Topic Overview

Contracts

The pre-request includes:

• Ensuring the requesting department has a discussion on whether they need to work with a supplier with internal and external stakeholders. Additionally, schools and departments should review and understand the policies and guidance on how suppliers are selected at Stanford, which are referenced in:
  • Admin Guide 5.1.1: Procurement Policies
  • Fingate’s purchasing policies and guidelines
  • Topic Overview: Selecting a Supplier (coming soon)
• Conducting a basic outline of scope, ensures pricing is documented in a statement of work or proposal, and potentially also a formal Request for Proposal (RFP). 

A supplier is any individual or organization that receives a payment, or exchange of services, from Stanford University. Before a contract request can be made, the supplier must have an active record in the university’s database. See the Topic Overview: New Supplier and Payee Records for guidance on searching for an existing supplier and setting up a new one. 

The contract process begins with a contract request and appropriate financial approval. 

Request the Contract in SmartMart Contracts

New and amended contract requests of any or no dollar amount are submitted to Procurement Services through the SmartMart Contracts system within iProcurement. Learn more about the SmartMart Contracts system. Certain Capital Equipment purchases are an exception, which may need to route through iProcurement.

Departments should attach Statement of Work, proposals and/or draft agreements within the SmartMart Contracts system. Certain types of contracts, such as involving an Independent Contractor or use of Stanford data require additional consideration or documentation depending on the nature of the contract. This documentation helps to inform and expedite the contract request and review process. 

Once a contract request is submitted, it is reviewed by the Procurement Services intake team and then marked as “completed.” Next, the SmartMart contracts system will create a purchase requisition in iProcurement. 

Financial Approval in iProcurement

When purchasing a product or service with a cost of $25,000 or greater, the requisition must include documentation verifying that a competitive supplier selection process. This typically involves attaching either other competitive bid(s) or a sole source justification (SSJ) form. This documentation must be attached to the iProcurement Requisition in Oracle Financials when the PTA is added. 

The purchase requisition must then be completed and submitted for financial approval as a part of the Purchase Order process. 

If the contract request contains a monetary value, the funds must be fully approved before the contract signature can be completed. For more information, see Topic Overview: Authority to Approve Financial Transactions.

After the funding requisition has been financially approved, the Procurement Services Contracts team will:

1. Review the request
2. Draft the agreement 
3. Negotiate any changes to legal terms requested by the supplier 
4. Request signature from the supplier
5. Sign the contract on behalf of Stanford.

Occasionally, certain contracts may require review by other departments (e.g., the Office of General Counsel, Global Business Services or Office of Technology Licensing) or pose unique circumstances/risks, which may affect processing time. Fiscal Year End generally sees a significant increase in the volume of contract requests and can impact processing time.

Communicating with the Contracts Team
When a contract request is submitted  in SmartMart Contracts, departments should use the SmartMart Contracts system’s communications functionality to communicate with the Contracts Advisor assigned to their contract. The Contracts Advisor can provide status updates and will reach out if additional information or changes are needed from the requestor.

Contracts Submitted through a non-catalog requisition in iProcurement
If a contract request was submitted through iProcurement, departments should manage the request through iProcurement. For questions about transactions submitted in iProcurement, please submit a support request.

Execution
The preparer of the contract request will receive a system-generated email letting them know when the contract has been fully signed. 

At this point, the preparer, and named contract stakeholders have view access of the contract file within SmartMart Contracts and can download a copy of the signed agreement if needed.

A funding PO is created within Oracle Financials and the number for the PO is embedded in the contract prior to signature.  Invoices may be uploaded to the associated PO. See the Topic Overview: Purchase Order Invoice Processing to understand PO invoicing requirements. See the Topic Overview: Purchase Order Process on how to review, access and manage the purchase order or make simple financial changes such as a PTA change.

If the department needs to change the terms of a contract before its termination or decides to request an agreement renewal, they need to submit a Request to Amend or Change an Existing Agreement in the SmartMart Contracts system.

Most Stanford contracts are set to automatically terminate based upon the date executed in the contract. If a department wishes to terminate a contract early, please contact the assigned contract advisor in the SmartMart Contracts system for assistance in terminating early.

The IRS requires that business owners correctly determine whether an individual providing services must be  paid as an employee or may be paid as an independent contractor. The determination of  how work is classified drives whether employment taxes must be withheld and paid by the university and eligibility for benefits including vacation. Refer to IRS guidance at Employee versus Independent Contractor Status for more information.

An Independent Contractor Checklist (IC Checklist) can help determine whether to pay a consultant as an independent contractor or employee and must be attached when submitting a requisition if the supplier is an independent contractor. 

For more information:

• Visit the IRS webpage on Independent Contractor (Self-Employed) or Employee?
• Refer to Administrative Guide Policy 2.2.3, University Payroll

Special care must be taken when Stanford data is used or accessible by others. Whether it be consultants who may use the data or services that host it, data risk classification must be considered. See the Data Risk Assessment (DRA) FAQs and Third Party Security Requirements for more information. Contracts with consultants or hosting services  will require a DRA review of data risk by the Information Security Office (ISO) and University Privacy Office (UPO).  The DRA process  could take from 4-6 weeks, so it is important to start the process early. 
 
Additional contract terms may need to be incorporated into contracts when the supplier performs a service function or activity that may involve the use, access, transfer, or storage of moderate or high risk data. Please consult Procurement  through an FSC support request as soon as the purchase has been identified as involving moderate or high risk data, such as data protected by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), or other similar Federal or State security requirements.