Transcript Going Global: Factors to Consider Before Signing Up

International Contracting Issues:
Getting to the Nuts and Bolts
Minnesota State Colleges and Universities
CAO, CSAO and Deans Spring Meeting 2013
Mary Al Balber, Assistant General Counsel
Kris Kaplan, Deputy General Counsel
Minnesota State Colleges and Universities
The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.
Overview
 Pre-contracting considerations
 Types of international agreements
 Elements of good contracts
 Applicable system policies and procedures
 Special topics for international contracting
Board of Trustees 2010-2014
Strategic Plan
MnSCU and the State Operate in GLOBAL
Environment
Goal 2.2 requires graduates to have “strong, adaptable, globally
competitive and flexible skills.”
Strategic Direction 3: Provide learning opportunities, programs
and services to enhance the global competitiveness of the
state.
International Activities
Long-Established:
 Hosting international students and scholars on MnSCU
campuses;
 Study abroad
 Faculty-led or 3d party provider
Other types of international agreements and collaborations on
the rise . . .
Some Examples of System
Internationalization Initiatives
 Memoranda of Understanding (MOU)
 Faculty/student exchange programs
 Institution-wide or program-specific
 Joint degree programs
 Delivery of courses or training abroad in
collaboration with foreign institution
 Delivery of courses or training at MnSCU campuses
for international clientele
International Income/Customized Training
Contracts
 Require customized legal advice and are not included as part
of this presentation.

Possible issues include:
 tax consequences
 employment/employee issues
 “business presence”
 legal requirements/regulations of foreign countries
 Contact system legal counsel early in the planning process if
considering any international income/customized training
business transactions.
Put Globalization into Context
A Vision Thing
 Internationalization Strategy
 Goals grounded in college or university mission and core
values
 Defined benefits for students, faculty, community culture
and economic development
 Internationalization Plan
 Study abroad; curriculum development; student
recruitment and services
 Collaborative agreements
International Agreements
 Strategic Framework
 Rationales, goals
 Priority regions, programs, issues
 Alignment with current academic offerings
 Program Decisional Guidelines
 Further mission, core values
 Aligned with internationalization strategy, plan,
partnership framework
 Build in sufficient time for legal review, if needed
Take a Hard Look:
 “Due diligence” review of proposed collaborator:
 Who is this? Private or public?
 Have necessary resources to launch and sustain or even
expand partnership?
 How strong is their commitment?
 Track record? Other U.S. Institutions—have you inquired?
 Academic reputation?
 Culture, economics, politics of country?
The Minnesota State Colleges and
Universities Employee Code of
Conduct
 Code of Conduct – conflict of interest issues in
selection process?
 Remember that system contract procedures apply
 Our Code is a compilation of various existing statutes
and policies that govern employee conduct.
 Adopted as a system procedure
http://www.mnscu.edu/board/procedure/1c0p1.html
 Frequently Asked Questions are linked on the above
website.
 Effective July 1, 2008
Why Is Employee Ethical Behavior
Important?
 We are obligated to comply with law.
 Violations can result in
 Criminal penalties;
 Employment sanctions-including termination
International Agreements
 Most common in system:
 MOU or MOA
 Exchanges
 Study abroad service providers
Memorandum of Understanding
 A formal agreement between two or more parties
 Generally, not legally binding but they carry a degree of
seriousness and mutual respect
 Does not involve the exchange of money or resources
 Sets out the parties’ mutually accepted expectations to carry
out common objectives
 Stronger than a handshake agreement
 Often, MOUs are the first steps towards a legal contract
 Sometimes required by other party (or government) to begin
discussions of more substantive relationship
How are Contracts Different?
 The legal definition of a contract is: An agreement between
two or more persons/institutions that creates an obligation to
do or not to do a particular thing.
 Usually a document that is recognized by courts of law and
grant substantial rights to both parties. If either party defaults
on the conditions stated in the document, the other party
can file a case for breach of contract and seek damages.
 MnSCU contracts should address: purpose, payment, business
terms and responsibilities, term of agreement and
termination, intellectual property, jurisdiction, legal
requirements, liability, insurance and other important
provisions intended to protect you.
 International agreements other than MOUs should be
treated as contracts
 System policies and procedures apply
 Use system templates where available, or seek assistance
in crafting amendments if vendor contracts are used
 Campuses need procedures for processing any
international agreement that include
 Timely review of terms
 Appropriately authorized signatures
Typical International Exchange
Agreements Might Include:
 Identification of the campus contact and unit that will be
responsible for administering and implementing Agreement;
 Description of the activity to take place under the proposed
exchange Agreement;
 Identification of College/University Resources to be utilized;
 Duration of agreement, termination provision
 Description of any other campus commitments required.
 Financial obligations - including tuition support benefits, teaching
or research assistantships, travel expenses, housing, medical
insurance coverage, or maintenance allowances - must be
specifically stated in the agreement. If no such commitments are
intended, a general provision should make this clear.
Procedure 5.14.2
Consultant, Professional or
Technical Services
 Contracts must be prepared on forms approved by
the system office to assure that they include all state
required contract language. Any modification of
forms approved by the system office or the use of a
non-system office form requires the review of the
system legal counsel and approval of the vice
chancellor-chief financial officer.
Essentials of a Written Contract
 Clarity, completeness, and common understanding is essential;
 Supersedes previous oral discussions or “how we’ve always
done it;”
 After contract signed, if wish to change it, conversations or
e-mails to change the contract are not sufficient. Changes to
contracts (amendments) must be in writing and signed by the
parties;
 Contract must be signed before (!) the parties begin
performing duties under the contract
 Good practice and state law requires
 Good contracts are preventative care:
 Easier to work out issues before signing contract than to leave things
unaddressed or “silent” and risk breaching the contract and/or litigation
later.
Access Approved Contract Templates Here!
(Your FIRST stop for a Contract -- Bookmark!)
 MnSCU Finance Contracts website:
http://www.finance.mnscu.edu/contracts-purchasing/contracts/index.html
 What Contracts/Agreements are on the Site: Hotel Contract*
Professional/Technical* Prof./Tech. Amendment* Services Contract* Guest Lecturer*
Joint Powers* Inter and Intra Agency Agreements* Various Lease Agreements*
Maintenance Service Master Contract* Occupancy/Facility Use Agreements* Clinical
Affiliation Agreements* Income and Customized Training* Payment Card Industry
(PCI) Amendment Template…and more!!
 MnSCU Board Policies and Contract and Procurement Procedures:
http://www.mnscu.edu/board/policy/index.html
 Board Policy 5.14 Procurement and Contracts
 Procedure 5.14.2 Consultant, Professional or Technical Services
 Procedure 5.14.5 Purchasing
Request For Proposal - Resources
 MnSCU Request for Proposal Template
http://www.finance.mnscu.edu/contractspurchasing/contracts/forms/index.html
 Additional links and documents near bottom of
Contracts page:
 Procurement dollar threshold table (.pdf) (52KB)
March 2010 – Office of General Counsel
 Request for Proposal Template(.pdf) (155 KB)
Updated: 2009
Not a MnSCU Form or Template?
 College/university must review for essential elements,
prohibited provisions, practicality and business decisions,
logistics;
 Don’t assume that a provision suggested by a party can not
be changed or modified;
 If other party wants to use its contract form, consult with
MnSCU Office of General Counsel or Attorney General’s
Office for legal review and possible negotiation and
recommended changes, or drafting addendum or
amendment;
 Avoid “We’ll sign yours, if you’ll sign ours.”
Lead Time
 Plan accordingly – expect the best and
plan for the worst
 Use system templates and forms
 Allow time for negotiation, especially with foreign entities
 Answer questions: WHO, WHAT, WHEN, WHERE, HOW
MUCH, MISSION RELATEDNESS, BENEFITS TO
CAMPUS/MNSCU
 Not every contract can be an emergency
Consideration and Terms of Payment
 Compensation (Negotiate cost savings. It’s okay.)
 By deliverable or task, when possible
 Include rate of pay, how much for the services listed in the duties – in US
dollars
 Avoid a “lump sum” contract if possible-instead break down budget as much
as possible (helpful for tracking dollars if there is a dispute)
 Reimbursement of travel and subsistence expenses
 Vendor’s expenses need to be identified before the contract is written and
included in the total cost
 Per diem defined by Commissioner’s Plan
 Terms of Payment- “prompt payment”
 Agree to pay 30 days after invoice is received
 Ensure we are not prepaying for services unless otherwise permitted
Encumbrance** Mn. Stat. 16A .15 Subd. 3
 Has work/travel/obligations begun prior to contract’s full execution?
That is not allowed, per Minnesota Statutes MS16.A.15.
 Process an MS16A.15 Form, found at: http://www.finance.mnscu.edu/contractspurchasing/contracts/forms/index.html #1
 No signed contract without encumbrance
 Payment made in violation of statute is illegal
 Statute says: Employee authorizing payment is liable to the State for amount
paid.
 Statute says: If an employee knowingly incurs an obligation or authorizes or
makes an expenditure or payment in violation of statute, the violation is just
cause for removal.
Delegation of Authority
 Board Policy 1A.2.2
http://www.mnscu.edu/board/procedure/1a02p2.html
 Process and forms on Finance website
http://www.finance.mnscu.edu/about/delegationofauthority/index.html
 Must have delegated authority to sign contracts
to legally bind college/university
Indemnification And Liability
 Be alert for sections in other parties’ contracts headed:
Hold Harmless; Indemnification; Limitations on Liability; or
Liabilities.
Indemnification: a provision in the contract in which one party agrees
to pay damages or claims that the other party may be required to pay
to another.
Hold Harmless: a type of indemnity provision or clause that would
require one party to fully protect the other party from a claim asserted
by another. This may also include payment of costs and/or attorneys
fees.
 Colleges and universities prohibited by law from agreeing to indemnify
the other party to a contract (reference: Minnesota Constitution
article XI, section 1 and Minnesota Statutes section 16A.138).
Minnesota Statutes prohibit insurance of an obligation without an
encumbrance and the Minnesota Constitution provides that no money
is to be paid out without an appropriation.
Insurance
 All contracts generally require liability insurance
 Check with risk management for requirements for your proposed
activity:
Keswic Joiner at 651 201-1778
[email protected]
or
Marlys Williamson at 651 201-2591
[email protected]
 Study abroad health insurance: MnSCU has a contract with
HTH for health/accident insurance for travel abroad that may
be purchased; contact Keswic Joiner for assistance in
accessing information about that policy.
Data Issues
 Often, a CONTRACTOR will ask that MnSCU promise to
maintain the confidentiality or even the terms of the contract
itself.

We can’t do that unless the materials in question are classified as
private, confidential or protected nonpublic under the Data Practices
Act.
 Include provisions to protect system IP, where applicable,
including college/university name, logo
 Require vendor to obtain release from individuals for use of
their photos.
Amendments, Addenda and Exhibits
 When parties want to modify terms of existing
contracts:
 A superseding Amendment or Addendum is drafted  May modify, add, or supplement existing contract;

Signature and date by authorized representatives of both
parties needed for validity;

Amendments/Addenda reference existing contract, and
state how it is changed;
(cont.)
Exhibits
 Sometimes parties refer to Exhibits and incorporate them by
reference so that the exhibit is part of the contract, e.g.:
“Exhibit A, attached herein, and is incorporated by reference
in its entirety as part of this Agreement.”
 Frequently used to describe details of responsibilities or other
matters too lengthy or complex for the contract, such as exchange
agreements.
 AVOID attaching Vendor’s proposal or Vendor’s contract and
incorporating it by reference. WHY: Often contains terms and
language in conflict with agreed upon contract; includes other
terms not negotiated; is not specific in detail (“happy language”);
or includes terms that MnSCU is prohibited from agreeing to.
Frequently-Noted Issues
 Study Abroad Vendors
 “Free” travel, incentives offered to faculty
 Pre-payment for services
 Indemnification
 Publicity
 Insurance
Frequently-Noted Issues
 Exchange Agreements
 Use of term “partner”
 Visa assistance
 Homestays – if considering offering for incoming students,
or if incoming students may be minors, seek legal
assistance
 Keep control of academic standards
 Clearly assign responsibilities
 Choice of law/jurisdiction
 Contract in another language
Internal Campus Considerations For
International Contracts
 Understand/formalize and communicate campus review and
approval process for international agreements
 How do others find current agreements
 Consider internal brief reporting summarizing activity for
previous two years (if five year contract) or previous year,
including plan for remaining years of contract
 What are the exchange numbers for each year? Has it been
reciprocal?
 Could other programs at campus or MnSCU benefit from
participating? How?
Contracting Best Practices

Use most current template directly from Finance website each time you draft to avoid use
of outdated forms. Never modify or omit required clauses without AGO or OGC review.
Ensure no changes are made. If there are changes proposed by other party, contact our
office.

Understand your internal campus contract process for reviews, approval, and contract
management and post contract evaluation or monitoring. This sometimes involves multiple
departments and system office.

Follow the template instructions, proofread, check your math, and delete any instructions.

Ask: Does this make sense and would be clear to others unfamiliar with the contract ?

Never modify or omit required clauses without AGO or OGC review. Ensure no changes
are made. If there are changes by the contractor, contact our office.

Don’t agree to jurisdiction in another state or country without further legal review and
approval.

Be alert to attempts by the other party to change MnSCU contract template language to
limit their liability. Never modify or omit the required liability or insurance clause without
AGO or OGC review.

Don’t agree to indemnify the other party or to a mutual indemnification clause.

Avoid “we’ll sign yours if you sign ours.”

Avoid appearance of “junkets” with student or public resources and or funds.
International Contract Additional
Considerations
 Ensure foreign party is properly identified and full address included in MOU
or contract.
 Specify all payments in U.S. Dollars if contract is performed or payable
outside U.S.
 Ensure transparency in contract process (arms length transaction)
 Any export control/ITARs issues-contact system legal counsel
 Ensure term and termination, and any renewal process identified and
understood
 Ensure compliance with MnSCU travel policy and State Dept.
 Limit use of highly technical terms and jargon
 Spelling, formatting, grammar, punctuation, and general appearance of
document are professional and accurate
 Sufficient lead time for review and approval of campus units and legal
counsel
Consult Legal Counsel When . . .
 No MnSCU template is available
 Or the activity requires adding new provisions or changing
standard language
 Using third party’s template – even if an MOU
 To ensure provisions are legally appropriate
 If contemplating an activity that raises foreign
presence or operational legal issues
Helpful Contracts Coming Soon!
 “Sample” Memorandum of Understanding with
(Foreign) Affliliate Institution
 “Sample” International Services Contract
 Posting/Access location to be determined on website.
 Contact General Counsel’s Office if needed.
Resources
MnSCU Finance Contracts website:
http://www.finance.mnscu.edu/contractspurchasing/contracts/index.html
MnSCU Board Policies and
Contract Procedures:
http://www.mnscu.edu/board/policy/index.html
OGC Webinars page (to access past
contracts-related Webinars):
http://www.ogc.mnscu.edu/events/workshops.html
Resources
(Don’t leave home without us!)
 Office of General Counsel
 Gail Olson 651 201-1750 [email protected]
 Kris Kaplan 651 201-1749 [email protected]
 Mary Al Balber 651 201-1752 [email protected]
 Scott Goings 651 201- 1753 [email protected]
 Sarah McGee 651 201- 1410 [email protected]
 Risk Management (insurance)
 Keswic Joiner, Director of Risk Management- MnSCU
(651) 201-1778 [email protected]
 Marlys Williamson, State Program Admin Coordinator, Administration
Department
(651) 201-2591 [email protected]