PROCUREMENT 101

1
PROCUREMENT 101The Essentials
2
Building Blocks
3
Kentuckys Procurement Law

• American Bar Associations (ABA) Model
  Procurement Code was adopted by Legislation in
  1978 and became law in 1979.
• Kentucky was the first state to adopt this
  procurement code.
• There are currently 18 states operating under
  this code.
• KRS Chapter 45A is the statutory location of the
  Model Procurement Code.

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Kentuckys Procurement Law

• ABA drafted the MPC as a result of numerous
  public purchasing scandals across the country
• Its a Model Code and not a Uniform Code
• Highly flexible statutory framework
• Establishes a set of ethical standards.

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KRS 45A.010- Purposes and Policies

• (2) The underlying purposes and policies of this
  code shall be
• (a) To simplify, clarify, and modernize the law
  governing purchasing by the Commonwealth
• (b) To permit the continued development of
  purchasing policies and practices
• (c) To make as consistent as possible the
  purchasing laws among the various states
• (d) To provide for increased public confidence in
  the procedures followed in public procurement
• (e) To insure the fair and equitable treatment of
  all persons who deal with the procurement system
  of the Commonwealth
• (f) To provide increased economy in state
  procurement activities by fostering effective
  competition and
• (g) To provide safeguards for the maintenance of
  a procurement system of quality and integrity.

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KMPC

• KRS 45A.050 KRS 45A.340
• State Government
• 45A.050 45A.067 Definitions, Exemptions to
  centralization of procurement, Finance Cabinet
  authority to promulgate Regulations
• 45A.070 45A.170 Methods of awarding state
  contracts, Competitive Sealed Bidding,
  Competitive Negotiation, Small Purchases
• 45A.180 45A. 340 Capital Construction, Bonds,
  Protests, Conflicts of Interest
• KRS 45A.343 KRS 45A.460
• Local Governments

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KMPC

• KRS 45A.500 45A.540 - Recycled Material Content
  Products
• KRS 45A.550 45A. 570 - Privatization Contracts
• KRS 45A.600 45A.725 - Miscellaneous Procurement
  Provisions
• Personal Service Contracts

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KMPC

• KRS 45A.730 45A.750 Procurement of
  Architectural and Engineering Services
• KRS 45A.800 45A.838 Architectural and
  Engineering Services
• KRS 45A.840 45A.879 Underwriter and Bond
  Counsel Services
• KRS 45A.990 Penalties

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KRS 45A. 990 - Penalties

• KRS 45A.045 Disposal of Surplus Real and
  Personal Property Class D Felony
• KRS 45A.325 Collusion Class D Felony
• KRS 45A.330 to 340 Conflicts of Interest
  Class B Misdemeanor
• KRS 45A.690 to 725 Personal Service Contracts
  Class A Misdemeanor

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Administrative RegulationsTitle 200 Chapter 5

• For Example
• 306 - Competitive Sealed Bidding
• 307 - Competitive Negotiations
• 310 - Multiple Contracts
• 312 - Termination of Contracts
• 380 - Protests

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Competitive Sealed Bidding

• KRS 45A.080 Competitive sealed bidding
• (4) Bids shall be opened publicly at the time and
  place designated in the invitation for bids.
• 200 KAR 5306. Competitive sealed bidding
• Section 2. The purchasing officer or other
  employee of the purchasing agency designated to
  open the bids shall determine when the time set
  for opening bids has arrived and shall so declare
  the time to those present for the bid opening.
  The purchasing officer or designee shall, in the
  presence of all persons in attendance, open all
  bids received as of that date and hour. If
  practical, the names of the bidders and the
  amounts of their bids may be read aloud to the
  persons present.

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Policies and Procedures

• FAP 111-35-00 Competitive Sealed Bidding
• 10. Opening of Bids At the time designated for
  bid opening, online and hardcopy bids shall be
  opened and may be read or otherwise made
  available to the public. No late online bid
  responses shall be received or considered. A
  hardcopy bid received after the time specified in
  the Solicitation shall not be considered, unless
  no other bids are received.

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Familiarize Yourself With the Following in the
Policies and Procedures Manual

• FAP-111-08-00
• FAP-111-09-00
• FAP-111-10-00

• Exceptions to Sealed Bidding (By Law or
  Regulation)
• Exceptions to Sealed Bidding (Not Practicable /
  Feasible)
• Exceptions to Sealed Bidding (Sole Source)

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Four Basic Methods of Procurement Under KMPC
(KRS 45A)

• Competitive Sealed Bidding (KRS 45A.080)
  Conducted by FACs Office of Procurement Services
  for aggregate purchase of 20,000 or more.
• Competitive Negotiations - RFP (KRS 45A.085)
  Large dollar amounts - Determination and Finding
  required.
• Non-Competitive Negotiations (KRS 45A.095)
  Examples Sole Source, Emergency- Determination
  and Finding Required.
• Small Purchases (KRS 45A.100) Aggregate amounts
  less than your agencys authorized dollar amount.
  Most agencies 1,000 with single quote.

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KentuckyPreference Laws
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KRS 45A.494 - Reciprocal preference for Resident
Bidders

• Prior to a contract being awarded to the
  lowest responsible and responsive bidder on a
  contract by a public agency, a resident bidder of
  the Commonwealth shall be given a preference
  against a nonresident bidder registered in any
  state that gives or requires a preference to
  bidders from that state. The preference shall be
  equal to the preference given or required by the
  state of the nonresident bidder.

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Tie Bid

• If a procurement results in a tie between a
  resident bidder and a nonresident bidder,
  preference shall be given to the resident bidder.

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KRS 45A.494 Reciprocal Preference for Resident
Bidders

• Applicability
• Applies to all contracts funded or controlled in
  whole or in part by a public agency.
• Contract means any agreement of a public
  agency, including grants and orders, for the
  purchase or disposal of supplies, services,
  construction, or any other item.
• Public agency has same meaning as KRS 61.805
  (Open Meetings Law definition).

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KRS 45A.494 - Reciprocal preference for Resident
Bidders

• Resident Bidder
• An individual, partnership, association,
  corporation, or other business entity that, on
  the date the contract is first advertised or
  announced as available for bidding
• Authorized to transact business in the
  Commonwealth and
• For 1 year prior to and through the date of the
  advertisement, filed Kentucky corporate income
  taxes, made payments to the Kentucky unemployment
  insurance fund established in KRS 341.490, and
  maintained a Kentucky workers' compensation
  policy in effect.

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KRS 45A.494 - Reciprocal preference for Resident
Bidders

• Nonresident Bidder
• An individual, partnership, association,
  corporation, or other business entity that does
  not meet the requirements to be considered a
  resident bidder.

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KRS 45A.494 - Reciprocal preference for Resident
Bidders

• Other Requirements
• The Finance and Administration Cabinet shall
  maintain a list of states that give to or require
  a preference for their own resident bidders,
  including details of the preference given to such
  bidders, to be used by public agencies in
  determining resident bidder preferences.
• The cabinet shall also promulgate administrative
  regulations in accordance with KRS Chapter 13A
  establishing the procedure by which the
  preferences required by this section shall be
  given.

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KRS 45A.494 - Reciprocal preference for Resident
Bidders

• Other Requirements (cont.)
• The preference for resident bidders shall not be
  given if the preference conflicts with federal
  law.
• Any public agency soliciting or advertising for
  bids for contracts shall make KRS 45A.490 to
  45A.494 part of the solicitation or advertisement
  for bids.

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200 KAR 5400. Kentucky Resident Bidder
Reciprocal Preference.

• Section 1. Definitions.
• (1) "Contract" is defined by KRS 45A.490(1).
• (2) "Nonresident bidder" is defined by KRS
  45A.494(3).
• (3) "Public Agency" is defined by KRS 45A.490(2).
• (4) "Resident bidder" is defined by KRS
  45A.494(2).
• (5) "Response" means any bid or response
  submitted to a solicitation.
• (6) "Solicitation" means an invitation for bid,
  request for proposal, advertisement for bid, or
  another formal method of soliciting a contract
  issued by a public agency.

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200 KAR 5400. Kentucky Resident bidder
reciprocal preference.

• Claiming Resident Bidder Status
• Any individual, partnership, association,
  corporation, or other business entity claiming
  resident bidder status shall submit along with
  its response a notarized affidavit that affirms
  that it meets the criteria to be considered a
  resident bidder as set forth in KRS 45A.494(2).
  Failure of a Ky. bidder to submit will not
  disqualify a vendor from bidding however, they
  will not be eligible to be considered as a
  resident bidder. A vendor can not take
  exception to any part of the affidavit in order
  to be eligible for resident bidder status.
• (2) If requested, failure to provide
  documentation to a public agency proving resident
  bidder status shall result in disqualification of
  the bidder or contract termination.

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200 KAR 5400. Kentucky resident Bidder
Reciprocal Preference.

• Determination of Residency for Nonresident
  Bidders
• The state of residency for a nonresident bidder,
  for purposes of this administrative regulation,
  shall be its principal office as identified in
  the bidders certificate of authority to transact
  business in Kentucky as filed with the
  Commonwealth of Kentucky, Secretary of State.
• If the bidder is not required to obtain a
  certificate of authority to transact business in
  Kentucky, its state of residency shall be deemed
  to be the mailing address provided in its bid.

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200 KAR 5400. Kentucky Resident Bidder
Reciprocal Preference

• Applying the Reciprocal Preference
• Once all responsible and responsive bidders to a
  solicitation have been scored and ranked, the
  residency of each bidder shall be identified.
• A preference equal to the preference given or
  required by the state of the highest evaluated
  nonresident bidders shall be given to all
  responsive and responsible resident bidders.
• The responses shall then be rescored and
  re-ranked to account for any applicable
  preferences.

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200 KAR 5400. Kentucky Resident Bidder
Reciprocal Preference

• Applying the Reciprocal Preference (cont.)
• 4. In awarding a contract, resident bidders shall
  only receive preference against nonresident
  bidders residing in a state that gives a
  preference to bidders from that state. This
  preference shall not be applied against
  nonresident bidders residing in states that do
  not give preference against Kentucky bidders.
• 5. If a procurement determination results in a
  tie between a resident bidder and a nonresident
  bidder, preference shall be given to the resident
  bidder.
• 6. Nothing in this administrative regulation
  shall result in a nonresident bidder receiving a
  preference over another nonresident bidder.

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Secretary of State Registration?

• Will this new law require all resident vendors
  who wish to bid on a contract to be registered
  with the Sec. of States Office?
• The reciprocal preference law does not impose any
  additional requirements on a vendor with regard
  to registering with the Secretary of State.  A
  resident bidder will fall into one of these three
  categories 
• 1) Organized under the laws of Kentucky which
  would require registration with the Secretary of
  State
• 2) Organized under the laws of another state but
  doing business here which would require that they
  receive a certificate of authority to transact
  business in Kentucky from the Secretary of State
  or
• 3) Not required to register with the Secretary of
  State (sole proprietorship, for example). 
• Therefore, the category in which they fall will
  determine what form of registration, if any, is
  required.    

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Next Steps

• This information will be posted to our
  eprocurement website http//eprocurement.ky.gov/
• The Oregon website that contains a list of all
  state preferences is http//procurement.oregon.go
  v/DAS/SSD/SPO/reciprocal_detail.shtml. Ky is in
  the process of creating our own list of state
  preferences, but we will use the Oregon site
  initially.

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THE LAW

• 1.) Procurements not to exceed an aggregate
  amount of 1,000 for all other purchases by state
  governmental bodies may be made in accordance
  with Small Purchase Regulations promulgated by
  the Secretary of the Finance and Administration
  Cabinet.
• 2.) Procurement requirements shall not be
  artificially divided so as to constitute a Small
  Purchase under this section.
• Ref KRS 45A.100
• Policy FAP-111-55-00

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Definition of Aggregate

• Gathered together in a mass constituting a whole.

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Basic Small Purchase Procedure
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Price Quotes Required for Finance Cabinet Agencies
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Quotations Required for Commodity Service
Purchases
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Construction Services Quotes Required
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Tips When Obtaining Quotes From Vendors

• If obtaining phone quotes - advise vendor(s)
  youre obtaining quotes from several vendors.
• For FAX quotes, have vendor fax his quote, terms,
  etc. to you complete with his signature.
• Write legible if youre obtaining quotes by fax
  machine.
• Always give a complete address for the Ship To
  location -- Dont use P.O. Box Numbers!!
• If possible, always make freight terms F.O.B.
  Destination --- not F.O.B. Factory!

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Tips When Obtaining Quotes From Vendors

• Contact the manufacturer if a Brand Name is
  required to determine authorized dealers to
  promote competition.
• If you have a higher small purchasing authority
  (I.e. 5,000 or more), consider establishing an
  acceptable brands list (ABL) when soliciting.
• ADVANTAGE of ABL -
• Promotes Competition
• DISADVANTAGE -
• Requires research and hands on evaluation
• of products -- can be time consuming.

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Specifications

• Learn all you can about preparing specifications
  -- especially when the bid requires a formal
  solicitation (20,000 plus)
• There are various workshops and/or seminars
  available to you.
• National Institute of Governmental Purchasing
  (NIGP) is an excellent source.

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Submitting Specifications on eMARS
Requisitions

• General or Generic Specifications
• Brand Name or Approved Equal
• Acceptable Brands List
• No Substitute Requisition BEWARE!!!! -
  Competition Killer

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Definition Of a TERM CONTRACT

• Price agreements with a particular vendor to
  supply specific items at a specific unit price
  for a specific period.

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Term Contracts

• When Should a Term Contract be Used?
• 1. To provide a continuing need
• 2. To expedite the normal purchasing process
  (i.e. obtaining quotes)

• Why are Term Contracts Established?
• 1. Convenience of User
• 2. Variety at a Fixed Price
• 3. Accelerates the Bid process

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GSA

• What is the General Service Administration (GSA)?
• The procurement agency of the U.S. government
• What is a GSA Price Agreement?
• A non-competitive negotiation between a vendor
  and the federal government which results in a 5
  to 10 year contract.

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45A.045 Authority of Cabinet

• (7) Nothing in this section shall deprive the
  Finance Administration Cabinet from negotiating
  with vendors who maintain a general service
  administration (GSA) price agreement with the
  United States of America or any agency thereof.

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Terms Acronyms to Know

• RQ Requisition
• MA Price Contract Prefix
• PO Guaranteed Contract Prefix
• AOC Advice of Change to amend a Price
  Contract
• RFQ Request for Quotation
• RFB Request for Bid
• RFP Request for Proposal
• IT Prefix to identify an IFB
• DF Determination and Finding
• 45A KYs Model Procurement Law
• 200 KAR Chapter 5 Purchasing Administrative
  Regulation
• Addendum Official changes to RFQs, RFBs, RFPs
• BREACH Contractor is in default of contract
  requirement(s)
• PROTEST Vendor formally protesting an award
  decision

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Be Aware of Procedures Pertaining to Recycled
Content in Products Purchased.

• SOURCES
• KRS 45A.500 to .540
• 200 KAR 5330

46

• POST AWARD CONTRACT MANAGEMENT

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POST AWARD CONTRACT MANAGEMENT

• Overview of Types of Contracts and Award Methods
• Understanding the Contract
• Contents of the Contract
• Contract Performance
• Designating an agency contract manager, receiving
  goods or services, monitoring performance,
  approving payment, evaluation of performance
• Contract Modifications
• Performance Problems, Complaints, and Resolution
• Contract Termination
• Disciplinary Action
• Creating and Maintaining Records
• Assignment of Contract or Assignment of Payments

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WHAT IS CONTRACT MANAGEMENT?

• The management of all actions, after the award of
  a contract, that must be taken to assure
  compliance with the contract e.g., timely
  delivery, acceptance, payment, closing contract,
  etc.
• Every agency should designate a programmatic
  contract manager for each contract they
  administer.

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CONTRACT TYPES AND AWARD METHODS

• Competitive Sealed Bidding KRS 45A.080
• Competitive Negotiation KRS 45A.085
• Noncompetitive Negotiation KRS 45A.095
• Small Purchase by state agencies KRS 45A.100
• Personal Service Contract KRS 45A.695
• Memorandum of Agreement KRS 45A.690
• Includes any kind of contract- one-time,
  Delivery Orders, Master Agreements, PSCs, MOAs
• A payment for a good or service cannot be
  made without the proper authority!!!

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CONTRACT TYPES AND AWARD METHODS

• The contract will be the official notice of
  award, which will begin the process of contract
  management. The vendor must receive an official
  contract/order from the Commonwealth that
  authorizes the purchase or notifies them to begin
  work.

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Understanding the Contract

• Contents of a Contract
• Contract components and order of precedence
• Solicitation, addenda to solicitation, vendors
  response to the solicitation
• Contract Sections
• Line items and pricing
• Scope of work/Specifications
• Deliverables and payment triggers
• Negotiated items (where applicable)
• Contract amount and budget
• Contract period and renewals
• Standard Terms and Conditions

52
Contract Performance

• Awards of state contracts are made in accordance
  with the evaluation criteria set forth in the
  solicitation.
• In many instances vendors are awarded points
  based on their delivery of a product or contract
  milestones, which may have resulted in their
  receipt of the award.
• It is essential that the contract manager
  verifies that the contractor complies with all
  contractual requirements.

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Contract Performance

• What should be considered in managing a
  contractors performance?
• Deliverables (milestones)
• Quantity of goods to be delivered and/or services
  to be performed
• Meets required specifications
• Schedule
• Completion of project and implementation
• Outcomes
• Were the savings projected from using this new
  product or service achieved.
• Budget/financial issues
• Timeliness of invoicing
• Necessity of contract modifications  
• Customer service level

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Contract Performance

• Who manages the contract?
• Commonwealth Buyer from the contract-issuing
  agency
• Point of contact for all communications related
  to the contractual terms and conditions.
• Renewals, change orders, modifications, or
  terminations must all come through the Buyer to
  be valid and enforceable.
• Using agency designated contract manager
• An employee from the program agency responsible
  for the performance to be achieved through the
  contract
• Responsible for enforcing performance of the
  contract terms and conditions and serve as a
  liaison with the contractor.

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Contract Performance

• As a Contract Manager, How Do I Monitor
  Performance?
• Communicate initially with the vendor to set
  expectations and cover the four basic elements of
  contract performance
• Contract requirements
• Scope of work, deliverables
• Schedule
• Milestones, completion
• Budget
• Contract delivered within original budget.
  Accuracy, adequacy and timeliness of invoices,
  invoice processing and payment. Financial
  reporting if required.
• Customer service level
• What level of support and access are you going to
  expect?
• Reiterate these requirements throughout the life
  of the contract

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Contract Performance

• How Do I Monitor Performance (cont.)?
• Review invoices for contract compliance
• Only approve if product/service billed has been
  delivered per contract
• In deliverables based contracts, make sure that
  milestones have been fully met before remitting
  payment.
• Ensure invoice detail is sufficient for a proper
  audit.
• For a personal service contract, invoices must be
  submitted as required by statute, KRS
  45A.695(10).

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Contract Performance

• The contractor must be held accountable to
  perform at acceptable levels. The quality of
  work, work schedule/timetable, conflicts,
  budgets, payments, data, and subcontractors are
  just a few of the things that should be
  monitored.
• Acceptance and rejection requirements should be
  clearly outlined in the contract. If the
  contractor has met the obligations, final
  acceptance/payment should follow.

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Contract Performance

• Payments (per FAP 111-45-00)
• An agency
• shall ensure that adequate funds are available
  for immediate payment before placing an order
• shall select the appropriate payment method
• shall reference the appropriate contract when
  making payments in the states procurement/
  accounting system
• shall process an electronic invoice that will
  liquidate the encumbrance when payment is
  authorized, for payments against a document that
  has been entered into, and has encumbered funds
  within the states procurement/accounting system
• shall retain the official invoice from the vendor
  for the period of time required by the
  appropriate document retention schedule.

59
Contract Performance

• Payments (cont.)
• An agency may make payments using a Procurement
  Card
• if exercising small purchase authority
• if specifically authorized in the terms of the
  contract
• All bills shall be paid within thirty (30)
  working days of receipt of goods and services or
  a vendor's invoice and acceptance.
• Per KRS 45.454 Penalty for late payment
• An interest penalty of 1 per month after thirty
  (30) working days following the receipt of the
  goods or services or vendor's invoice by a
  purchasing agency.

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Contract Performance

• THE BUCK STOPS HERE!!
• The contract manager is the agencys front line
  resource to ensure proper performance and that we
  are paying for what was required in the contract.

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CONTRACT MODIFICATIONS
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TYPES OF CONTRACT MODIFICATIONS

• Contract modifications are generally one of two
  types
• Administrative modifications
• Example - change in source of funding
• Changes which do not affect the terms related to
  vendor performance
• Substantive modifications
• Example Changes in scope, quantity, etc.
• These changes do affect the vendor and therefore
  require their approval.

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CONTRACT MODIFICATIONS

• Contract Modifications are governed by statutes,
  regulations, and policies and procedures
• KRS 45A.201(1) Issuance of regulations
  concerning modification and termination of
  contracts by Commonwealth
• 200 KAR 5311 Contract modifications
• FAP 111-11-00 Modification of Contracts

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CONTRACT MODIFICATIONS

• A Modification shall be used to make corrections
  or changes to a contract.
• A Modification shall not be used to initiate a
  major change outside the original scope of the
  contract.
• For Finance issued contracts, a modification
  shall not be permitted unless issued by the
  Finance Cabinet.
• Agency or vendor can request modification with
  supporting documentation.
•  

65
CONTRACT MODIFICATIONS

• An increase in quantity of goods in excess of ten
  (10) percent shall not be permitted unless
  authorized in the Solicitation, and
• Unit price increases shall not be permitted
  except as authorized by the solicitation.
• A Modification shall not be used to increase the
  dollar amount of a contract established under an
  agencys small purchase authority to an amount
  exceeding the small purchase authority limit.

66
CONTRACT MODIFICATIONS

• Modification to a Personal Service Contract shall
  be processed in the same manner as the original
  contract in the states procurement system. 
• agree to increase or decrease funds,
• revise the scope of work,
• extend the time for performance within the
  current biennium, or
• any other change. 

67
CONTRACT MODIFICATIONS

• All contract modifications are amendments to
  contracts and thus become part of the contract.
• All contract modifications must be executed by
  the buyer or purchasing officer.
• Using agencies may make requests for
  modifications to the buyer.
• EO1 modification must be made if the originally
  approved dollar amount is exceeded by more than
  15.

68
CONTRACT MODIFICATIONS

• Contract modifications should be within the scope
  of the solicitation and the existing contract
• Must be consistent with the procurement method

69
REGULATION FOR DISCIPLINARY ACTION

• Disciplinary action for failure to perform
• Failure to post bid or performance bonds, as
  required by a solicitation
• Substitution of commodities
• Failure to comply with the terms and conditions
  of a solicitation or contract,
• including failure to complete performance within
  the time specified in the contract
• Failure to replace inferior or defective
  materials, supplies or equipment

70
REGULATION FOR DISCIPLINARY ACTION

• Refusal to accept a contract awarded pursuant to
  the terms of a solicitation
• Falsifying invoices, or making false
  representations to any state agency or official,
  about any payment under a contract
• Collusion
• Failure to report, or to pay the Kentucky
  Department of Revenue any sales or use taxes
• Failure to comply with the prevailing wage law
  requirements.

71
REGULATION FOR DISCIPLINARY ACTION

• No purchase shall be made by any state agency
  from a bidder or contractor who has been
  suspended from bidding.
• All state agencies shall be promptly informed
  about bidders or contractors suspended from
  bidding.

72

• CONTRACT TERMINATION

73
200 KAR 531. TERMINATION OF CONTRACTS

• Any contractor who is determined to be in breach
  of any of the terms and conditions of a contract
  with the Commonwealth of Kentucky, shall be
  declared in default and the contract may be
  terminated.
• Contracts may be terminated for
• default by the contractor
• the convenience of the Commonwealth,
• non-appropriation of funds

74
200 KAR 5312. Termination for Default

• The Commonwealth may terminate a contract because
  of the contractors failure to perform its
  contractual duties.
• This can include
• Failure to perform the contract according to its
  terms, conditions and specifications
• Failure to make delivery within the time
  specified
• Late payment or nonpayment of bills for labor,
  materials, supplies, or equipment furnished in
  connection with a contract for construction
  services
• Failure to diligently advance the work under a
  contract for construction services
• The filing of a bankruptcy petition by or against
  the contractor or
• Actions that endanger the health, safety or
  welfare of the Commonwealth or its citizens.

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200 KAR 5312. Termination for Default

• The Commonwealth shall not be liable for any
  further payment to a contractor under a contract
  terminated for the contractor's default after the
  date of termination.

76
200 KAR 5312. Termination for Convenience

• The Commonwealth may terminate a contract for
  convenience if it has been determined that
  termination will be in the Commonwealth's best
  interests.
• The Commonwealth shall provide the contractor
  thirty (30) calendar days written notice of
  termination of the contract.
• the contractor shall have the burden of
  establishing the amount of compensation to which
  the contractor believes he is entitled.
• the purchasing officer may negotiate a settlement
  with the contractor according to terms deemed
  just and equitable by the purchasing agency.
• the settlement shall be subject to the prior
  approval of the Secretary of the Finance and
  Administration Cabinet, or designee.

77
200 KAR 5312. Termination for Convenience

• Payment
• Payment of the sum agreed to in settlement of a
  contract terminated for convenience of the
  Commonwealth shall be made from the same source
  of funds or account as the original contract.
• The Commonwealth shall not pay interest on the
  amount due under the settlement.

78
200 KAR 5312. Funding Out Provision

• The Commonwealth may terminate a contract if
  funds are not appropriated to the contracting
  agency or are not otherwise available for the
  purpose of making payments without incurring any
  obligation for payment after the date of
  termination, regardless of the terms of the
  contract.
• The contracting agency shall provide the
  contractor thirty (30) calendar days written
  notice of termination of the contract.

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• Documentation

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WHAT SHOULD BE KEPT?

• A contract managers file should contain the
  contract, any amendments, and all reports,
  complaints, and correspondence materially related
  to the contract.

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DOCUMENT, DOCUMENT, DOCUMENT!

• It is impossible to overstate the importance
  of documenting activity during the life of the
  contract!
• It is critical in the resolution of disputes or
  claims! Any staff who deals with the vendor
  should maintain records of contract activity, and
  note problems or unusual occurrences.
• You will rely heavily on the documentation to
  deal with protests and legal disputes, answer
  open record requests, handle vendor
  complaints/cancel contracts for failure to
  perform, etc.

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WHAT SHOULD I DOCUMENT?

• Regardless of how small or insignificant the
  matter may seem, problems tend to snowball and
  can get out of hand. You should
• keep copies of written correspondence and e-mails
  with the vendor
• document telephone conversations with the vendor
  (date, time, vendor representatives name)
• briefly document meetings with vendor
  representatives

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RETENTION OF PROCUREMENT DOCUMENTS

• Files and Records General
•  Each agency shall maintain records necessary to
  support each purchasing transaction.
• See FAP 111-28-00 for additional information.  

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QUESTIONS ANSWERSSESSION

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