Government Contract Review Committee: Jurisdiction & Approval Process
The Government Contract Review Committee oversees Personal Service Contracts and Memoranda of Agreement to ensure appropriateness, necessity, and adherence to guidelines. Comprised of General Assembly members, the committee reviews contracts, approves or defers them based on specified criteria, and requires a constitutional majority for actions. Understanding the committee's jurisdiction, process, and approval mechanisms is crucial for efficient contract management.
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Personal Service Contracts & Memoranda of Agreement: Committee Jurisdiction, Process, and Approval
I. Jurisdiction: The Role of the Committee Government Contract Review Committee (GCRC) is a statutory committee created by KRS 45A.705. It is required to meet monthly and review Personal Service Contracts and Memorandum of Agreement submitted to the LRC. This review must occur within 45 days of the receipt. Personal Service Contract: Agreement where an individual, firm, partnership, or corporation is to perform services Professional skill/judgment required for a specified time at an agreed upon price i.e. PSC # 14-036: UK contracted with Crowe Horwath, LLP for auditing of various services Memorandum of Agreement: Agreement between agencies of the Commonwealth i.e. MOA # 90109: Murray State Univ. contracted with Graves County Board of Education to provide a Reading Recovery Teacher Leader on their campus
The GCRC is composed of 8 members of the General Assembly 4 members of the House and 4 members of the Senate Current Membership: Senator Sara Beth Gregory (Co-Chair) Representative Dennis Horlander (Co-Chair) Senator Julian Carroll Senator Paul Hornback Senator Christian McDaniel Representative Jesse Crenshaw Representative Brad Montell Representative Brent Yonts
Scope of Committee Review (KRS 45A.695-705) Provide oversight and examine the following: The stated need for the service Whether the service could or should be performed by state personnel The amount and duration of the contract or agreement The appropriateness of any exchange of resources or responsibilities.
Committee Actions During review at the monthly meeting, GCRC members can: Consider the contract Reviewed without objection This allows the contract to pass through committee Defer the contract for a specified amount of time Typically occurs when questions remain on the contract or items are missing (i.e. SOS registration requirement) Disapprove the contract This occurs when the members deem the amount, duration, or exchange of resources as inappropriate
NOTE: Committee Action requires a constitutional majority of the membership, or 5 votes. Action is considered to be a motion to defer or disapprove a contract. A motion to Review without objection is considered as allowing the contract to pass through committee.
If Disapproved (KRS 45A.705)... Following a successful motion to disapprove, we submit a written notation to the secretary of the Finance and Administration Cabinet to request the contract be terminated. The secretary or a designee will then determine whether the contract or agreement should Be revised to comply with the committee s objections Be cancelled Remain effective as originally approved The secretary will notify the committee of the action taken within 10 days from the date of committee review.
II. Preparing the contract for review Filing your contract Establishing Proof of Necessity Committee Policy Additional Requirements
Filing your contract... In order to ensure your contract gets reviewed at the proper time: Each Personal Service Contract or Memorandum of Agreement is to be filed with the committee prior to the effective date and shall be accompanied by a completed Proof of Necessity (PON). KRS 45A.695 Personal Service Contracts of $10,000 or less and Memorandum of Agreement of $50,000 or less are exempt from routine review and are to be filed with the committee no more than 30 days after their effective date for informational purposes only. KRS 45A.700
NOTE: Although submitted for information purposes only, PSCs of $10,000 or less and MOAs of $50,000 or less may still be examined by the committee. Agency participation may still be requested at monthly meetings relative to those agreements. If a PSC of $10,000 or less or an MOA of $50,000 or less is amended so that the total now exceeds those threshold amounts, the amended contract will be placed on the agenda for routine review. Payment for PSCs over $10,000 & MOAs over $50,000 cannot be remitted prior to committee review. However, work can begin once the contract is filed.
Proof of Necessity (KRS 45A.695)... The Proof of Necessity form must accompany all filed contracts and agreements, and must include: The need for service The unavailability of state personnel or the non-feasibility of utilizing state personnel to perform the service The total projected cost of the contract and source of funding The total projected duration Payment information, in detail For MOAs, the reason for exchanging resources or responsibilities Other information as the committee deems appropriate
Committee Policies... Personal Service Contract Amendment Policy Specialized Service: Maximum Rates Legal Appraisers Auctioneers Auditing Multiyear Contracts
Personal Service Contract Amendment Policy *Policy Statement #00-6* It shall be a policy of the Government Contract Review Committee of the Legislative Research Commission that no personal service contract amendment coming before the committee for review shall be in order any sooner than ninety (90) days after a committee action on the contract, unless the amendment is supported by a detailed explanation, addressed to the committee, citing specific valid and justifiable reasons for amendment of the contract. The failure of a contracting body to accurately estimate the total amount of a contract or proposed contract shall not constitute the sole reason for amending a government contract.
Specialized Service: Maximum Rates *Policy Statement 99-1* Legal Services Partner - $125/hour Associate - $100/hour For Appellate cases - $125/hour Legal Services for Title Examinations on Parcels of Land Surface Title - $170/title Mineral Title - $500/title Paralegals - $40/hour
Note on Legal Fees... The Government Contract Review Committee may approve higher hourly rates for legal services provided in high rate areas, or for legal services provided by attorneys located in high rate areas. "High Rate Area" means those geographic areas recognized by the secretary of the Finance and Administration Cabinet as high rate areas by promulgation of an administrative regulation (http://finance.ky.gov) If a higher hourly wage is sought, submit a letter to the committee to justify the need to pay the wage For out of state attorneys, be prepared to explain why out-of-state counsel is necessary
Additional Fee Requirements... Appraisers - Policy Statement 99-2 Real Estate - $560/day Resource & Mineral - $600/day unless required by the complexity of the appraisal, in which case, prior justification must be presented to the committee. Auctioneers - Policy Statement 99-3 Real Property and Personal Property Not to exceed $800/event for auctioneer services, unless required by the complexity of auction, in which case, prior justification must be presented to the committee. Auditing - Policy Statement 99-5 Principal or Partner - $125/hour Sr. Auditor or Manager - $100/hour Jr. Auditor or Staff Auditor - $75/hour
Multiyear Contract Policy... Policy Statement 99-4 It shall be the policy of the Government Contract Review Committee of the LRC to consider for approval, only those personal service contracts, price contracts for personal services, memoranda of agreement, memoranda of understanding, program administration contracts, interlocal agreements (to which the Commonwealth is a party), privatization contracts, or similar devices and instruments under the jurisdiction of the committee that are entered into and concluded prior to the end of the biennium in which the contract or agreement was made. (June 30, 2014 for state funds...September 30, 2014 for federal funds)
Notes on Multiyear Contracts Contracts can only last as long as the next biennial period (i.e. June 30, 2016 for contracts in this biennium) Contracts cannot be set up past the June 30 date Any new contracts past the June 30 date must either have new money appropriated by the legislatureor carry a balance forward from the previous biennium At end of biennium, a new contract must be submitted for renewal contracts or projects AN AMENDMENT IS NOT SUFFICIENT
Additional Requirements Secretary of State Registration/foreign vendors Retroactive Start Date Contracts that exceed maximum rate
SOS Registration Requirement... Per KRS 14A.9-010: A foreign entity shall not transact business in this Commonwealth until it obtains a certificate of authority from the Secretary of State. Must be registered, active, and in good standing Contracts submitted for review that utilize foreign vendors must meet this requirement prior to the monthly committee meeting. Inability to meet this requirement may leads to a deferral on the contract. Info on the process for vendor registration can be found at www.sos.ky.gov
Exceptions to the Registration Requirement... KRS 14A.9-010(2): The following activities, among others, shall not constitute transacting business within the meaning of subsection (1) of this section: (a) Maintaining, defending, or settling any proceeding; (b) Holding meetings of the board of directors, shareholders, partners, members, managers, beneficial owners, or trustees or carrying on other activities concerning the internal affairs of the foreign entity; (c) Maintaining bank accounts; (d) Maintaining offices or agencies for the transfer, exchange, and registration of the foreign entity's own securities or maintaining trustees or depositaries with respect to those securities; (e) Selling through independent contractors;
Exceptions to the Registration Requirement (continued) (f) Soliciting or obtaining orders, whether by mail or through employees, agents, or otherwise, if the orders require acceptance outside this state before they become contracts; (g) Creating or acquiring indebtedness, mortgages, and security interests in real, personal, or intangible property; (h) Securing or collecting debts or enforcing mortgages and security interests in property securing the debts; (i) Owning, without more, real or personal property; (j) Conducting an isolated transaction that is completed within thirty (30) days and that is not one (1) in the course of repeated transactions of a like nature; and (k) Transacting business in interstate commerce.
III. Tips and Things to Consider When Filing Contracts Secretary of State Registration Retroactive Start Dates & Contracts of High Rate Multiple Vendors Funding Sources and Contract Descriptions
Secretary of State Registration Make sure they are registered with the Secretary of State and are in good standing Attach form to contract indicating company is in good standing
Retroactive Start Date & Contracts of High Rate In cases where a retroactive start date is needed or a contracted hourly rate exceeds the maximum requirement, submit a letter of explanation to the co- chairs prior to the meeting. Lack of this documentation may lead to a deferral.
Multiple Vendors Also called a multi contract May submit one contract with a list of all supporting vendors No need for an individual contract for each vendor
Funding Sources & Contract Descriptions Make sure funding sources are accurate and consistent Provide a concise description of services provided
IV. The Day of the Meeting Contracts Selected for Further Review What should you expect? What do members generally look for?
What to expect for meeting time In the week prior to the meeting, committee members and agencies will receive the complete agenda to review. We strongly encourage all agencies to look over the agenda thoroughly to ensure that no corrections or additions need to be made prior to the meeting. Committee members typically have up until the business day before the meeting to select contracts for review, at which point we immediately notify all agencies that need to attend the meeting and speak to their contract. The routine meeting day is the 2ndTuesday of the month. Members notify us by the Monday before the meeting with any questions or pulled items.
If your contract is selected for further review... Members typically pull contracts that present questions on the amount, scope, source of funding, necessity, and effectiveness of the agreement. If the contract deals with a reoccurring program, be prepared to discuss measurements of its success. Members often look at service contracts for universities to understand whether the contracted service can be performed by current staff or students with particularized training. If questions remain after discussion at the meeting, members can request to defer the contract to the following month.
After the meeting... All approved contracts transmittals will be stamped, scanned and emailed to the respective agencies. Payment can begin upon receipt of the approved contract. Universities can anticipate receipt the business day following the monthly meeting.
Call or email our office if you ever have a question or concern. We are located in 002 of the Capitol Annex. Kim Eisner, Committee Staff Administrator Ext. 756 Kim.Eisner@lrc.ky.gov Daniel Carter, Legislative Analyst Ext. 360 Daniel.Carter@lrc.ky.gov Jennifer Wilson, Committee Assistant Ext. 424 Jennifer.Wilson@lrc.ky.gov
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