Agreements executed on behalf of the university must follow certain university regulations and other internal procedures. The Procurement and Contracts Department (PCD) developed these Guidelines to assist university personnel in understanding the university contract review and approval process. The Guidelines are applicable to:
Contracts executed by an individual on behalf of the university
Contracts to which the university is a party or signatory in any capacity, regardless of funding source or amount of funds expended or generated. The Guidelines are intended to supplement the Policies and Procedures.
A “contract” is defined as an agreement entered into by two or more parties. To be legally enforceable, the contract (an offer for goods/services followed by acceptance) needs to be supported by consideration and entered into voluntarily by the parties.
Individuals and groups who come to the university to perform a service should have an understanding regarding the terms between them and the university. Since both parties need to know what each expects from the other, a contract must be agreed upon and signed by both parties. In addition, a contract provides a history of previous relationships between the university and a supplier or service provider. When you engage in discussions with service providers, you should be aware of the following:
Contracts should always be between a service provider and American University (American University-WCL, American University- WAMU for example), never between the service provider and a specific individual or department.
In order to be valid, contracts must be signed by an authorized American University administrator (in most cases the Director of Procurement and Contracts or the Controller) and counter-signed by the vendor’s authorized signatory. Contracts and proposals not signed by appropriate individuals within the Finance or President’s offices are null and void.
AU has standard contracts to be used in most business transactions. (See Section VII. Standard Contracts)
AU does NOT pay in advance for services rendered (although it will prepay subscriptions and conferences if required). The supplier will be required to charge AU after services have been rendered or for significant progress payment points during the project. Full payment is made only upon the completion and acceptance of services by the appropriate university contact. Payment will be made thirty (30) days after receipt of a valid invoice referencing a valid AU PO or valid contract depending on policy and requirements. Exceptions to this must be authorized in advance by Procurement and Contracts.
AMERICAN UNIVERSITY DOES NOT HONOR ORAL AGREEMENTS. Everything must be clearly stated in a written and signed agreement. Your verbal promise to a service provider does not obligate American University, but you may find yourself personally liable for the terms of that promise.
AU has an alcohol policy. In cases where a group uses an off campus facility and alcohol is being served, an alcohol clearance form and appropriate proof of vendor insurance must accompany the contract.
AU’s general practice is not to enter into agreements that grant “exclusive rights” to an individual or company. Exceptions to this must be authorized in advance by PCD.
B. Appropriate Signatures
In virtually all organizations, the Board of Trustees or Board of Directors designates signatory authority to specific administrators. The university’s Signature Authorization Policy has designated certain university administrators. Please refer to the Policy Guidelines.
At AU, the signatures of these individuals can bind the university to the terms of an agreement.
Any violation of this provision will render the contract void. In addition, Agreements signed by anyone other than the designated signatories can PERSONALLY bind the individual who signed the contract to its terms, including the terms of payment.
Additional Information to Be Submitted before a Contract is Signed
In order to complete the Procurement process, the following information should be submitted to Procurement and Contracts:
The name and the address of the service provider (person or business) with which American University is conducting business
The type of services that the service provider will be performing during the contracted period, the term of the contract, and the actual or estimated cost of services rendered.
The name, phone number, and department of the individual who is responsible for receiving the contract after review and approval from Procurement and Contracts.
A social security number if the service provider is an individual or the Federal Identification Number if a corporation is providing the services (This is required information on the W-9).
A W-9 form is required for both contracts and proposals including both types of Professional Service Agreements where an existing W-9 is not on file or the vendor is new.
C. Prior Review
All contracts should be sent to Procurement and Contracts for review prior to any signatures. Procurement and Contracts, in consultation with the Office of General Counsel, are responsible for reviewing contracts for American University.
The process for reviewing and approving a contract is as follows:
Obtain the appropriate departmental approval to structure a proposal on behalf of the university
In consultation with PCD, select the appropriate University Contract (See Standard Contracts, Section VI, and Other Contracts, Section VII)
Confirm the requirements of the contract or an attached Statement of Work.
The contract is reviewed by Procurement and Contracts.
Procurement and Contracts may forward the contract to the Office of General Counsel to review for legal sufficiency. (Specific concerns shall be brought to the attention of Procurement and Contracts, who will, in coordination with the Office of General Counsel, appropriately incorporate those concerns into the agreements).
Once contract and legal review is complete, Procurement and Contracts will return the contract to the initiator.
Obtain any special forms from the service provider that may be required for the contract (Examples: vending permits, special licenses, certificates of insurance or liquor liability)
Obtain any special forms from AU that are required (alcohol clearance form, waivers, or releases).
The contract will then be forwarded to the service provider for signature after PCD has signed. Once the contract has been approved and signed by Procurement and Contracts, the contract will either be returned to the person that sent the contract, as a fully executed agreement or the person will be contacted for further information before the contract can be signed. The service provider signs and dates the contract. If the service provider will not sign the contract as is and/or any changes need to be made to the contract, Procurement and Contracts will make any of these changes.
Contracts cannot be accepted or signed if the above steps have not been satisfactorily completed.
D. Additional Information to be Submitted after a Contract is Signed
A purchase order is required for all contracts or proposals EXCEPT for those that are for an individual. A PSA or other similar services contract must be used under these circumstances. More information on this topic may be found at the following: www.irs.gov/instructions/i1099msc/ar02.html#d0e173