Contract Review Policy and Process
Policies Governing Contracts...
Definition of a Contract: A contract is any agreement between two parties which is enforceable at law. In a contract, legally enforceable commitments are made by and/or to the University. Some people incorrectly believe they can avoid the hassles of a contract by entering into other types of agreements (e.g., letters of agreement, memos of understanding, etc.). However, a contract, by any other name, is still a contract. If there are legally enforceable commitments, there is a contract and, hence, University policies and procedures must be followed.
Not all contracts signed by NKU are processed through the Office of Research, Grants and Contracts (RGC). Examples of contracts not handled by RGC include contracts issued through the Purchasing Department or through Auxiliary Services, software licenses, and contracts for the use of NKU space. In addition, RGC is not involved when an individual faculty member is providing consulting services independently of the University. The relevant Dean's office is to be consulted in regards to contracts that involve a faculty member in independent consulting activities.
Contracts that are processed through RGC are generally those that involve research, the delivery of academic programs (regardless of whether they are housed in the academic division), or services of our faculty, staff, or students. The contract may involve funds coming to the University, no exchange of funds, or, in the instance when the University is awarding a sub-contract that is part of a grant or larger externally funded contract, funds may actually be paid out from the University. The policies which follow are those approved for use by RGC for contracts within its purview.
Definition of Department: Within these policies, the term department refers to an academic department or University-recognized center, institute, or other entity within the Divisions of Academic Affairs or Student Affairs.
Routing Form: This Routing Form is used to transmit grants and contracts to RGC and to show that the project being transmitted is supported by the relevant department chair and dean (or other appropriate supervisor).
Contracts that MUST be processed through RGC:
A written contract must be developed, and both the contract and a signed Routing Form must be processed through RGC whenever:
- The value of the contract exceeds $2,500; or
- The contract extends beyond a 1-month period; or
- The contract involves a government agency; or
- The NKU department or the other contracting party wants or needs a written contract; or
- The agreement involves an actual, potential, or perceived conflict of interest, as defined by the University’s Conflict of Interest Policy.[1]
The signed Routing Form must be submitted to RGC prior to NKU signing the contract. Ideally it should be submitted before the University bids on the contract or otherwise offers to provide the contracted services.
The budget for the contract must include F&A charges of 10-20% of the project cost, unless a policy exception is approved by the Associate Provost for Outreach/Dean of Graduate Studies.
The contract must be reviewed and approved by RGC. Contract Review Process and a Contract Review Checklist can be obtained from RGC or downloaded from the RGC web site.
Units that issue contracts frequently may request a "blanket" contract form for use with a variety of customers. The advantage of the blanket contract is that it will not need to be scrutinized by RGC each time it is used, but like all contracts, it will still require the signature of the appropriate contracting authority. Furthermore, it must be filed with RGC along with a signed Routing Form.
Agreements within the purview of RGC but not processed through RGC:
- Agreements valued at less than $2,500 and lasting less than one month do not require a signed Routing Form and written contract, and do not have to be reviewed by RGC, unless they fit one of the conditions listed in the section above.
- The general fund, dean's office and RGC will not receive any share of the F&A dollars on these projects.
At the end of each fiscal year, all departments will provide their Dean's Office and RGC with a report of the income from these small, non-governmental contracts. The reports will include the date(s) of service, the recipient(s) of the service, the nature of the service, the amount charged, and the amount paid. The report will cover the period July 1 to June 30 and must be submitted no later than July 15 of the next fiscal year. RGC will include this income information in its reports to the Board of Regents and its annual report.
Note: The NKU contract policies and related materials are adapted, with express permission, from similar policies and documents used at Central Michigan University.
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[1] If you are uncertain whether there is a conflict of interest, consult RGC for assistance.
Contract Review Process: The faculty/staff member who will serve as Project Director for a contracted project shares with the staff of the Office of Research, Grants and Contracts (RGC) the responsibility for reviewing the relevant contract. RGC will be closely involved in the contracting process and is prepared to provide as much assistance as is needed. For example, RGC will assist in developing the budget for the project, drafting and reviewing the contract, and negotiating with the outside party. In addition, RGC assumes responsibility to involve the Office of the University Counsel as indicated in this policy.
Writing a Contract: One of the two parties to the contract must prepare the document. If the document is to be drafted by the University, the Project Director should begin by meeting with RGC who will determine whether initial meetings should include the University Counsel. During these meetings, the Project Director will be asked for information about the project and the terms that he/she would recommend for the contract. A decision will be made regarding who -RGC, the Project Director, University Counsel or the other party -will prepare the initial draft of the contract. Depending on the complexity and size of the contract, it may take several meetings and several rewrites before the contract is ready for the next step.
Processing a Contract. Regardless of whether the contract was drafted by the University or by the outside party, the same steps will be followed for reviewing the contract.
The Project Director will:
- Obtain a complete copy of the contract, including all attachments and exhibits.
- Review the contract and complete Column A (Project Director's column) of the Contract Review Checklist, available on RGC's web site.
- Complete a Routing Form, which can be downloaded from RGC's web site.
- Bring the contract, including all attachments and exhibits, the completed Contract Review Checklist and the completed Routing Form to RGC.
RGC will:
- Complete Column B of the Contract Review Checklist.
- Contact the Project Director if there are questions or concerns about the terms of the contract.
- Arrange for review by the Office of the University Counsel if
- The amount exceeds $50,000; or
- If the contract must be submitted to the Board of Regents for approval; or
- The contract will last more than two years without a cancellation clause; or
- There are indemnification, warranty or guaranty provisions; or
- There are unusual legal provisions or legalistic language that is unfamiliar to RGC.
Negotiating a Contract: It is not unusual for the terms of a contract to be subject to negotiations between the University and the outside party. When this is the case, RGC will work with the Project Director to determine who is in the best position to handle the negotiations. If negotiations result in substantive changes to a contract that has already been internally reviewed, then those portions that are changed will be subject to another review.
Confidentiality Clause: Contracts, particularly those with industry, often contain a clause pledging the University to maintain confidentiality about corporate-related information acquired in the process of conducting the project. When a contract includes such a clause, RGC will ensure that the Project Director understands the implications of the confidentiality agreement. If the Project Director agrees to the confidentiality clause, RGC, following the advice provided by Counsel, will prepare a confidentiality document for signature by the Project Director and others working on the project for NKU. This document will indicate that each person working on the project understands the implications of the confidentiality requirement and agrees to abide by it. The Project Director will be required to sign a confidentiality document before the contract is signed by the University. Other persons, including students, who will be working on the project will be required to sign a confidentiality document prior to having access to information covered by the confidentiality clause of the contract.
Signing a Contract: NKU authorizes University officials to enter into contracts on behalf of the University. Only those authorized to sign contracts may do so, and only for the amounts covered by their authorization. If a University employee signs a contract that he/she is not authorized to sign, the individual risks being personally liable for the contract.
Once there is agreement to the terms of a contract and, when needed, the Office of the University Counsel has approved the contract, RGC will arrange for contracts to be signed by the appropriate person(s). RGC will also ensure that the contract is signed by the outside party and that copies of the contract are provided to the appropriate offices.
Note: The NKU contract policies and related materials are adapted, with express permission, from similar policies and documents used at Central Michigan University.