Understanding Contracts in the Texas Juvenile Justice System
Contracts play a crucial role in the operations of the Texas Juvenile Justice Department, ensuring legal obligations are met. This content explains what constitutes a contract, the key elements required for a contract to be valid, and dispels common misconceptions regarding written contracts. It also outlines the various documents involved in a contract and clarifies the significance of purchase orders in the contracting process.
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Training provided by Texas Juvenile Justice Department Contract s Department 1 03/23/2016
Things to consider: Things to consider: A contract is a legally enforceable promise or set of promises. Not every promise is legally enforceable. Includes all documents agreed to by parties and named in contract. Training provided by Texas Juvenile Justice Department Contract s Department 2 03/23/2016
To qualify as a contract: To qualify as a contract: A set of promises based on a voluntary agreement; Between parties who have capacity to contract; Objectives and performance must be legal; Made up of: Offer Acceptance Consideration Made up of: Offer Acceptance Consideration Training provided by Texas Juvenile Justice Department Contract s Department 3 03/23/2016
True or false: Does a contract have to be in writing? Generally speaking, No. A verbal contract that can be proven is just as legally binding as a written contract. CAUTION something. When in doubt say: I ll get back with you on that . CAUTION: You could enter into a contract just by agreeing to do I ll get back with you on that . Consult with Contract s Department or General Counsel before making any commitment. Training provided by Texas Juvenile Justice Department Contract s Department 4 03/23/2016
A Contract consists of several documents Solicitation (RFP), whether formal or informal; Addenda to the RFP; Proposal or quote submitted by service provider; Negotiated and agreed to changes to original scope; Best and final offer; Any document included in the contract by reference; Signed contract. Question: Is a purchase order a contract? Yes, every purchase order must have a solicitation, offer, acceptance, and consideration. PO is the acceptance. Question: Is a purchase order a contract? Training provided by Texas Juvenile Justice Department Contract s Department 5 03/23/2016
One party party accepting the offer. One party makes an offer giving power to other party to bind both to a contract simply by other Simply stated: Here is my offer, if you agree to the terms, we have a deal. Contract is formed. Be careful accepting someone's offer. Always qualify it by saying: Let me check with my contracts and legal departments before I accept. Training provided by Texas Juvenile Justice Department Contract s Department 03/23/2016 6
Best to accept in writing. Promise to perform or actual performance creates a contract. Only person at TJJD that can accept an offer binding the agency to a contract, is Executive Director Executive Staff. One exception is a purchase order. A trained purchaser may accept an offer if prior approval obtained on requisition. Acceptance indicated by signing contract. Only person at TJJD that can accept an offer, Director, unless delegated in writing to another Executive Training provided by Texas Juvenile Justice Department Contract s Department 7 03/23/2016
Legal value, bargained for and given in exchange for an act or a promise. Must agree to pay the price that was negotiated to gain the right to enforce promise. Legal value is: Do something with no prior legal duty to do; Refrain from doing something no legal right to do. Not concerned with actual value; Training provided by Texas Juvenile Justice Department Contract s Department 03/23/2016 8
Expressed and Implied Expressed and Implied: Expressed writing, at time contract formed. TJJD requires this written type. Expressed-parties have stated terms of contract, orally or in Implied parties. Facts and circumstance indicate an agreement has been reached. Implied-mutual agreement is demonstrated by actions of the Training provided by Texas Juvenile Justice Department Contract s Department 9 03/23/2016
Federal and State Law Article 2 of the Uniform Commercial Code- All states adopted except Louisiana (only part). Common Law- Law made and applied by judges Not governed by statutes State of Texas Government and Administrative Codes New Legislation on horizon SB 20 Training provided by Texas Juvenile Justice Department Contract s Department 10 03/23/2016
State of Texas Procurement Manual and Procedures State of Texas Contract Management Guide Comptroller Contract Advisory Team, CAT TJJD Internal Contract Procedures Purchasing Approval Matrix Training provided by Texas Juvenile Justice Department Contract s Department 11 03/23/2016
What are the changes: More oversight by DIR, TPASS, CAT, LBB, and SAO; Changing major contracts definition back to $1 million; Requirement to write better Scopes of Work; Use best value criteria when awarding contracts; Identify high risk contracts; Require risk and needs assessment; Base payments on deliverables; Pay for performance; New reporting and posting requirements; Identify and post non-competitive awards; Longer 7 year retention period; Better tracking of vendor performance; Vendor Performance used as evaluation criteria; Two year moratorium against contracting with former employee. Training provided by Texas Juvenile Justice Department Contract s Department 12 03/23/2016
Sequence of defined, repeatable activities that begin before contract award and continues through delivery, payment, and closeout. Process of planning, creating, awarding, and administering agreements to buy goods and services from another party. Art and science of managing a contractual agreement both from a legal stand point and performance based perspective. Training provided by Texas Juvenile Justice Department Contract s Department 13 03/23/2016
Identify need for services Risk and needs assessment Develop detailed description of services, aka, statement of work or scope of work (SOW); Submit requisition in CAPPS for funding approval; Attach all documents related to requested service; Contract Specialist takes lead in negotiating; Assist in working out details with service provider; Contract Specialist will finalize contract, change req. to CON and route for approvals, using CAPPS workflow; CS will obtain signatures and distribute copies of contract. Contract Specialist takes lead in negotiating; Training provided by Texas Juvenile Justice Department Contract s Department 14 03/23/2016
Any approver of a contract that has a conflict of interest must disclose it. All contract approvers, purchasing and contracts staff must sign conflict of interest statement. NOTICE this contract, certifies that he or she: (1) has no interest in, or connection with, the contract referenced herein; (2) has not accepted or received, and will not accept or receive, from a person or entity to whom the contract has been awarded, directly or indirectly, anything of value or a promise, obligation, or contract for future reward or compensation; and (3) has disclosed any possible conflicts of interest to the Director of Business Operations and Contracts. NOTICE: : Each Approval Authority in this workflow, by approving Training provided by Texas Juvenile Justice Department Contract s Department 15 03/23/2016
Key elements of the contract Key elements of the contract; Contains the written offer, acceptance and consideration Contains the written offer, acceptance and consideration; Describes the details of what both parties must do Describes the details of what both parties must do; Minimizes risk to TJJD; Minimizes risk to TJJD; Provides Rules of Performance; Provides Rules of Performance; SOW or description of services must include: Detailed list of all services to be performed; How compensation will be provided for successfully performing; Deliverables and dates they are required to be met; Performance measures that sets level of quality required; Rules for receiving payment. SOW or description of services must include: Training provided by Texas Juvenile Justice Department Contract s Department 16 03/23/2016
All contracts must be initiated through Contracts Department. OK to consult with Legal Department before beginning. Submit purchase requisition in CAPPS. Attach all documents you have: proposals, quotes, contract documents and related correspondence. Contract Specialist negotiates and creates contract, attaches to the requisition. May request departmental assistance. Contracts are approved through CAPPS workflow approval. After approval, hard copy contract routed for signature by CS. Under Contract s Attorney for Contracts Dept. Three main functional areas: o Contract Initiation/Administration o Contract Management o General Counsel All contracts must be initiated through Contracts Department. Under no circumstances take Contract s Attorney for signature. Contracts Dept. no circumstances take contract contract directly to signature. Process starts and ends with the directly to Executive Process starts and ends with the Executive Director Director or or Training provided by Texas Juvenile Justice Department Contract s Department 17 03/23/2016
Sometimes referred to as Program Administration. Responsibility of department using service Planning, preparing risk and needs assessment; Consulting with Contracts and Legal Departments if necessary; Developing statement of work, deliverables and performance measures; Describing TJJD Policies that may apply to service being performed; Administering daily operations of services established in contract. Managing performance. May require involvement of Contract Manager should dispute arise. Overseeing delivery and receipt of services. Analyzing invoices for compliance; Certifying services were performed, approving invoices for payment; Applying knowledge, skills, and techniques to support program activities. Three elements managed called triple Responsibility of department using service. Includes: triple constraint constraint: cost, time, and scope. Training provided by Texas Juvenile Justice Department Contract s Department 18 03/23/2016
Handled by Contracts Department Ensuring appropriate clauses are in contract; Enforcing contract terms and managing actions of parties as governed by the terms of the contract; Ensuring TJJD receives the best service, from the best provider, for the best price, with the best quality and for the best length of time. Handled by Contracts Department. Consists of: o o o All Contract Managers are to be CTCM certified. For TJJD, a Contract Specialist III or above is considered a Contract Manager Contract Manager. Training provided by Texas Juvenile Justice Department Contract s Department 19 03/23/2016
All contracts must be submitted to Contracts Department for processing. All contracts must be submitted to Contracts Department for processing. Contract Obtain required documents; Review contract terms; Process contract amendments including renewals; Obtain legal review; Negotiate changes with other party; Properly route for approval; and Obtain signatures from other party and TJJD s Executive Director. Contract Manager Manager will: Always consult with Contracts Department when a contract is anticipated. When in doubt ask. We are here to help. Contracts Department will ensure contracts are properly awarded in accordance legal and statutory requirements. Training provided by Texas Juvenile Justice Department Contract s Department 20 03/23/2016
General Counsels Office : Provides legal review, guidance, and oversight for all aspects of the agency's contracting framework. Determines contractual statutory authority; Ensures all legal elements of agency contracts are met; Legal Departments role in developing a contract is coordinated by the Contract Manager; Training provided by Texas Juvenile Justice Department Contract s Department 21 03/23/2016
Consult with Contracts Department first, we will determine if General Counsel involvement required. Determine meaning and legal effect of the terms. Determine principle objectives. Common sense guidelines apply. Handwritten provisions may prevail over written. Actions of the parties are used. Avoid disputes with well written statement of work. Training provided by Texas Juvenile Justice Department Contract s Department 03/23/2016 22
Strict performance Substantial performance Good faith performance Implied covenant of good faith and fair dealing Neither party will prevent other from obtaining benefits they have a right to expect Prevents abuses of power, encourages ethical behavior Training provided by Texas Juvenile Justice Department Contract s Department 03/23/2016 23
Before approving an invoice for payment you must : : Know Provide invoice to Claims immediately. Analyze services billed are listed in the contract. Roles and Responsibilities: Department Contract Administrator: Ensures invoices properly completed and submitted on time; Must verify services performed are billable. Approve invoices by certifying services were performed in accordance with the contract terms and statement of work. Contract Specialist: Interprets contract terms to resolves payment disputes; Confers with legal when necessary; Communicates non-compliance issue to service provider TJJD s Claims Department Reviews invoice for accuracy; Resolves questionable charges; Processes payment. Know your Provide invoice to Claims immediately. 30 day clock starts when you receive it. Analyze the invoice your contract contract- - Read and understand terms of contract. the invoice. If not correct, get service provider to correct it. Make sure all Department Contract Administrator: Contract Specialist: TJJD s Claims Department: Training provided by Texas Juvenile Justice Department Contract s Department 24 03/23/2016
Contractual duty cannot be done by anyone. Illness or death not excuse duties that can be delegated to someone else. Supervening illegality Destruction of subject matter of the contract Unforeseen developments makes performance highly impractical or unreasonably expensive. Mutual agreement Training provided by Texas Juvenile Justice Department Contract s Department 03/23/2016 25
Corrective Action Non-Performance issues must be well documented. Put provider on notice, send cure notice letter. Deadline passes, can extend, withhold payment or claim breach. Provider may invoke dispute resolution process. Withhold payment Non-Performance must be well documented. Provider must be given opportunity to correct problem. If problem serious enough to consider non-payment, maybe time to terminate Restitution Must return exact property conferred on him; or Must return a sum of money equal to the benefit. Liquidated damages Recover damages for losses that can be proven. Liable only for losses foreseeable at time of contract Responsible for cost to re-procure services and resulting delays. Both parties have duty to minimize or avoid damages. Training provided by Texas Juvenile Justice Department Contract s Department 03/23/2016 26
True or False: An simple agreement with another state agency can be signed by a Department Head or Senior Director if not committing any agency funds. True or False: You wish to schedule a training for your department and obtain hotel meeting room space, you can sign the agreement with the trainer or hotel as long as the training is for your staff and is reasonable in cost. Both are False. The Purchasing Approval Matrix governs approvals required for all contracts, regardless of cost. The Executive Director is the authorized agent for TJJD to sign all contracts, unless delegated to another staff member. all Training provided by Texas Juvenile Justice Department Contract s Department 27 03/23/2016
Question: Who can enter into a contract on behalf of your Department? No one, except the Executive Director or their designee, has the authority to bind the agency to a contract or commit agency funds. It is very important to remember when dealing with an outside party you wish to contract with, whether it is a private company or another agency that you have no authority to commit agency funds or to accept an offer. Contracts will generally have a statement that says only the authorized representative of each party may sign the contract, otherwise contract may be void. Training provided by Texas Juvenile Justice Department Contract s Department 28 03/23/2016
Purchasing Approval Matrix is approved by Board; Found in Procurement Procedures Manual-PCM.03.09; Establishes approvals required for all purchases; Approvals are required for no cost contracts; Establishes which contracts need Board approval; Establishes approvals required for IT and construction purchases and services; and Used to establish work flow in CAPPS. Training provided by Texas Juvenile Justice Department Contract s Department 29 03/23/2016
TEXAS JUVENILE JUSTICE DEPARTMENT PURCHASE APPROVAL MATRIX Agency procedures require the application of the Approval Matrix for all Agency purchases. Signatures on the requisition form (BSD-100) approves the expenditure of agency funds. Any purchase that will be paid with local operating funds must be approved by the facility's business office. Facility Business Coord. (Field sites only) ALL PURCHASE REQUISITIONS (BSD-100) Requesting Division Director Requesting Department Head Superintendent or Principal (Field sites only) Central Office Budget Approval Grant Budget Analyst Construction Accountant IT Approval TJJD Board Chief Financial Officer Executive Director All purchases Less than $5,000 X X* X All purchases Equal to $5,000 or less than $25,000 X X X X X X X X X X X All purchases Equal to $25,000 or less than $100,000 All purchases Equal to $100,000 or higher Purchase of Equipment $150,000 or greater Proprietary/Sole Source Purchases greater than $5,000.00 Information Technology purchases also require Construction-related purchases also require X X X X X X X X X X X X X X X X X X X X X X X X X X X Field purchases will be approved by the Superintendent unless it is for the Education Department, then the Principal will approve. *Certain purchases under $5,000.00 may be exempt from Superintendent or Principal approval. Individual Superintendents and Principals may establish their own approval thresholds based on the types and dollar amount of purchases under $5,000.00. Each Business Office will have a written list for those exempt items signed by the Superintendent or Principal. All Sole source/proprietary purchase requests must have a sole source justification from vendor. A Proprietary Justification Letter must be signed by the Executive Director or his/her designee. All Central Office purchases require budget analyst approval. In addition, grant-funded purchases require Grant Budget Analyst approval. IT purchases require IT Division approval. Purchase requests under $25,000.00 from the field may be approved by the Director of Information Technology. Certain items are exempt for IT Division approval, a list of those items will be published by the IT Division. AFTER PURCHASE REQUISITION IS APPROVED: Once a requisition is approved in accordance with the above matrix, the requisition is then presented to the Purchaser or Contract Specialist to select the appropriate procurement method which will result in the creation of a purchase order or a contract. No further approvals are required to issue a Purchase order. Contracts require additional approvals. Purchase orders are used for low-risk purchases of goods and simple services only. DO NOT USE A PO AS A SUBSTITUTE FOR A CONTRACT. Check with the Contracts and Procurement Department if you have questions. Below are the approvals required to execute a contract. Executive Director Chief Financial Officer CONTRACTS FOR SERVICES Senior Director Requesting Department Other Contracting Parties Contracts Administration Manager Director of Business Operations and Contracts Construction Department Grant Manager Chief Technical Officer TJJD Board All contracts and contract amendments require the following additional approvals and executing signatures. Legal Review Execution Authority Approval X X X X X X X All Contracts and Amendments X X X X X X X X Grant-Funded Contracts X X X X X X X Information Technology Contracts Construction Contracts less than $300,000.00 X X X X X X X X X X X X X X X Construction Contracts exceeding $300,000.00 X X X X X X X Construction Change Orders exceeding $150,000 X X X X X X X X All Architectural or Engineering contracts X X X X X X X X Consulting Contracts exceeding $15,000 X X X X X X X X All new Residential Services Contracts X X X X X X X X All Contracts exceeding $500,000 If signature approval was provided on the purchase requisition, it is not required on the contract approval routing. Signatures will be obtained from the other contracting parties prior to the Executive Director executing the contract unless an exception is granted by the Director of Business Operations and Contracts. TJJD Board approval may be obtained at any point in the approval process but must be obtained prior to the Executive Director executing the contract. TJJD Board may be asked to approve other procurements deemed appropriate for board approval as determined by the Executive Director. The Executive Director may delegate Execution Authority in accordance with Texas Statutes, as neccessary to conduct the business of the Department. Training provided by Texas Juvenile Justice Department Contract s Department 30 03/23/2016
How will we handle FY16 contract renewals? CAPPS Team to hold User Group Meeting to discuss; Information will be provided as we get it. Contract renewals are being tracked. Notices to go out 90 days before expiration. Renewals will be processed through and approved in CAPPS. Identify renewals requiring Board approval. Training provided by Texas Juvenile Justice Department Contract s Department 31 03/23/2016
Mallor, Jane P., et al. Business Law -The Ethical, Global, and E-Commerce Environment 13th Edition. New York, NY: McGraw-Hill Companies, Inc., 2007. Training provided by Texas Juvenile Justice Department Contract s Department 32 03/23/2016
