FI0420 – Contracts

Effective: February 4, 2013
Revision No: 12
Topics:
Definition Contracting Authority
Applicability Executing Contracts
Conflict Of Interests Credit Applications
Independent Contractors Paying Contractors
Exceptions Forms
Procurement Requirements Procedures
Drafting Contracts Contacts
Reviewing Contracts Related Policies
Fiscal Review Committee Requirements
Objective:

To outline authority and responsibilities of University personnel with regard to drafting, reviewing, and executing contracts.

Policy:

Definition[top]

  1. A contract is any agreement between the University and another party that creates an obligation, right, or liability. An agreement may be a binding contract even though one party provides something of value to the other party at no charge.
  2. Examples of University contracts include, but are not limited to, the following types of agreements:  affiliation agreements; agreements for the purchase, lease, or rental of goods or services; agreements for the use of the University’s name, logo, or resources; agreements regarding use of intellectual property; agreements with hotels, convention centers, or other facilities; athletic agreements; banquet event orders; catering agreements; click-through terms and conditions (also known as shrink-wrap, click-wrap, online, or electronic terms and conditions, terms of use, or licenses); clinical service agreements; deeds; gift agreements not related to a University Foundation; instructional agreements; liability waivers; material transfer agreements (also known as MTAs); memoranda of agreement (also known as MOAs); memorandum of understanding (also known as an MOUs); nondisclosure agreements (also known as confidentiality agreements, NDAs, or CDAs); settlement agreements; software license agreements; subscription agreements; term sheets; and terms and conditions. 
  3. To ensure compliance with applicable laws, regulations, and policies, contracts are reviewed at various levels and may only be executed by authorized officials of the University.  (See sections of this policy on Contracting Authority and Executing Contracts for information about University officials authorized to execute contracts.)  Departments shall submit their contracts to the appropriate campus or institute contract or business office early enough to allow sufficient time for the contract review process to be completed, and for all parties to sign the contract, before the start date of the contract.  For more information regarding the time frame for processing contracts, departments should contact their campus or institute contract or business office.  Additional time is necessary for contracts that require approval by the State Fiscal Review Committee (See Fiscal Review Committee Requirements below).

Applicability[top]

  1. This policy applies to all contracts (including, but not limited to, the initial contract and to every amendment, change order, modification, renewal, or extension of the contract) regardless of dollar value.  The following types of contracts are exempt from this policy:

    1. Purchase orders (See FISCAL POLICY FI0410);
    2. Real property acquisition and disposition contracts (See FISCAL POLICY FI0620)
    3. Real property lease agreements (See FISCAL POLICY FI0625);
    4. Contracts that must be approved by the State Building Commission; and
    5. Contracts for legal services, including but not limited to outside counsel, expert witnesses, and consultants, procured by the Office of the General Counsel.

      Note: Only the General Counsel is authorized to procure legal services for the University.

         

  2. The following shall apply to sponsored grants and contracts:

    1. The campus research offices are responsible for drafting and reviewing domestic sponsored grants and contracts, material transfer agreements, and confidentiality agreements to ensure that they comply with this policy.  These agreements do not have to be routed through the review process outlined in this policy, and the campus research offices are responsible for maintaining all such grants and contracts in accordance with the University’s Records Management policy (See FISCAL POLICY FI0120). Also, the use of the standard University contract documents does not apply to research grants and contracts.
    2. All payable research contracts, however, need to be entered into IRIS to enable correct payments by the accounts payable staff.  The campus or institute business offices are responsible for ensuring that these contracts are properly entered into IRIS.   
    3. As noted in this policy, domestic sponsored grants and contracts can be executed by the Vice Chancellors for Research or designee approved by the Chief Financial Officer. (See Executing Contracts section below).  
    4. All foreign sponsored grants and contracts, regardless of dollar amount, must be reviewed by the University of Tennessee System Administration contract office and the Office of the General Counsel prior to execution. The campuses are responsible for establishing the review process for these agreements before they are submitted to the University of Tennessee System Administration contract office and the Office of the General Counsel.
    5. See FISCAL POLICY FI0205 for additional policies related to sponsored grants and contracts.
  3. A contract is not required for deposition or trial transcription services obtained from a firm or individual by the Office of the General Counsel. Any other services provided by court reporters are subject to this policy.
  4. The Audit Division of the State Comptroller's Office is staffed to service most of the University's needs and requirements for independent audits. However, when federal grants and contracts require an independent audit or other needs exist for auditing or specialized accounting services by firms, the appropriate chief business officer should furnish the Chief Financial Officer (or designee) and the treasurer, a detailed summary of requirements to present to the State Comptroller's Office to determine if the State Audit Division can handle these needs or requirements.

    If these needs cannot be serviced by the State Audit Division, a contract with an independent firm will be negotiated in accordance with procurement policy and this policy. In addition to complying with procurement policy and this policy, such contracts require prior approval of the University’s Chief Financial Officer and the State Comptroller, and must include the following provision:
     

    1. "All audit (or accounting or financial analysis) workpapers shall be made available for review by the State Comptroller, or State Comptroller’s representatives, upon request during normal working hours either while the analysis is in progress or subsequent to the completion of this contract."
  5. This policy does not apply in the event of any conflict with applicable law, state or federal regulations, provisions governing the use of federal grant or contract funds, or other binding contractual commitments.

Conflict of Interests[top]

  1. All contracts must comply with the University’s Conflict of Interests policy. Employees are expected to take all reasonable precautions to ensure that their outside financial interests do not place them in conflict with carrying out their duties and responsibilities as employees of the University, or as investigators. All employees are required to take the initiative and report in writing to their immediate supervisor any conflict of interests between their University duties and responsibilities, and their outside interests. Fiscal Policy FI0125 should be consulted for additional guidance and information.

Independent Contractors[top]

  1. If the proposed contract is with an individual who is providing a service, the department should use its best efforts to ensure that the individual qualifies as an independent contractor and not as an employee. If an individual fails to qualify as an independent contractor, the University cannot enter into a contract with the individual, and any compensation for services will be processed through payroll and applicable taxes will be withheld. The University of Tennessee System Administration Accounts Payable office, in consultation with the University’s tax professional, will make the final determination before a payment is processed. An independent contractor guide is provided in Appendix C to assist departments in making the correct classification. Departments should review this guide and consult with either the University of Tennessee System Administration Accounts Payable office or the University’s tax professional in the Controller’s office when they are unsure if the individual will qualify as an independent contractor.

Exceptions[top]

  1. In certain cases, the University’s Chief Financial Officer (or designee) may make exceptions to this policy.  Before an exception request is submitted to the Chief Financial Officer, it should first be approved by the appropriate campus or institute contract or business office, with input from the University of Tennessee System Administration contract office and Office of the General Counsel as appropriate. The Chief Financial Officer may require that exception requests be accompanied by documentation indicating (a) all reasonable attempts have been made to negotiate the inclusion of required contractual provisions and to exclude prohibited contractual provisions, or the reasons negotiation attempts have not been made (e.g., a deadline or other time constraint is pending); (b) the other contracting party is the sole source of the goods or services being sought by the University; (c) the goods or services are critical to the University’s mission; and (d) an assessment of the business and financial risks indicates that the benefit to the University of the goods or services outweighs any risks to the University.

Procurement Requirements[top]

  1. Before contracting with vendors to procure services, departments shall determine that the services are necessary and cannot be satisfactorily and economically performed or rendered by internal University resources. Internal resources must be used when available.
  2. Payable contracts must comply with the University’s Purchasing Policy. In general, all purchases by the University must be obtained through a competitive process, unless the total cost of the goods or services is less than $5,000 or a non-competitive purchase is approved in advance by the campus purchasing office and business office. (See FISCAL POLICY FI0415).
  3. Campus purchasing directors are authorized to issue purchase orders which are binding contracts generally awarded on a competitive basis. This is generally the most efficient manner to procure goods and services since once a purchase order is issued, no additional work is required by the department and they can begin buying items from that vendor. Note that vendors may request contracts, even if a purchase order is issued by the University.

    If the vendor or the University requires a contract (other than a purchase order), regardless of the dollar amount and regardless of whether the goods or services were procured in a competitive manner, the department must submit the contract to the appropriate campus or institute contract or business office for review, and the contract can only be signed by an authorized official of the University. A list of individuals authorized to sign on behalf of the University is available on the University of Tennessee System Administration contract office’s website. Departments are encouraged to work with their purchasing department and the proposed vendor towards the issuance and acceptance of a purchase order in lieu of a contract.

  4. Contracts with current The University of Tennessee, Tennessee Board of Regents or other State of Tennessee employees for goods or services are prohibited. Other prohibitions may also apply, e.g., regarding conflicts of interests (see FISCAL POLICY FI0125). Contracts with former employees for goods or services are likewise prohibited for six months after termination. This restriction, however, does not apply to individuals who are classified as "friends" or individuals who have a "special appointment" and who have not been paid in the last six months. See FISCAL POLICY FI0445 for policies on contracting with other State agencies, including the Board of Regents.

Drafting Contracts[top]

  1. To expedite the contract review process, departments should use the University’s standard contract documents whenever possible (See Appendix A). If the vendor will not accept the University’s standard contract documents, the department should consider selecting a different vendor before agreeing to work with the vendor in drafting a contract. The University requires various provisions and there are also numerous clauses that the University cannot agree to due to State statutes or other regulations. A non-exclusive list of these provisions is listed below and campus or institute contract or business offices should make every effort to ensure compliance. Failing to comply will result in a longer review process, since the campus or institute contract or business office and/or Office of the General Counsel will then attempt additional negotiations with the vendor or alternative language may have to be drafted. Departments should first contact their campus or institute contract or business office for advice and assistance. The campus or institute contract or business office will coordinate with the University of Tennessee System Administration contract office and the Office of the General Counsel for drafting complex contracts, or negotiating terms and conditions with external parties.
  2. When amending an existing contract, the University’s standard contract amendment form should be used whenever possible (See Appendix B).  Contract amendments are subject to the same review procedure as the original contract and departments should attempt to draft them in accordance with the applicable provisions listed below.
  3. Required Provisions. Because the University is a state agency, there are numerous clauses that may be required in certain circumstances.  Below is a non-exclusive list of required clauses:

    1. Maximum Financial Obligation: Generally, contracts requiring the University to pay a vendor for a good or service should contain a clause capping the amount that the University will pay under the contract for the goods and services.

      Example: The maximum amount that The University of Tennessee will pay for goods and services under this contract is $________ [insert dollar amount] (“Maximum Financial Obligation”). The University of Tennessee’s Maximum Financial Obligation is not subject to increase for any reason, unless this contract is amended by a written amendment that is signed by authorized officials of both parties.

    2. Illegal Immigrants Attestation: If the contract involves the acquisition of either goods or services by the University, the following provision must be included in either the contract terms or as a separate attestation document:

      “In compliance with the requirements of Tennessee Code Annotated § 12-4-124, the Contractor hereby attests that the Contractor shall not knowingly utilize the services of an illegal immigrant in the United States in the performance of this Contract and shall not knowingly utilize the services of any subcontractor who will utilize the services of an illegal immigrant in the United States in the performance of this Contract.”

      Note: The provision may be modified to replace the word “Contractor” with the individual’s or entity’s name or as may otherwise be provided in the remainder of the contract.

    3. Safety and Environmental Standards: If the contract involves acquisition of services by the University, the following provision must be included in the contract:
       

      “Any activities performed within The University of Tennessee facilities in support of this Contract shall be executed in accordance with all applicable safety and environmental standards. Covered activities include but are not limited to the installation, servicing and maintenance of devices or equipment. Requisite safety standards include those promulgated by the Tennessee Occupational Safety and Health Administration (TOSHA), the Tennessee Department of Environment and Conservation (TDEC), Tennessee Division of Radiological Health, and any other regulation or related consensus standards which may apply to the device, equipment, or services covered under this Contract. All hazardous substances and materials, including waste, under the control of the Contractor shall be managed in accordance with applicable Environmental Protection Agency (EPA) and TDEC regulations.”

      Failure to abide by regulatory requirements may result in termination of the Contract by the University. Any fines imposed against the University as the result of a Contractor’s failure to abide by regulations shall be the Contractor’s responsibility.

    4. Audit: Tennessee Code Annotated § 8-4-116 subjects entities contracting with state or local government agencies to audit by the State of Tennessee Comptroller of the Treasury. Accordingly, the following clause must be added to the University’s payable contracts:

      “The Contractor shall maintain documentation for all charges against the University under this Contract. The books, records and documents of the Contractor, insofar as they relate to work performed or money received under this Contract, shall be maintained for a period of 3 full years from the date of the final payment, and shall be subject to audit, at any reasonable time and upon reasonable notice, by the University or the Comptroller of the Treasury, or their duly appointed representatives. These records shall be maintained in accordance with generally accepted accounting principles.”

    5. Contract Length: Contracts shall not be executed for longer than five years except in one of the following circumstances:

      1. Contracts longer than five years may be executed when either substantial savings to the University will result, or when a special project requires continuing a particular contractor's services for longer than five years.
      2. Contracts longer than five years may be executed if the contract is with any governmental unit, if the contract requires no expenditure of funds by the University, or if any statutes or regulations specifically authorize a longer-term contract in a particular case.
      3. Contracts with coaches and other athletics personnel for longer than five years may be executed.
      4. Affiliation agreements for longer than five years may be executed.
    6. Note: Contracts exceeding one year in duration may require approval by the Fiscal Review Committee of the Tennessee General Assembly (See the Fiscal Review Committee section in this policy.)
  4. Prohibited Provisions: Because the University is an instrumentality of the State of Tennessee, it is prohibited by law from agreeing to various common contractual clauses. Below is a non-exclusive list of common contractual clauses to which the University cannot agree. In general, prohibited provisions must be deleted in their entirety from contracts. If there are acceptable modifications with regard to certain prohibited provisions, they are listed below:

    1. Arbitration, Mediation, or other Alternative Dispute Resolution: Clauses that obligate the University to participate in binding or nonbinding arbitration, binding mediation, or other binding types of alternative dispute resolution.
    2. Attorneys’ Fees, Expert Fees, Collection Costs, or Court Costs: Clauses that obligate the University to pay another party’s attorneys’ fees, expert fees, costs of collection, or court costs.
    3. Audit: Clauses that would obligate the University to pay another party’s costs related to an audit of the University.
    4. Confidentiality or Other Non-Disclosure: Clauses that obligate the University to maintain the confidentiality of, or otherwise not disclose, certain information.
    5. Contracting Party: Language that identifies the contracting party as an individual campus, department, or other unit of the University.

      Acceptable modification: The University of Tennessee.

      Note: The contracting party must always be “The University of Tennessee,” and generally should not list a campus or institute as a part of the contracting party name. To include a campus or institute, the contracting party may be referred to as follows: “The University of Tennessee, on behalf of its ________.” [Insert name of campus or institute].

    6. Equitable Remedies/Remedies in Equity:  Any reference to another party having a right to remedies in equity, equitable remedies, injunctive relief, declaratory relief, or specific performance against the University to enforce the contract. 
    7. Exclusivity:

      Note: This prohibited provision does not relate to contracting with an entity that is the sole source of goods or services. Instead, it relates to agreeing by contract to purchase goods or services exclusively from a single vendor when other vendors are available.

      1. Clauses providing that another party will be the exclusive provider of goods or services to the University.
      2. Clauses providing that another party will have the exclusive right to negotiate for future contract (for example, a right of first refusal).
      3. Clauses providing that the University will provide goods or services exclusively to the other party.
    8. Governing Law (or Choice of Law): Clauses stating that the contract is governed by the laws of another state or another country.

      Acceptable modification: State of Tennessee.

      Note: The first proposal for modification of a governing law should always be substituting Tennessee law as the governing law. If the other party is unwilling to agree that the Tennessee law will govern the contract then the governing law provision should be deleted in its entirety.

    9. Indemnity, Hold (Save) Harmless, Defense: Clauses obligating the University to indemnify or hold (save) harmless another party or to defend any legal action against another party.

      Acceptable modification: Delete provision in its entirety and substitute the following language:

      Any liability of the University to [insert name of other party] and third parties for any claims, damages, losses, or costs arising out of or related to acts performed by the University under this agreement shall be governed by the Tennessee Claims Commission Act, Tenn. Code Ann. §§ 9-8-301 et. seq.

    10. Injunction: Clauses granting another party the right to seek or obtain an injunction or restraining order against the University for any reason, including breach of the contract.
    11. Interest: Clauses granting another party the right to recover interest on overdue payments in excess of the amount allowed by the Tennessee Prompt Pay Act, Tenn. Code Ann. §§ 12-4-701 et. seq. (currently 1.5% per month/18% per annum).
    12. Jurisdiction or Venue (Forum Selection): Clauses in which the University consents to jurisdiction or venue in any state (including Tennessee) or federal court or the court system of another country.
    13. Liability Insurance or Performance Bonds: Clauses that impose upon the University the obligation to purchase liability insurance or obtain a performance bond.

      Acceptable modification for liability insurance language: Delete provision in its entirety and substitute the following:

      The University of Tennessee is self-insured under the Tennessee Claims Commission Act, Tenn. Code Ann. §§ 9-8-301 et seq., which covers certain tort liability for actual damages of up to $300,000 per claimant and $1,000,000 per occurrence.

      Note: This modification is appropriate only for a liability insurance requirement. Language requiring the University to obtain a performance bond shall be deleted entirely.

    14. Limitation of Liability: Clauses that limit the liability of another party to the University.
    15. Limitation of Time during which University May File a Suit Against Contractor: Clauses that limit the amount of time that the University can file suit against the contractor and/or third parties.  
    16. Multi-year Commitment of Funds:Clauses committing University funds beyond the current fiscal year if payment is to be made from operating funds or other unencumbered funds.

      Acceptable Modification: Insert an “out clause” allowing the University to terminate the contract either for convenience or for insufficiency of funds. Suggested clauses are as follows:

      Option 1: “This agreement is subject to the appropriation and allocation of state funds. Since the Agreement is for a term extending beyond a single fiscal year of the University, in the event the University does not receive appropriate funds for the payment required under this Agreement for any fiscal period, the Agreement should be deemed terminated at such time at no penalty to the University.”

      Option 2: “At its convenience the University may terminate this Agreement, without cause and for any reason, by providing thirty (30) days written notice to the other party. In the event of a termination under this provision, the University shall have no further liability under the Agreement.”

    17. Principal Investigators: Clauses requiring that the principal investigator sign the contract or otherwise be authorized to bind the University. Principal Investigators may sign an acknowledgement similar to the following: Investigator, while not a party to the Agreement, hereby acknowledges that he/she has read the Agreement and understands his/her obligations as a UT employee to abide by the provisions herein.
    18. Punitive, Exemplary, or Treble Damages: Clauses obligating the University to pay punitive, exemplary, or treble damages for breach of the contract.
    19. Responsibility for Acts of Others: Clauses imposing responsibility on the University for acts or omissions of anyone other than University officers or employees. The University is prohibited from assuming liability for the acts or omission of its students, subcontractors, invitees, guests, representatives, or any other third party.
    20. Responsibility or Liability: Clauses imposing responsibility or liability on the University for claims, damages, losses, or costs related to the contract. This is a variation of an indemnity/hold harmless clause. Typical language is: “The University shall be responsible (or liable) for all claims for damages arising out of the performance of this contract.”

      Acceptable Modification: Same as above for Indemnity, Hold (Save) Harmless, Defense.

    21. Taxes: Clauses obligating the University to pay taxes incident to the contract in locations where the University is tax-exempt.

      Acceptable Modification: Add the following statement: “The University will pay taxes imposed directly on it.”
      Note: A list of locations where the University is tax-exempt is located on the Controller’s Office website.

    22. Third-Party Beneficiary: Clauses granting or recognizing the right of a third party (someone not a party to the contract) to bring a legal action against the University to enforce the contract.
    23. University Employee as Party to a Separate Contract: Except in the case of contracts with the federal government or a management and operations contractor for the federal government, a University employee’s obligation to sign a separate contract with the other party concerning any matter related to the contract. For example, requirement that an employee sign a separate confidentiality agreement or a waiver of liability.
    24. Waiver of Warranty: Clauses that waive or limit the warranty obligation of another party under the contract.

Reviewing Contracts[top]

  1. After a draft contract is prepared containing the appropriate business terms and the department is certain that it can comply with the University’s obligations in the contract, the contract must then be entered into IRIS, which will generate a Contract Review and Approval Form.  The Contract Review and Approval Form must be completed by the department for each contract, attached to the contract, and sent to the appropriate campus or institute contract or business office.

Note: Contract Review and Approval Forms are generated in IRIS.  Information for creating this form is located on the training section of the IRIS website (http://iris.tennessee.edu/) under “IRIS Help/Documentation.”  Campus or institute contract or business offices, or the University of Tennessee System Administration contract office, can provide assistance regarding this IRIS transaction.

  1. Each campus or institute contract or business office is responsible for establishing a review and approval process for its area.  This process must ensure that the contract complies with this policy and the applicable certification sections of the contract review form are completed.  Campuses and institutes are also responsible for forwarding the form and contract to the appropriate office for execution on behalf of the University.
  2. All applicable contracts must be reviewed by the appropriate campus or institute contract or business office, and when appropriate, the University of Tennessee System Administration contract office, before being executed (signed) on behalf of the University by an authorized official. Campuses, institutes, and units are responsible for reviewing all contracts in accordance with the following considerations:
     

    1. Compliance with University fiscal policies;
    2. Deletion or modification of prohibited provisions;
    3. Fairness of proposed rates of compensation;
    4. Price per unit of service or goods being acquired;
    5. Clear articulation of payment terms and conditions, and the requirement for an itemized invoice is included (when applicable); and
    6. Departments are responsible for making the necessary approvals on the Contract Review and Approval Form.
  3. Generally, contracts should not be sent to vendors for review until all necessary University review has occurred.

Fiscal Review Committee Requirements[top]

  1. In addition to review by campus officials, certain contracts require presentation to the Fiscal Review Committee of the Tennessee General Assembly.  These requirements are listed below and departments must be familiar with them to ensure that their contracts comply with these requirements.  If departments have any questions regarding the Fiscal Review Committee, departments should contact the University of Tennessee System Administration contract office.
  2. Pursuant to Tennessee law, the Fiscal Review Committee of the Tennessee General Assembly is required to review and comment on proposed non-competitive contracts with a term (time period) of more than one year and a cumulative payable value of $250,000 or more.
  3. The University must also submit amendments to payable contracts equal to or exceeding $250,000 and that have a term of longer than one year to the Fiscal Review Committee, even if the initial contract was procured competitively.  Amendments might include changing the vendor’s name, increasing or decreasing the University’s maximum payment obligation, or changing the services being offered and/or length of the contract.  If a provision for extension of time and increasing funding were addressed in the initial contract, then the amendment may not be required to be submitted to the Fiscal Review Committee.
  4. The following contracts are exempt from the Fiscal Review Committee reporting requirement:

    1. Contracts submitted to the State Building Commission;
    2. Sponsored grants and contracts;
    3. Contracts for training medical residents and interns (a written summary of these contracts will be provided annually to the Committee);
    4. Revenue producing contracts;
    5. Maintenance agreements for equipment or software when the equipment or software was procured competitively (a written summary of these contracts will be provided to the Committee quarterly);
    6. Library subscription contracts and electronic database contracts that are only available from one source (a written summary of these contracts will be provided to the Committee quarterly); and
    7. Amendments to contracts for enterprise resource planning systems (e.g., SAP (IRIS), Banner, and similar systems) that were procured in a competitive manner (a written summary of these contracts will be provided to the Committee annually).
  5. The University of Tennessee System Administration contract office is the University’s liaison with the Fiscal Review Committee.  Any contracts or amendments that need to be presented to the Committee should first be submitted to the appropriate campus or institute contract or business office.  After appropriate review, the campus or institute contract or business office will forward the contract to the University of Tennessee System Administration contract office as well as any questions regarding these requirements. Departments are responsible for providing the appropriate campus or institute contract or business office and University of Tennessee System Administration contract office with information requested by the Fiscal Review Committee.  The Fiscal Review Committee requires most contracts be formally presented to the Committee in person.  Campus or institute chief business officers are responsible for determining the appropriate individuals to present their contracts before the Fiscal Review Committee.  The University of Tennessee System Administration contract office will not present contracts before the Fiscal Review Committee.
  6. The Fiscal Review Committee requires contracts or amendments to be submitted to the Committee at least 60 days prior to the start date of the contract or amendment.  Before contracts can be submitted to the Fiscal Review Committee for approval, departments must ensure that the NCJ is fully approved, and that the appropriate business, contract, and legal review at the University is complete.  Because the Fiscal Review Committee requires contracts and amendments to be submitted no less than 60 days before the contract or amendment start date, contracts and amendments must be received by the University of Tennessee System Administration contract office at least 90 days in advance of the contract or amendment start date.

Contracting Authority[top]

  1. Delegated Contracts. Subject to compliance with all applicable fiscal policies, and subject to deletion or acceptable modification of prohibited provisions, the following types of contracts are delegated for execution by authorized campus and unit officials unless they fall within one of the categories of non-delegated contracts described in section 31:

    1. All contracts involving the transfer of funds to or from the University in the amount of $100,000 or less, provided that in determining whether the $100,000 limitation is satisfied, the net effect of funds flowing between the parties shall not be considered but only the stated dollar amounts to be transferred to or by the University (e.g., if the contract requires the other party to pay the University $90,000 while committing the University to pay $120,000 in other costs, the contract is non-delegated because it commits the University to pay $120,000 regardless of any other provision of the contract).
    2. All contracts, regardless of amount, in one of the following categories:

      1. Contracts with domestic entities for research to be conducted by the University; applications for grants and awards to the University from domestic entities; and agreements governing grants and awards to the University from domestic entities;
      2. Contracts with the State of Tennessee and its agencies (including the Tennessee Board of Regents and its institutions). (See FISCAL POLICY 445 for more details regarding employment/dual services contracts between the University and the State of Tennessee and its agencies);
      3. Contracts for event rental of University facilities;
      4. Contracts for scheduling athletics events; or
      5. Contracts for the rental of student housing.
  2. Note: MOUs, MOAs, letters of intent, and similar documents might be considered by a court to be binding on the University by their terms, even if they are called “non-binding” agreements. Such “non-binding” agreements are delegated only if they fall within one of the categories of delegated contracts described in this section.
  3. Contract Amendments.  Amendments to delegated contracts may also be executed by authorized campus or institute officials provided the amendment and the University’s cumulative payment amount for the initial contract plus all amendments is equal to or less than $100,000.
  4. Non-delegated Contracts. The following contracts may not be executed by campus or unit officials, regardless of dollar amounts, even if they fall into one of the categories of delegated contracts:
     

    1. Leases of real property to or by the University if the amount is more than $25,000 per year or the term is longer than five years. (This does not apply to pre-approved lease forms for student housing);
    2. Contracts for purchase or sale of real property;
    3. Memoranda of agreement to establish endowments; charitable remainder annuity trust agreements; and charitable remainder unitrust agreements;
    4. Contracts for participation in bowl games and regional or national athletic tournaments;
    5. Contracts with coaches and other athletics personnel;
    6. Contracts for the University’s endorsement of goods or services, indicia licensing, promotions, and sponsorship agreements;
    7. Contracts with individuals who are citizens of a foreign country, foreign governments, or companies whose principal office or contracting unit is located in a foreign country;
    8. Contracts for accounting, auditing, or fiscal management services;
    9. Post-retirement service contracts and retirement incentive agreements;
    10. Settlement agreements;
    11. Affiliation agreements involving any transfer of funds exceeding $100,000 to or from the University;
    12. Affiliation agreements with faculty physician practice plans;
    13. Affiliation agreements with teaching hospitals for graduate medical education programs;
    14. Contracts for the provision of administrative, technical, professional, management, or executive services by a University employee to another party (except the State of Tennessee and its agencies) under the direction and control of the other party, including but not limited to an agreement to lease or loan a University employee to another party.

Executing Contracts [top]

  1. All contracts must be executed by an officer of the University (as defined in the University Bylaws, Article IV, Section I) unless authority to sign the specific type of contract is delegated to specific campus, institute, or unit officials.  Campus officials are only authorized to execute delegated contracts for their campus/institute.  A list of officials authorized to sign contracts on behalf of the University is available on the University of Tennessee System Administration’s contract office’s website: http://treasurer.tennessee.edu/contracts/contractsignature.html
  2. Execution of a delegated contract. Contracts to be executed at the campus, institute, or unit level must be sent to the appropriate campus or institute contract or business office.  After signatures for both the University and the other party are obtained, the original, fully executed contract along with the contract review form must be sent to the University of Tennessee System Administration contract office for the official files.
     

    1. The following University officials are authorized to execute delegated contracts for their respective campus, institute, or unit:

      1. Chancellors;
      2. Vice president for public service;
      3. Chief business officers;
      4. Vice chancellors for research (domestic sponsored grants and contracts); and
      5. Other officials specifically designated by the University’s Chief Financial Officer (or designee) by a formal letter signed by the Chief Financial Officer (or designee).
    2. Officials authorized to execute contracts may not delegate this authority to anyone except other authorized officials. Authorized officials, however, may delegate authority to athletics directors to sign non-financial game contracts; to housing directors to sign pre-approved form contracts for the rental of student housing; or to 4-H Center managers to sign income generating rental agreements. Other delegations require prior approval by the University’s Chief Financial Officer.
  3. A large majority of contracts delegated to campus or unit officials do not require prior legal and fiscal review by University of Tennessee System Administration.  Authorized officials, however, must exercise sound discretion to recognize circumstances in which a proposed contract should be brought to the attention of appropriate University of Tennessee System Administration officials, even though the contract will not be submitted for University of Tennessee System Administration legal and fiscal review.
  4. Execution of a non-delegated contract. All non-delegated contracts must be executed by an officer of the University (as defined in the University Bylaws, Article IV, Section I). Chancellors are only authorized to sign non-delegated contracts related to their campus/institute, and the Chief Financial Officer must also be a signatory on any non-delegated contract signed by a Chancellor. After campus or unit contract or business office review, non-delegated contracts must be sent to the University of Tennessee System Administration contract office for processing through fiscal and legal review before the contract may be signed on behalf of the University. The original, fully executed contract must be sent to the University of Tennessee System Administration contract office for the official file. 
  5. Faxed, scanned/emailed, and photocopied contracts from the other party are acceptable and will be considered the equivalent of an original by the University.
  6. In the event a party requires a non-delegated contract to be signed by an authorized official whose signature authority is limited to delegated contracts, the contract must always have the signature of the Chief Financial Officer or other University of Tennessee System Administration officer authorized to execute a non-delegated contract (e.g., Executive Vice President).
  7. An official otherwise authorized to execute a contract on behalf of the University may not do so for contracts involving entities in which that individual is also an officer or a member of the board of directors.  Examples of such entities include the UT Foundation, UC Foundation, UT Research Foundation, affiliated teaching hospitals, and faculty physician practice plans.

Credit Applications [top]

  1. Credit applications should be treated as contracts, but do not need to be entered in IRIS. 

Paying Contractors [top]

  1. Payments to contractors must be processed in accordance with FISCAL POLICY FI0515.

Forms[top]


PROCEDURES
Knoxville:  http://budget.utk.edu/fiscal-policy/
Health Science Center:  http://www.uthsc.edu/policies/w932_document_list.php?app=FSC
Institute of Agriculture:  https://ag.tennessee.edu/Pages/UTIApolicies.aspx
Martin:  http://www.utm.edu/departments/finadmin/procedures.php
Chattanooga: http://www.utc.edu/business-financial-affairs/fiscalpolicies.php

FOR MORE INFORMATION

Blake Reagan  (865) 974-2302  breagan@tennessee.edu