants made directly to a university. This exception exists because highly expedited execution of paperwork is often tied to the acceptance of such awards. Direct federal grants are different from so called "pass through" grant agreements (where the funds flow from the federal government to some other entity, then to the university). Pass through agreements must still be submitted for legal review (i.e. Federal grant money flowing to the universities through third parties requires legal review, as do agreements for equipment donation).

Agreements with other Executive Agencies

Agreements with Executive Agencies shall be titled "COMMONWEALTH INTERAGENCY MEMORANDUM OF UNDERSTANDING," and must contain the following clauses:

This Memorandum is not intended to and does not create any contractual rights or obligations with respect to the signatory agencies or any other parties.

AND

Any dispute arising hereunder shall be submitted to the Office of General Counsel of the Commonwealth of Pennsylvania for final resolution.
Interagency Memorandums of Understanding will be routed to university legal counsel just like any other contract. Agreements with the following executive agencies, shall be subject to an MOU:

Department of Aging
Department of Agriculture
Department of Banking
Department of Community and Economic Development
Department of Conservation and Natural Resources
Department of Corrections
Department of Environmental Protection
Department of Health
Governor's Council for the Arts
Governor's Council for the Humanities
Housing Finance Agency
Department of Insurance
Department of Labor and Industry
Department of Military and Veterans' Affairs
Department of Public Welfare
Office of Administration
Office of the Budget
Pennsylvania Public Television Network
Pennsylvania State Police
Department of Revenue
Department of State
Department of Transportation

Agreements with Independent Agencies

An agreement with an independent Commonwealth agency may also be drafted as a Memorandum of Understanding. Alternatively, such may be treated as an ordinary contract, subject to Attorney General review. How such an agreement is handled is left to the discretion of the university and the independent agency.

For purposes of this manual, the following agencies are independent agencies:

Office of Attorney General
Office of Auditor General
Civil Service Commission
Ethics Commission
Fish and Boat Commission
Game Commission
Higher Education Assistance Agency (PHEAA)
Historical and Museum Commission
Human Relations Commission
Labor Relations Board
Liquor Control Board
Milk Marketing Board
Public Utilities Commission
Securities Commission
State Tax Equalization Board
Turnpike Commission
Department of Treasury

The foregoing lists of executive and independent agencies are not comprehensive.

Agreements within the State System of Higher Education

Agreements between different parts of the State System of Higher Education are not really contracts. The entire arrangement should be treated from start to finish as an internal transaction. Such agreements differ from standard contracts in the following ways:

Bidding is not required.
As long as the agreement is solely between parts of the State System (agreements of two or more universities with each other or with the Office of the Chancellor) under no circumstances should the entities use a formal contract document or anything that even appears remotely to be a binding contract. The word "contract" should not be used within the agreement to describe it.
The parties should formalize their expectations in a letter between authorized employees at the appropriate levels of authority. The Chancellor or President of the university can authorize any employee to engage in contracts generally or in particular kinds of contracts. Persons exercising such authority should have written authorization from the Chancellor or President.
So long as no other entity except the Office of the Chancellor and/or State System universities are parties to the agreement, nothing in the letter (or any reply to it or other exchange of correspondence regarding it) should make reference to any rights, or remedies for breach, or manner of enforcement. The letter should state that the arrangement is not a legally binding contract and is not enforceable in a court or in the Board of Claims. The agreement may state that in the event of a dispute between two parties, advice and direction should be requested from the Office of the Chancellor or Office of Legal Counsel.

Sole Source Contacts

A sole source contract implies that there is only one person or company that can provide the contractual services needed and that any attempt to obtain bids would only result in one person or company being available to meet the need.

A contract may be awarded for a supply, service or construction item, without the necessity of competition, when the contracting officer determines in writing that one of the following statutory conditions exists:

Only a single contractor is capable of providing the supply, service or construction.
A federal or state statute or federal regulations exempts the supply, service or construction from the competitive procedure.
The total cost of the supply, service or construction is less than the amount established by the State System for small, no-bid procurements as dictated by the policy on small procurements.
It is clearly not feasible to award the contract for supplies or services on a competitive basis.
The services involve the repair, modification or calibration of equipment and they are to be performed by the manufacturer of the equipment or by the manufacturer's authorized dealer, provided the contracting officer determines that bidding is not appropriate under the circumstances.
The contract for supplies or services is in the best interest of the Commonwealth.

Before entering into a sole source contract, a statement of justification must be sent in advance to university legal counsel certifying that the contract is appropriate as a sole source. University Legal Counsel will review the statement and either approve or disapprove the certification.

Requisition Procedures

To request services, a purchase requisition must be created in SAP by the requesting department. Obtain all required signatures and submit to the Contracts Office for processing. Provide a complete and detailed description of all services to be provided. This description assures that the contractor clearly understands the service they are to provide. The description must be explicit enough to be enforceable in the event of a dispute.

Attach to the purchase requisition any forms received from Contractor (i.e. maintenance agreements, license agreements, contracts, proposals, etc.). These forms will be reviewed by the Contracts Office for any terms and conditions that are prohibited by the Commonwealth of Pennsylvania prior to signing. Only the President or other party specifically delegated by the President in writing may sign a contract. No persons should sign a contract on behalf of the university unless they are specifically delegated to do so. A person without delegation who signs a contract will be acting outside the scope of his or her employment and will be held personally liable for obligations created by the inappropriate signing of the contract.

Services exceeding $1,500.00 require legal review and approval prior to the commencement of the work. Submit the request at least eight weeks in advance of date of commitment. This allows sufficient time to prepare the contract, and obtain the signatures of the contractor and all necessary Commonwealth Offices.

In addition to the above, services exceeding $20,100.00 require competitive bidding. An additional 3-4 weeks is needed for the bid process. Submit a minimum of 3 bidders and detailed specifications describing the services to be provided. When bidding is not possible a statement of justification must be submitted along with the request form stating why you have selected this group, etc. This justification will be reviewed by University Legal Counsel and Office of Attorney General when they consider the contract for approval.

Request for Purchasing Services To request services such as, but not limited to, equipment rental and maintenance, conference facilities, building services and maintenance, and computer software licenses and maintenance.

Honorarium To request consultant/guest speaker services

Bus Transportation Request To request services for bus transportation services. The contractor is Campbell's Bus Lines, Inc.