Business Affairs and Auxiliary Services

Negotiating and Entering into Contracts and Leases

 

Definition
Contracts are a binding business agreement between two or more parties for the supply of goods or services at an agreed upon price.

Leases are agreements by which one party conveys equipment, facilities, or real estate for a specified term and cost to another party.
 
Purpose
To ensure timely and appropriate formulation and internal review of contracts and leases entered into by Seton Hall University. To maintain proper business practices, inventory control, cost containment, and accounting treatment through the effective adherence to this policy.
 
General Overview - Review and Approval Process
Contracts and leases will generally involve either the University’s obtaining or supplying of goods or services. Depending on the planned arrangements, contracts or leases may have been preceded by a Request for Proposal (RFP) and both may require review and revision by Business Affairs, Procurement, Compliance and General Counsel. Contracts or leases for goods or services totaling over $500,000 must be approved by the University’s Board of Regents. Standard contracts (as defined below) for practicums, affiliations, honorariums, internships and other academic functions that have an expenditure of $10,000 or less may be approved and signed by the Provost. Standard contacts for speakers, performers, entertainers and other special services related to student development activities that have an expenditure of $10,000 or less may be approved and signed by the Vice President for Student Affairs. The Director of Business Affairs, from time to time, may determine that it is appropriate to have a standard contract reviewed more closely and signed as a non-standard contract. Only the President, the Executive Vice President for Administration and the Vice President for Finance and Technology shall have authority to sign: a) non-standard contracts or lease agreements and b) standard agreements with expenditures in excess of $10,000. Contracts and leases shall not be entered into by any other employee on behalf of Seton Hall University and no agreement consummated outside these guidelines herein shall be recognized by the University. Appropriate time frames need to be incorporated into planning processes leading up to contract or lease signing, as discussed herein.
 
Types of Agreements and Contracts
In addition to contracts or leases involving the purchase or supply or goods or services, other examples may involve the maintenance of capital equipment or affiliation with another organization.  Contracts or leases can also involve, but are not limited to, the following: licensing arrangements; property leases; research, articulation or exchange agreements involving transfer of credits; contracts involving special services such as immunization clinics; event-related arrangements or agreements with speakers being brought to the University; commitments involving entertainers including individuals, groups of performers and/or musicians, or theater groups; and agreements involving consultants or other “independent contractors”.
 
In general, all types of contracts or leases mentioned above will hereby be classified into two (2) main types:

  1. Standard - those entered into by Seton Hall University that will contain standard terms and conditions as developed by the university and previously approved by Legal Counsel, Compliance Office and Business Affairs.
  2.  Non-standard - those entered into that do not contain standard terms and conditions as developed by Seton Hall University. These are typically agreements where the vendor selected presents their own terms and/or agreement to the university for review and approval.

Requests for Proposals
When formulation of a contract or lease is preceded by a Request for Proposal (RFP), a formal bidding process will take place. The need for bidding will be determined by the level of financial commitment in question, and on the outcome of discussions between the requesting department and the Procurement Department. If an RFP is contemplated in connection with a business arrangement that will result in a contract, discussions with Procurement and initial formulation of the RFP needs to begin at least three (3) months prior to the planned effective date of the contract, so as to ensure appropriate time frames for review by the Board of Regents (if required), Procurement, General Counsel and Business Affairs.
 
Bid policy for the university is as follows:
 
All acquisitions of goods or services (with or without a contract or lease involved) that total over $10,000 must be transacted with at least two (2) bids being obtained. It is recommended, however, that for orders over $25,000 that a total of between three (3) to five (5) bids be obtained, but two (2) shall be the minimum. Bidding can be waived if the item or service being provided is being provided by a university preferred vendor (i.e. a vendor listed on the Procurement Department's preferred vendor list) or if the vendor is a sole provider of the good or service in question. Additionally, bids involving contracts or leases that total over $250,000 must be approved by the President of the University and bids involving contracts or leases that total over $500,000 must be approved by the Board of Regents. 

Insurance and Indemnification
The type(s) and levels of insurance coverage required for a given contract or lease will be determined based on discussion between the requesting department and Business Affairs. The Compliance Officer is also available for technical assistance, in determining appropriate terms of insurance and indemnification.
 
The University intends to transfer certain risk associated with its ownership of property, activities, repair and construction projects. Most non-insurance transfers are accomplished through provisions in contracts designed specifically for risk control transfer. The contract can contain indemnity and hold harmless agreements that can protect the University's interests.
 
The indemnification provision of a contract or lease outlines the management and transfer of risk, by establishing the circumstances in which parties to the contract will hold each other harmless in the event of a claim or suit that results from the activities or transactions specified in the contract. Typically each party to the contract or lease agrees to hold the other party harmless if it is determined that the issue that triggered the claim or suit was the result of the sole negligence of one or another signatory to the contract. The wording of an indemnification provision will be determined through discussion between the requesting department and Business Affairs, and, in turn, with the Compliance Office and General Counsel.
 
Each department head is responsible for the proper wording of the contract and its ramifications.
 
Specific Steps to be Taken Prior to Contract or Lease Signing  

  1. The first step in initiating a contract or lease is to determine if bids are required. To make that determination, review the bid policy terms mentioned above or contact the Procurement Department for assistance. If a lease is requested, the department and Procurement must additionally work with the Controller to determine if a lease or purchase is the better financial option for the university to entertain. After conducting the bid process (if necessary), a vendor is selected and contracted for product/services using either a non-standard university agreement or a standard university agreement.

  2.  If If a contract to be entered into is a standard university contract, the agreement should be forwarded to the Office of Business Affairs for review and approval. Any and all “standard contracts” or leases must be completed and attached to a Contract Review Routing Folder (see Attachment B). Since the agreement is of standard format and has been previously approved by General Counsel, a Contract Review Checklist is not necessary. All standard contracts should be signed by the contracting parties prior to final approval and signature by the Provost, Vice President for Student Affairs or other authorized University division head. The Director of Business Affairs, from time to time, may determine that it is appropriate to have a standard agreement reviewed more closely and signed as a non-standard agreement. If the standard agreement provides for expenditures that exceed $10,000, then the Business Affairs Office will direct the agreement to the President, the Executive Vice President for Administration or the Vice President for Finance and Technology for approval and signature.

  3. If a non-standard university agreement is entered into, a discussion concerning the intended business arrangement should take place with the Office of Business Affairs. That office will assist relative to contract language/format, and clarify, if required, the contract review process. Any and all proposed “non-standard contracts” or leases must be forwarded with a completed Contract Review Checklist (see Attachment A), attached to a Contract Review Routing Folder (see Attachment B) and sent to the Director of Business Affairs. The Checklist assists contract originator in ensuring that all relevant and necessary contract provisions have been incorporated into the draft document. The Director of Business Affairs will forward all non-standard contracts or leases to the university's Office of General Counsel for review.  A concurrent financial review will be carried out by Procurement and the University Controller if necessary. If the contract or lease is for goods or services over $500,000, it must additionally be approved by the university's Board of Regents.

Upon completion of review, the General Counsel will forward the non-standard contract to the Office of the Vice President for Finance and Technology for signature. Only the President, the Executive Vice President for Administration or the Vice President for Finance and Technology are authorized to enter into and sign non-standard contracts or leases for goods or services.

4. Original signed contracts or leases and pertaining documents are to be kept on file in Business Affairs. Copies of all signed contracts or leases are to be forwarded to the Office of General Counsel and the University Controller's Office.

Time Frames for Steps Pertaining to the Review Process
Planning for a contract or lease requires adherence to the following time frames:
 
If it is planned that a Request for Proposal will precede the review process, it should be anticipated that a period of lead time of at least three (3) months prior to the expected contract or lease start date would be appropriate to begin bidding, but contact the Procurement Department for assistance and advice.
 
The review process for a standard university contract or lease in which standard contract language (as currently approved by the Office of General Counsel) is used does not require Legal, Business Affairs or Compliance review but should commence at least two (2) weeks prior to the anticipated effective date of the contract.
 
The review process for a non-standard university contract or lease for a new agreement that does require Legal Counsel, Business Affairs or Compliance review needs to commence at least one (1) month prior to the anticipated effective date of the contract. 

Amended and Approved
Board of Regents
November 25, 2008
Amendment »

Effective Date
November 25, 2008

Effective Date

September 1, 2005

 
 
Contact Us

Business Affairs and Auxiliary Services
(973) 761-9002
Bayley Hall Rm. 200

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