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Indiana Office of Inspector General

IG > UGC: Uniform Government Code > Contracts Contracts

Contents

§400 The Indiana Attorney General
§401 Application of rules
§402 Grants versus contracts
§403 Memorandums of Understanding
§404 Independent contractor determination
§405 Outside legal counsel contracts
§451 Three-step process
§452 Procurement Contracts Under $25,000
§453 Personnel transaction process
§454 IOT approval
§455 Form Approval and Pre-Review
§456 Cost-effectiveness
§457 Bidding and competition
§458 Four-year limit
§459 Early and late performance compensation
§460 Minority and Women’s Business Enterprises Division
§461 Unspecified number of items at a fixed price
§462 Cost Plus Contracts
§463 Cost Reimbursement Contracts
§464 Sex offender restriction
§465 Petroleum product contracts
§466 Steel product contracts
§471 Writing requirement
§472 EDS Executive Document Summary
§473 Attachments
§474 Original signatures
§475 Vendor signatures
§476 Statutory terms omitted
§477 Ethics
§478 Confidential information
§479 Non-collusion statements
§480 Lack of funds statement
§481 Boilerplate
§482 Double-sided printing and scanning
§490 Amendments and change-orders
§491 Addendums
§492 Renewals
§493 Lack of funds termination


In general

§400 The Indiana Attorney General

The Indiana Attorney General represents the State of Indiana in all legal matters not otherwise addressed by statute. Among many duties, the Attorney General issues official legal opinions to the Governor and other state officers. The Attorney General has also compiled, in cooperation with the Indiana Department of Administration, a Professional Services Manual which addresses the many rules addressing the contracting process.

Source:
IC 4-6-1-6 (Attorney General rights, powers and duties)
IC 4-6-2 (Attorney General powers and duties)
Professional Services Manual


§401 Application of rules

The following contract rules apply to:

  1. all branches of state government, and;
  2. all state agencies which are defined as every officer, board, commission, department, division, bureau, committee, employee, and other instrumentality of the state, including: state hospitals, state penal institutions, and other state institution enterprises and activities wherever located.

However, various entities (specified in IC 4-13-2-1) are excluded from these contract rules.

Source:
IC 4-13-2-1 (contract requirements)


§402 Grants versus contracts

Grants and contracts include similar elements and are often mistakenly referred to interchangeably. However, contracts create “state procurement relationships” and grants create “state assistance relationships”. IDOA and the Attorney General will reject documents from agencies that attempt to avoid the competitive procurement process by improperly referring to a contract as a grant.

Source:
2008 Professional Services Contract Manual, at 15


§403 Memorandums of Understanding

Agreements between an Indiana Executive Branch agency and another unit of government that has the capacity to sue or be sued must be memorialized by a contract subject to review under IC 4-13-2-14.1

In contrast, an arrangement between two or more state agencies must be memorialized by a Memorandum of Understanding. These must be signed by the agency appointing authorities or designates, must contain an Executive Document Summary and are input to the state PeopleSoft system.

Source:
2008 Professional Services Contract Manual, at 14


§404 Independent contractor determination

Severe tax consequences may be imposed against the State by the Internal Revenue Service for improperly classifying an employee as an independent contractor. It is the agency’s duty to properly classify contractors and employees.

Source:
2008 Professional Services Contract Manual, at 14


§405 Outside legal counsel contracts

Agencies are prohibited from hiring outside counsel without written consent of the Attorney General.

Source:
IC 4-6-5-3 (outside legal counsel)
2008 Professional Services Contract Manual, at 11


Process requirements:

§451 Three-step process

A contract must be approved by (or by the written delegate filed with the DOA of the):

  1. DOA Commissioner (for policy, contract language and procedures and business issues in the State’s best interests);
  2. Budget Agency Director (except for supplies under IC 5-22 or public works contracts less than $100,000 under IC 4-13.6); and
  3. Attorney General (for form and legality, and if rejected, a disapproval in writing with an explanation of the legal defect and how to make the contract compliant).

The DOC may be exempted from this rule if using inmate labor.

The Attorney General and IDOA estimate this process takes approximately 60 days. The Attorney General must review the contract within 45 days.

A request to expedite this approval process may be made to the Attorney General (contracts@atg.in.gov) but must include the EDS number and an explanation of why the rush is required. The Attorney General will correspond only with the state agency and not the contractor.

The status of a contract within this approval process may be determined through the web-based Contract Tracking System (“KMS”).

Source:
IC 4-13-2-14.1 (rule)
IC 4-13-2-11.1 (DOC inmate labor exception)
IC 4-13-2-14.3 (Attorney General as to form and legality)
2008 Professional Services Contract Manual, at 5
2008 Professional Services Contract Manual, at 6 (60 day process)
2008 Professional Services Contract Manual, at 6 (KMS)
2008 Professional Services Contract Manual, at 7 (expedited requests)


§452 Procurement Contracts Under $25,000

Budget Agency delegates approval authority to the IDOA for contracts for the purchase of goods or services, except for personal services and contracts involving State-sponsored meetings and conferences, where the total contract amount does not exceed $25,000.

Source:
SBA Circular 98-2 (delegation authority)
IC 4-12-1-13
IC 4-13-2-14.1


§453 Personnel transaction process

The Budget Agency need not approve changes to the personnel transaction process.

Source:
Budget Agency Circular 96-2 (exempting Budget Agency approval of changes to personnel transaction process)


§454 IOT approval

All procurement for information technology goods and services shall be subject to the review and approval of IOT prior to the IDOA.

Agencies are further prohibited from hiring or creating IT positions without the review and approval of SPD and IOT.

Source:
SBA Circular 2007-3
2008 Professional Services Contract Manual, at 5


§455 Form Approval and Pre-Review

An agency may submit to the Attorney General for Form Approval a template which, once approved, may be used without further Attorney General review for one year.

A pre-reviewed contract is a process where the Attorney General pre-reviews the contract draft and makes suggestions. This service is to be requested only in the rare situations.

Source:
2008 Professional Services Contract Manual, at 7-8 (form approval and pre-review)


§456 Cost-effectiveness

Agencies must justify to the DOA Commissioner the cost effectiveness of a contract before contracting for services in lieu of appointing employees to available positions.

Source:
IC 4-13-2-14.4


§457 Bidding and competition

Competition in purchasing involving the procurement process, use of RFPs and bidding requirements are addressed in IC 5-22.

Source:
IC 5-22


§458 Four-year limit

Contracts shall not exceed four years. Exemptions exist.

It is also IDOA’s policy that a contract shall not exceed four years. Written approval by the IDOA Commissioner is required to extend this limit and should be sought well in advance of the expiration of an existing contract.

A contract for remediation of a hazardous waste site may be entered into for any period not to exceed ten (10) years.

A contract for EBT program services may be entered for a period of five (5) years, with successive periods not to exceed two (2) years each.

Source:
IC 5-22-17-3
IC 5-22-17-7 (10 years permitted for remediation of a hazardous waste site)
IC 5-22-17-8 (5 years permitted for EBT programs)
2008 Professional Services Contract Manual, at 5


§459 Early and late performance compensation

An agency may specify in a contract increased compensation for early performance and decreased compensation for late performance.

Source:
IC 5-22-17-6


§460 Minority and Women’s Business Enterprises Division

All state agencies, separate bodies corporate and politic, and state educational institutions are to report to the IDOA’s Minority and Women’s Business Enterprises (“M/WBE”) division on planned and actual participation of M/WBE in contracts awarded by state agencies. Agencies are also to determine and define opportunities for M/WBE participation in contracts.

Source:
IC 4-13-16.5 (M/WBE division established);
24 IAC 5 (M/WBE promulgated rules);
2008 Professional Services Contract Manual, at 13


§461 Unspecified number of items at a fixed price

A solicitation may provide that the purchasing agent will award a contract for supplies or services for an unspecified number of items at a fixed price per unit. Such a contract may include a formula or a method for escalation of the unit price.

Source:
IC 5-22-17-13


§462 Cost Plus Contracts

A governmental body may not enter into a cost plus a percentage of cost contract.

Source:
IC 5-22-17-1 (prohibition)


§463 Cost Reimbursement Contracts

A governmental body may enter into a cost reimbursement contract if the purchasing agent determines in writing that the contract is likely to be less costly to the governmental body than any other contract type, or that it is impracticable to obtain the supplies required except under such a contract.

Source:
IC 5-22-17-2


§464 Sex offender restriction

Contractors or employees who have been convicted of specified sex crimes are prohibited from doing state business with or around children.

Source:
IC 4-13-2-14.7


§465 Petroleum product contracts

Contracts for petroleum products permit different terms.

Source:
IC 5-22-17-10 (petroleum products)


§466 Steel product contracts

Contracts for steel products permit different terms.

Source:
IC 5-22-17-14 (steel products)


Content requirements:


§471 Writing requirement

Contracts must be in writing.

Exceptions to this rule are the following:

  1. Small purchases as defined in IC 5-22-8;
  2. Emergency conditions as defined in IC 5-22-10-4; or
  3. Emergency conditions as defined in IC 4-13.6-5-5

Source:
IC 4-13-2-14.2


§472 EDS Executive Document Summary

An EDS is a mandatory summary sheet attached to the front of each contract. The agency is required to submit all necessary information.

Source:
2008 Professional Services Contract Manual, at 5


§473 Attachments

All exhibits or attachments referenced in the contract must be submitted with the contract for approval.

Source:
2008 Professional Services Contract Manual, at 4


§474 Original signatures

Original signatures are required. Faxed or stamped signatures are prohibited.

Source:
2008 Professional Services Contract Manual, at 5


§475 Vendor signatures

Vendor signatures to contracts must be obtained first. The State signs last. The Attorney General is the last party to sign unless the contract was granted form approval by the Attorney General, and then IDOA and the Budget Agency must sign last.

Source:
2008 Professional Services Contract Manual, at 5


§476 Statutory terms omitted

A contract term required by statute which is omitted from the contract remains a term of the contract.

Source:
IC 4-13-2-14.2(c)


§477 Ethics

All contracts should contain the requirements of the Indiana Code of Ethics by the Office of the Inspector General.

Source:
42 IAC 1-5 (Indiana Code of Ethics)
2008 Professional Services Contract Manual, at 13


§478 Confidential information

No contract or its attachments should include a person’s social security number or information classified as confidential by state law, the agency or by a vendor. Contracts are scanned and made available for public inspector pursuant to APRA.

Source:
IC 5-14-3-4 (Access to Public Records Act “APRA”);
IC 4-1-10 (confidentiality application to agencies);
IC 4-1-11 (notification requirements if confidentiality breach made);
2008 Professional Services Contract Manual, at 6


§479 Non-collusion statements

A non-collusion statement is mandatory in the original contract and all amendments or renewals.

Source:
2008 Professional Services Contract Manual, at 4


§480 Lack of funds statement

The mandatory Budget Agency approval of a contract will not be given without the following language in a contract:

“When the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of performance of this contract, the contract shall be canceled. A determination by the Director of the State Budget Agency that funds are not appropriated or otherwise available to support continuation of performance shall be final and conclusive.”

The contract must also specify that payment and performance obligations are subject to the appropriation and availability of funds, and a political subdivision must have available a sufficient appropriation balance or an approved additional appropriation before a purchasing agent may award a contract. [IC 5-22-17-3]

Source:
IC 4-13-2-14.1 (Budget Agency is one of the three entities who approves state contracts)
IC 5-22-17-3 (contract language requirement and appropriations availability)
IC 5-22-17-5 (Budget Agency may cancel contract when appropriations unavailable)
Budget Agency Circular 2007-1 (specific cancellation language is mandatory for Budget Agency contract approval)


§481 Boilerplate

Clauses outside the boilerplate may be added.

Source:
2008 Professional Services Contract Manual, at 4


§482 Double-sided printing and scanning

Double-sided printing is required.

Contracts once approved by the Attorney General are scanned by a private company and returned to IDOA for the agency to pick up.

Source:
Executive Order 05-21
2008 Professional Services Contract Manual, at 5


Modifications and cancellation:

§490 Amendments and change-orders

An expired contract may not be amended or renewed.

Source:
2008 Professional Services Contract Manual, at 4


§491 Addendums

In contrast to an “amendment” which changes or adds to the terms of an existing contract, an “addendum” is attached to a contractor’s form contract for the purpose of deleting terms to which the State cannon agree or adding mandatory clauses. The State does not sign the form contract — only the addendum.

Source:
2008 Professional Services Contract Manual, at 4


§492 Renewals

A contract may be renewed any number of times.

The term of the renewed contract may not be longer than the term of the original contract.

An expired contract may not be amended or renewed.

Source:
IC 5-22-17-4(b) and (c)
2008 Professional Services Contract Manual, at 4


§493 Lack of funds termination

A contract is canceled when the Budget Agency makes a written determination that funds are not appropriated or otherwise available to support the continuation of performance of a contract. This Budget Agency determination is final and conclusive.

The mandatory Budget Agency approval of a contract will not be given without the following language in a contract:

“When the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of performance of this contract, the contract shall be canceled. A determination by the Director of the State Budget Agency that funds are not appropriated or otherwise available to support continuation of performance shall be final and conclusive.”

The contract must also specify that payment and performance obligations are subject to the appropriation and availability of funds, and a political subdivision must have available a sufficient appropriation balance or an approved additional appropriation before a purchasing agent may award a contract. [IC 5-22-17-3]

Source:
IC 4-13-2-14.1 (Budget Agency is one of the three entities who approves state contracts)
IC 5-22-17-3 (contract language requirement and appropriations availability)
IC 5-22-17-5 (Budget Agency may cancel contract when appropriations unavailable)
Budget Agency Circular 2007-1 (specific cancellation language is mandatory for Budget Agency contract approval)