Transcript Jack Royalty, Assistant Director Finance & Administration

PROCUREMENT 101
“The Essentials”
Building Blocks
POLICIES AND PROCEDURES
ADMINISTRATIVE REGULATIONS
KENTUCKY MODEL PROCUREMENT CODE
Kentucky’s Procurement
Law
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American Bar Association’s (ABA)
Model Procurement Code was
adopted by Legislation in 1978 and
became law in 1979.
Kentucky was the first state to
adopt this procurement code.
There are currently 18 states
operating under this code.
KRS Chapter 45A is the statutory
location of the Model Procurement
Code.
Kentucky’s Procurement
Law
•ABA drafted the MPC as a result of
numerous public purchasing scandals
across the country;
•It’s a Model Code and not a Uniform
Code;
•Highly flexible statutory framework;
•Establishes a set of ethical standards.
KRS 45A.010
- Purposes and Policies
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(2) The underlying purposes and policies of this
code shall be:
(a) To simplify, clarify, and modernize the law
governing purchasing by the Commonwealth;
(b) To permit the continued development of
purchasing policies and practices;
(c) To make as consistent as possible the
purchasing laws among the various states;
(d) To provide for increased public confidence in
the procedures followed in public procurement;
(e) To insure the fair and equitable treatment of all
persons who deal with the procurement system of
the Commonwealth;
(f) To provide increased economy in state
procurement activities by fostering effective
competition; and
(g) To provide safeguards for the maintenance of a
procurement system of quality and integrity.
KMPC
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KRS 45A.050 – KRS 45A.340
State Government
–
–
–
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45A.050 – 45A.067 – Definitions, Exemptions to
centralization of procurement, Finance Cabinet
authority to promulgate Regulations;
45A.070 – 45A.170 – Methods of awarding state
contracts, Competitive Sealed Bidding,
Competitive Negotiation, Small Purchases;
45A.180 – 45A. 340 – Capital Construction,
Bonds, Protests, Conflicts of Interest;
KRS 45A.343 – KRS 45A.460
Local Governments
KMPC

KRS 45A.500 – 45A.540 - Recycled
Material Content Products
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KRS 45A.550 – 45A. 570 Privatization Contracts

KRS 45A.600 – 45A.725 Miscellaneous Procurement
Provisions
–
Personal Service Contracts
KMPC
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KRS 45A.730 – 45A.750 – Procurement of
Architectural and Engineering Services
KRS 45A.800 – 45A.838 – Architectural and
Engineering Services
KRS 45A.840 – 45A.879 – Underwriter and
Bond Counsel Services
KRS 45A.990 – Penalties
KRS 45A. 990 - Penalties
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KRS 45A.045 – Disposal of Surplus Real
and Personal Property – Class D Felony
KRS 45A.325 – Collusion – Class D
Felony
KRS 45A.330 to 340 – Conflicts of Interest
– Class B Misdemeanor
KRS 45A.690 to 725 – Personal Service
Contracts – Class A Misdemeanor
Administrative Regulations
Title 200 Chapter 5
For Example:
 306 - Competitive Sealed Bidding
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307 - Competitive Negotiations
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310 - Multiple Contracts
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312 - Termination of Contracts
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380 - Protests
Competitive Sealed
Bidding
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KRS 45A.080 Competitive sealed bidding
–
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(4) Bids shall be opened publicly at the time and
place designated in the invitation for bids….
200 KAR 5:306. Competitive sealed bidding
–
Section 2. The purchasing officer or other
employee of the purchasing agency designated
to open the bids shall determine when the time
set for opening bids has arrived and shall so
declare the time to those present for the bid
opening. The purchasing officer or designee
shall, in the presence of all persons in
attendance, open all bids received as of that
date and hour. If practical, the names of the
bidders and the amounts of their bids may be
read aloud to the persons present.
Policies and Procedures
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FAP 111-35-00 Competitive Sealed
Bidding
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10.
Opening of Bids: At the time
designated for bid opening, online and
hardcopy bids shall be opened and may
be read or otherwise made available to
the public. No late online bid responses
shall be received or considered. A
hardcopy bid received after the time
specified in the Solicitation shall not be
considered, unless no other bids are
received.
Familiarize Yourself With the
Following in the Policies and
Procedures Manual:

FAP-111-08-00
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FAP-111-09-00
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FAP-111-10-00
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Exceptions to
Sealed Bidding (By
Law or Regulation)
Exceptions to
Sealed Bidding
(Not Practicable /
Feasible)
Exceptions to
Sealed Bidding
(Sole Source)
Four Basic Methods of
Procurement Under KMPC
(KRS 45A)
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Competitive Sealed Bidding (KRS 45A.080)
Conducted by FAC’s Office of Procurement Services
for aggregate purchase of $20,000 or more.
Competitive Negotiations - RFP (KRS 45A.085)
Large dollar amounts - Determination and Finding
required.
Non-Competitive Negotiations (KRS 45A.095)
Examples: Sole Source, Emergency- Determination
and Finding Required.
Small Purchases (KRS 45A.100) Aggregate amounts
less than your agency’s authorized dollar amount.
Most agencies = $1,000 with single quote.
Kentucky
Preference
Laws
KRS 45A.494 - Reciprocal
preference for Resident
Bidders
“Prior to a contract being awarded
to the lowest responsible and
responsive bidder on a contract by
a public agency, a resident bidder
of the Commonwealth shall be
given a preference against a
nonresident bidder registered in any
state that gives or requires a
preference to bidders from that
state. The preference shall be equal
to the preference given or required
by the state of the nonresident
bidder.”
Tie Bid
If a procurement results
in a tie between a
resident bidder and a
nonresident bidder,
preference shall be given
to the resident bidder.
KRS 45A.494 – Reciprocal
Preference for Resident
Bidders
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Applicability
Applies to all contracts funded or controlled
in whole or in part by a public agency.
“Contract” means any agreement of a public
agency, including grants and orders, for the
purchase or disposal of supplies, services,
construction, or any other item.
“Public agency” has same meaning as KRS
61.805 (Open Meetings Law definition).
KRS 45A.494 - Reciprocal
preference for Resident Bidders
1.
2.
3.
Resident Bidder
An individual, partnership, association,
corporation, or other business entity that, on
the date the contract is first advertised or
announced as available for bidding;
Authorized to transact business in the
Commonwealth; and
For 1 year prior to and through the date of the
advertisement, filed Kentucky corporate
income taxes, made payments to the
Kentucky unemployment insurance fund
established in KRS 341.490, and maintained a
Kentucky workers' compensation policy in
effect.
KRS 45A.494 - Reciprocal preference
for Resident Bidders
Nonresident Bidder
An individual, partnership,
association, corporation, or other
business entity that does not meet
the requirements to be considered a
resident bidder.
KRS 45A.494 - Reciprocal
preference for Resident Bidders
1.
2.
Other Requirements
The Finance and Administration Cabinet
shall maintain a list of states that give to
or require a preference for their own
resident bidders, including details of the
preference given to such bidders, to be
used by public agencies in determining
resident bidder preferences.
The cabinet shall also promulgate
administrative regulations in accordance
with KRS Chapter 13A establishing the
procedure by which the preferences
required by this section shall be given.
KRS 45A.494 - Reciprocal
preference for Resident Bidders
Other Requirements (cont.)
3.
4.
The preference for resident bidders shall
not be given if the preference conflicts
with federal law.
Any public agency soliciting or advertising
for bids for contracts shall make KRS
45A.490 to 45A.494 part of the solicitation
or advertisement for bids.
200 KAR 5:400. Kentucky
Resident Bidder Reciprocal
Preference.
Section 1. Definitions.
(1) "Contract" is defined by KRS 45A.490(1).
(2) "Nonresident bidder" is defined by KRS
45A.494(3).
(3) "Public Agency" is defined by KRS
45A.490(2).
(4) "Resident bidder" is defined by KRS
45A.494(2).
(5) "Response" means any bid or response
submitted to a solicitation.
(6) "Solicitation" means an invitation for bid,
request for proposal, advertisement for bid,
or another formal method of soliciting a
contract issued by a public agency.
200 KAR 5:400. Kentucky Resident
bidder reciprocal preference.
(1)
Claiming Resident Bidder Status
Any individual, partnership, association, corporation, or
other business entity claiming resident bidder status shall
submit along with its response a notarized affidavit that
affirms that it meets the criteria to be considered a
resident bidder as set forth in KRS 45A.494(2). Failure of a
Ky. bidder to submit will not disqualify a vendor from
bidding; however, they will not be eligible to be
considered as a “resident bidder”. A vendor can not take
exception to any part of the affidavit in order to be eligible
for “resident bidder status”.
(2) If requested, failure to provide documentation to a public
agency proving resident bidder status shall result in
disqualification of the bidder or contract termination.
200 KAR 5:400. Kentucky resident
Bidder Reciprocal Preference.
Determination of Residency for Nonresident
Bidders
1.
The state of residency for a nonresident
bidder, for purposes of this administrative
regulation, shall be its principal office as
identified in the bidder’s certificate of
authority to transact business in Kentucky
as filed with the Commonwealth of
Kentucky, Secretary of State.
2.
If the bidder is not required to obtain a
certificate of authority to transact
business in Kentucky, its state of
residency shall be deemed to be the
mailing address provided in its bid.
200 KAR 5:400. Kentucky Resident
Bidder Reciprocal Preference
1.
2.
3.
Applying the Reciprocal Preference
Once all responsible and responsive
bidders to a solicitation have been scored
and ranked, the residency of each bidder
shall be identified.
A preference equal to the preference given
or required by the state of the highest
evaluated nonresident bidders shall be
given to all responsive and responsible
resident bidders.
The responses shall then be rescored and
re-ranked to account for any applicable
preferences.
200 KAR 5:400. Kentucky
Resident Bidder Reciprocal
Preference
Applying the Reciprocal Preference (cont.)
4. In awarding a contract, resident bidders shall only
receive preference against nonresident bidders
residing in a state that gives a preference to bidders
from that state. This preference shall not be applied
against nonresident bidders residing in states that do
not give preference against Kentucky bidders.
5. If a procurement determination results in a tie
between a resident bidder and a nonresident bidder,
preference shall be given to the resident bidder.
6. Nothing in this administrative regulation shall result in
a nonresident bidder receiving a preference over
another nonresident bidder.
Secretary of State
Registration?

Will this new law require all resident vendors who wish to
bid on a contract to be registered with the Sec. of State’s
Office?
– The reciprocal preference law does not impose any
additional requirements on a vendor with regard to
registering with the Secretary of State. A resident
bidder will fall into one of these three categories:
– 1) Organized under the laws of Kentucky which would
require registration with the Secretary of State;
– 2) Organized under the laws of another state but doing
business here which would require that they receive a
certificate of authority to transact business in
Kentucky from the Secretary of State; or
– 3) Not required to register with the Secretary of State
(sole proprietorship, for example).
– Therefore, the category in which they fall will determine
what form of registration, if any, is required.
Next Steps
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This information will be posted to our
eprocurement website:
http://eprocurement.ky.gov/
The Oregon website that contains a list of
all state preferences is:
http://procurement.oregon.gov/DAS/SSD/SP
O/reciprocal_detail.shtml. Ky is in the
process of creating our own list of state
preferences, but we will use the Oregon
site initially.
THE LAW
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1.) Procurements not to exceed an
aggregate amount of $1,000 for all other
purchases by state governmental bodies
may be made in accordance with Small
Purchase Regulations promulgated by the
Secretary of the Finance and
Administration Cabinet.
2.) Procurement requirements shall not be
artificially divided so as to constitute a
Small Purchase under this section.
Ref: KRS 45A.100
Policy: FAP-111-55-00
Definition of Aggregate:
 Gathered
together in a
mass constituting a
whole.
Basic Small Purchase
Procedure
TYPE OF
PURCHASE
Construction
Services
All Other
Purchases
ONE QUOTE
$3000 or Less
3 OR MORE
QUOTES
$3000 to $10000
$1000 or Less
Not Applicable
(KRS 45A.100)
Price Quotes Required for
Finance Cabinet Agencies
NUMBER OF QUOTE
REQUESTS
REQUIRED
One
At Least Three (3)
FOR
CONSTRUCTION
SERVICE
COSTING
Less than $20,000
Less than $40,000
FOR
ALL OTHER
PURCHASES
COSTING
Less than $5,000
Between $5,000 &
$20,000
The posting of a request for quotes on the VSS system will
satisfy all of the above requirements.
(KRS 45A.100)
Quotations Required for
Commodity & Service
Purchases
DELEGATED
AGENCY
Small
Purchase
Limit
$3,000 Limit
One Quote
for Purchase
Less Than
At Least
Three
Quotes if
Between
Posted to
VSS if
$1,000
N/A
$5,000 Limit
$3,000
$10,000
Limit
$20,000
Limit
$4,000
$1,000 &
$3,000
$3,000 &
$5,000
$4,000 &
$10,000
$5,000 &
$20,000
$5,000
(KRS 45A.100)
N/A
N/A
>$20,000
Construction Services Quotes
Required
Agency
Construction
Small Purchase
Limit
$15,000
One Quote
Required if Less
Than
At Least Three
Quotes if
Between
$5,000
$5,000 & $15,000
$20,000
$10,000
$10,000 &
$20,000
$40,000
$10,000
$20,000 &
$40,000
(KRS 45A.100)
“Tips” When Obtaining
Quotes From Vendors
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If obtaining phone quotes - advise vendor(s) you’re
obtaining quotes from several vendors.
For FAX quotes, have vendor fax his quote, terms,
etc. to you complete with his signature.
Write legible if you’re obtaining quotes by fax
machine.
Always give a complete address for the “Ship To”
location -- Don’t use P.O. Box Numbers!!
If possible, always make freight terms F.O.B.
Destination --- not F.O.B. Factory!
“Tips” When Obtaining
Quotes From Vendors
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Contact the manufacturer if a Brand Name is
required to determine authorized dealers to
promote competition.
If you have a higher small purchasing authority (I.e.
$5,000 or more), consider establishing an
acceptable brands list (ABL) when soliciting.
ADVANTAGE of ABL Promotes Competition
DISADVANTAGE Requires research and hands on evaluation
of products -- can be time consuming.
Specifications
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Learn all you can about preparing
specifications -- especially when the
bid requires a formal solicitation
($20,000 plus)
There are various workshops and/or
seminars available to you.
– National Institute of Governmental
Purchasing (NIGP) is an excellent
source.
Submitting Specifications
on eMARS Requisitions
•
General or Generic Specifications
•
Brand Name or Approved Equal
•
Acceptable Brands List
•
“No Substitute” Requisition
BEWARE!!!! - Competition Killer
Definition Of a TERM
CONTRACT
Price agreements with a
particular vendor to
supply specific items
at a specific unit price
for a specific period.
Term Contracts
When Should a Term
Contract be Used?
1. To provide a
continuing need
2. To expedite the
normal
purchasing
process (i.e.
obtaining
quotes)
Why are Term
Contracts
Established?
1. Convenience of
User
2. Variety at a
Fixed Price
3. Accelerates the
Bid process
GSA

What is the General Service
Administration (GSA)?
The procurement agency of the U.S.
government

What is a GSA Price
Agreement?
A non-competitive negotiation between a
vendor and the federal government which
results in a 5 to 10 year contract.
45A.045 Authority of
Cabinet
(7) Nothing in this section shall
deprive the Finance &
Administration Cabinet from
negotiating with vendors who
maintain a general service
administration (GSA) price
agreement with the United States of
America or any agency thereof.
RQ
MA
PO
AOC
Terms & Acronyms to
Know
Requisition
Price Contract Prefix
“Guaranteed” Contract Prefix
Advice of Change to amend a Price
Contract
RFQ
RFB
RFP
IT
D&F
45A
200 KAR Chapter 5
Addendum
BREACH
Request for Quotation
PROTEST
Vendor formally protesting an award
decision
Request for Bid
Request for Proposal
Prefix to identify an IFB
Determination and Finding
KY’s Model Procurement Law
Purchasing Administrative Regulation
Official changes to RFQs, RFBs, & RFPs
Contractor is in default of contract
requirement(s)
Be Aware of Procedures
Pertaining to Recycled Content in
Products Purchased.
 SOURCES:
–
KRS 45A.500 to .540
–
200 KAR 5:330
POST AWARD
CONTRACT
MANAGEMENT
POST AWARD CONTRACT
MANAGEMENT
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Overview of Types of Contracts and Award Methods
Understanding the Contract
– Contents of the Contract
Contract Performance
– Designating an agency contract manager, receiving
goods or services, monitoring performance, approving
payment, evaluation of performance
Contract Modifications
Performance Problems, Complaints, and Resolution
– Contract Termination
– Disciplinary Action
Creating and Maintaining Records
Assignment of Contract or Assignment of Payments
WHAT IS CONTRACT
MANAGEMENT?
The management of all actions, after
the award of a contract, that must
be taken to assure compliance with
the contract; e.g., timely delivery,
acceptance, payment, closing
contract, etc.
Every agency should designate a
programmatic contract manager for
each contract they administer.
CONTRACT TYPES AND AWARD
METHODS
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Competitive Sealed Bidding – KRS 45A.080
Competitive Negotiation – KRS 45A.085
Noncompetitive Negotiation – KRS 45A.095
Small Purchase by state agencies – KRS
45A.100
Personal Service Contract – KRS 45A.695
Memorandum of Agreement – KRS 45A.690
***Includes any kind of contract- one-time,
Delivery Orders, Master Agreements, PSCs,
MOAs
****A payment for a good or service cannot be
made without the proper authority!!!
CONTRACT TYPES AND AWARD METHODS
The “contract” will be the official
notice of award, which will begin the
process of contract management.
The vendor must receive an official
contract/order from the
Commonwealth that authorizes the
purchase or notifies them to begin
work.
Understanding the
Contract

Contents of a Contract
– Contract components and order of
precedence
 Solicitation, addenda to solicitation,
vendor’s response to the solicitation
– Contract Sections
 Line items and pricing
 Scope of work/Specifications
 Deliverables and payment triggers
 Negotiated items (where applicable)
 Contract amount and budget
 Contract period and renewals
 Standard Terms and Conditions
Contract Performance
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
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Awards of state contracts are made in
accordance with the evaluation criteria set
forth in the solicitation.
In many instances vendors are awarded
points based on their delivery of a product
or contract milestones, which may have
resulted in their receipt of the award.
It is essential that the contract manager
verifies that the contractor complies with all
contractual requirements.
Contract Performance

What should be considered in managing a
contractor’s performance?
–
Deliverables (milestones)
–
Quantity of goods to be delivered and/or services
to be performed
–
Meets required specifications
–
Schedule

Completion of project and implementation
–
Outcomes

Were the savings projected from using this
new product or service achieved.
–
Budget/financial issues

Timeliness of invoicing

Necessity of contract modifications
–
Customer service level
Contract Performance


Who manages the contract?
Commonwealth Buyer from the contract-issuing
agency
– Point of contact for all communications related to
the contractual terms and conditions.
 Renewals, change orders, modifications, or
terminations must all come through the Buyer to
be valid and enforceable.
Using agency designated contract manager
– An employee from the program agency responsible
for the performance to be achieved through the
contract
– Responsible for enforcing performance of the
contract terms and conditions and serve as a liaison
with the contractor.
Contract Performance


As a Contract Manager, How Do I Monitor Performance?
Communicate initially with the vendor to set expectations
and cover the four basic elements of contract
performance
–
Contract requirements

Scope of work, deliverables
–
Schedule

Milestones, completion
–
Budget

Contract delivered within original budget.
Accuracy, adequacy and timeliness of invoices,
invoice processing and payment. Financial
reporting if required.
–
Customer service level

What level of support and access are you going to
expect?
Reiterate these requirements throughout the life of the
contract
Contract Performance

How Do I Monitor Performance (cont.)?
Review invoices for contract compliance
– Only approve if product/service billed has
been delivered per contract
– In deliverables based contracts, make sure
that milestones have been fully met before
remitting payment.
– Ensure invoice detail is sufficient for a
proper audit.
 For a personal service contract, invoices
must be submitted as required by
statute, KRS 45A.695(10).
Contract Performance
The contractor must be held accountable to
perform at acceptable levels. The quality of
work, work schedule/timetable, conflicts,
budgets, payments, data, and
subcontractors are just a few of the things
that should be monitored.
Acceptance and rejection requirements should
be clearly outlined in the contract. If the
contractor has met the obligations, final
acceptance/payment should follow.
Contract Performance
Payments (per FAP 111-45-00)

An agency
– shall ensure that adequate funds are available for
immediate payment before placing an order;
– shall select the appropriate payment method;
– shall reference the appropriate contract when making
payments in the state’s procurement/ accounting system;
– shall process an electronic invoice that will liquidate the
encumbrance when payment is authorized, for payments
against a document that has been entered into, and has
encumbered funds within the state’s
procurement/accounting system;
– shall retain the official invoice from the vendor for the
period of time required by the appropriate document
retention schedule.
Contract Performance



Payments (cont.)
An agency may make payments using a Procurement
Card
– if exercising small purchase authority
– if specifically authorized in the terms of the contract
All bills shall be paid within thirty (30) working days of
receipt of goods and services or a vendor's invoice and
acceptance.
Per KRS 45.454 Penalty for late payment
– An interest penalty of 1% per month after thirty (30)
working days following the receipt of the goods or
services or vendor's invoice by a purchasing agency.
Contract Performance
THE BUCK STOPS HERE!!
The contract manager is the
agency’s front line resource
to ensure proper performance
and that we are paying for
what was required in the
contract.
CONTRACT
MODIFICATIONS
TYPES OF CONTRACT
MODIFICATIONS
Contract modifications are generally one of
two types:
 Administrative modifications
– Example - change in source of funding
– Changes which do not affect the terms
related to vendor performance
 Substantive modifications
– Example – Changes in scope, quantity, etc.
– These changes do affect the vendor and
therefore require their approval.
CONTRACT
MODIFICATIONS
Contract Modifications are governed by
statutes, regulations, and policies and
procedures:



KRS 45A.201(1) Issuance of regulations
concerning modification and termination of
contracts by Commonwealth
200 KAR 5:311 Contract modifications
FAP 111-11-00 Modification of Contracts
CONTRACT
MODIFICATIONS



A Modification shall be used to make
corrections or changes to a contract.
A Modification shall not be used to initiate
a major change outside the original scope
of the contract.
For Finance issued contracts, a
modification shall not be permitted unless
issued by the Finance Cabinet.
– Agency or vendor can request
modification with supporting
documentation.
CONTRACT MODIFICATIONS
•
•
•
An increase in quantity of goods in excess of ten
(10) percent shall not be permitted unless
authorized in the Solicitation, and
Unit price increases shall not be permitted
except as authorized by the solicitation.
A Modification shall not be used to increase the
dollar amount of a contract established under an
agency’s small purchase authority to an amount
exceeding the small purchase authority limit.
CONTRACT
MODIFICATIONS

Modification to a Personal Service
Contract shall be processed in the same
manner as the original contract in the
state’s procurement system.
– agree to increase or decrease funds,
– revise the scope of work,
– extend the time for performance within
the current biennium, or
– any other change.
CONTRACT
MODIFICATIONS
 All contract modifications are amendments to
contracts and thus become part of the
contract.

All contract modifications must be executed by
the buyer or purchasing officer.

Using agencies may make requests for
modifications to the buyer.

EO1 modification must be made if the originally
approved dollar amount is exceeded by more
than 15%.
CONTRACT MODIFICATIONS
 Contract
modifications
should be within the scope
of the solicitation and the
existing contract
–
Must be consistent with the
procurement method
REGULATION FOR
DISCIPLINARY ACTION
Disciplinary action for failure to perform
 Failure to post bid or performance bonds, as
required by a solicitation;
 Substitution of commodities;
 Failure to comply with the terms and
conditions of a solicitation or contract,
– including failure to complete performance
within the time specified in the contract;
 Failure to replace inferior or defective
materials, supplies or equipment
REGULATION FOR DISCIPLINARY
ACTION
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Refusal to accept a contract awarded
pursuant to the terms of a solicitation;
Falsifying invoices, or making false
representations to any state agency or
official, about any payment under a
contract;
Collusion;
Failure to report, or to pay the Kentucky
Department of Revenue any sales or use
taxes;
Failure to comply with the prevailing wage
law requirements.
REGULATION FOR
DISCIPLINARY ACTION
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No purchase shall be made by any
state agency from a bidder or
contractor who has been suspended
from bidding.
All state agencies shall be promptly
informed about bidders or contractors
suspended from bidding.
CONTRACT
TERMINATION
200 KAR 5:31. TERMINATION OF
CONTRACTS
Any contractor who is determined to be in
breach of any of the terms and conditions of
a contract with the Commonwealth of
Kentucky, shall be declared in default and
the contract may be terminated.
Contracts may be terminated for:
– default by the contractor
– the convenience of the Commonwealth,
– non-appropriation of funds
200 KAR 5:312. Termination for
Default
The Commonwealth may terminate a contract because of
the contractor’s failure to perform its contractual duties.
This can include:
– Failure to perform the contract according to its terms,
conditions and specifications;
– Failure to make delivery within the time specified;
– Late payment or nonpayment of bills for labor,
materials, supplies, or equipment furnished in
connection with a contract for construction services;
– Failure to diligently advance the work under a contract
for construction services;
– The filing of a bankruptcy petition by or against the
contractor; or
– Actions that endanger the health, safety or welfare of
the Commonwealth or its citizens.
200 KAR 5:312. Termination
for Default
The Commonwealth shall not be
liable for any further payment to a
contractor under a contract
terminated for the contractor's
default after the date of
termination.
200 KAR 5:312. Termination for
Convenience
The Commonwealth may terminate a contract for convenience
if it has been determined that termination will be in the
Commonwealth's best interests.
– The Commonwealth shall provide the contractor thirty (30)
calendar days written notice of termination of the
contract.
– the contractor shall have the burden of establishing the
amount of compensation to which the contractor believes
he is entitled.
– the purchasing officer may negotiate a settlement with the
contractor according to terms deemed just and equitable
by the purchasing agency.
– the settlement shall be subject to the prior approval of the
Secretary of the Finance and Administration Cabinet, or
designee.
200 KAR 5:312. Termination
for Convenience
Payment
– Payment of the sum agreed to in
settlement of a contract terminated
for convenience of the
Commonwealth shall be made from
the same source of funds or account
as the original contract.
– The Commonwealth shall not pay
interest on the amount due under the
settlement.
200 KAR 5:312. Funding
Out Provision
The Commonwealth may terminate a contract
if funds are not appropriated to the
contracting agency or are not otherwise
available for the purpose of making
payments without incurring any obligation
for payment after the date of termination,
regardless of the terms of the contract.
The contracting agency shall provide the
contractor thirty (30) calendar days written
notice of termination of the contract.
Documentation
WHAT SHOULD BE
KEPT?
A contract manager’s file
should contain the
contract, any
amendments, and all
reports, complaints, and
correspondence materially
related to the contract.
DOCUMENT, DOCUMENT,
DOCUMENT!
It is impossible to overstate the importance of
documenting activity during the life of the
contract!
It is critical in the resolution of disputes or claims!
Any staff who deals with the vendor should
maintain records of contract activity, and note
problems or unusual occurrences.
You will rely heavily on the documentation to deal
with protests and legal disputes, answer open
record requests, handle vendor complaints/cancel
contracts for failure to perform, etc.
WHAT SHOULD I
DOCUMENT?
Regardless of how small or insignificant
the matter may seem, problems tend to
snowball and can get out of hand. You
should:
– keep copies of written correspondence
and e-mails with the vendor
– document telephone conversations
with the vendor (date, time, vendor
representative’s name)
– briefly document meetings with vendor
representatives
RETENTION OF PROCUREMENT DOCUMENTS
Files and Records – General
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Each agency shall maintain records
necessary to support each
purchasing transaction.
See FAP 111-28-00 for additional
information.
QUESTIONS & ANSWERS
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