The following areas are under Finance and Administrative Services:
Finance and Administrative Services
The Board of Regents has given the Chancellor of the Nevada System of Higher Education the authority to enter into contracts on behalf of the Nevada System of Higher Education subject to limited exceptions that are reserved for approval of the Board of Regents, such as certain real estate matters, and employment contracts of longer than one year.
The purpose of this question and answer format is to state in plain terms the NSHE policy on contracting, including any delegation of authority from the Chancellor to the NSHE institutions. Where authority has been delegated from the Chancellor to an institution, that authority resides in the President of the institution. While the President may delegate that authority in writing to other administrative officers at the institution, the President ultimately remains responsible for all contracts entered into by the institution. Therefore the institution should have policies in place that provide for appropriate levels of internal review, including legal and financial review, pertaining to the economic and liability risks associated with the transaction. With respect to System Office contracts, the Chancellor may establish additional policies and delegation authority within the System Office and its units.
A contract is an agreement between two or more persons (or entities) that creates an obligation to do or not to do a particular thing. Its essential components are competent parties (persons or entities legally capable of contracting), subject matter (the purpose of the contract), a legal consideration (the inducement to contract, usually money or something of value, but also including mere promises to perform something or refrain from doing something), mutuality of agreement (all parties must voluntarily enter the contract) and mutuality of obligation (all parties are obligated to do something or not to do something they otherwise have a right to do).
Labels do not control whether a contract exists or not. The following, which are not meant to be all-inclusive, are all contracts if they constitute an agreement between two or more persons that creates an obligation to do or not to do a particular thing:
It is generally preferable to obtain original signatures on at least one copy of the contract as such original signatures may be useful in establishing the validity of signatures in the event of a dispute. However, circumstances such as exigency, location of parties, form of the contract and size of the contract may make acceptance of a facsimile or an electronic signature acceptable. Any exception to obtaining original signatures must be expressly approved and documented by the institution General Counsel's Office.
A contractual obligation is a legal obligation. Signing a contract is a very serious step which, depending on the terms of the contract, could put NSHE in a position of considerable liability—sometimes political, sometimes from a public relations standpoint, but most often of a financial nature. The policies contained in this procedure have been developed in order to try to limit financial liability from lawsuits that might arise from improperly written contracts. The procedures serve important interests of the Board of Regents, and it is essential that they be followed by NSHE officers and employees.
Yes. Student governments are an integral part of NSHE and the institutions in which they are established and, therefore, contracts they may enter into are subject to the contract policies established by the Board of Regents, the chancellor, and the presidents of their institutions.
Yes. Contracts with performing artists are contracts with NSHE and, therefore, are subject to the same policies and procedures established by the Board of Regents, the chancellor, and the presidents of the institutions. If a standard form contract is used that has been approved by the Vice Chancellor for Legal Affair's office, it may be approved at the institutional level.
Yes. Contracts with head coaches are contracts with NSHE and, therefore, are subject to the same policies and procedures established by the Board of Regents, the chancellor, and the presidents of the institutions. Often Board of Regents approval is required of athletic coach contracts because such contracts frequently exceed one year or contain certain perquisite/bonus provisions that require Board approval. Due to NCAA requirements, there are additional clauses in the employment contracts for head coaches that are not found in other employment contracts. Additional governing policy is contained in NSHE Code, Section 5.4.2 (b) and (c).
As NSHE is a single legal entity, the need for oversight regarding agreements or understandings between units within the System is lessened in comparison to contractual agreements between NSHE and external legal entities. Accordingly, internal agreements between units within NSHE do not require the chancellor's signature, unless otherwise required by Board of Regents' policies. These agreements, nevertheless, are subject to any policies that have been adopted at the institution level for the review and approval of contracts. A standard form agreement may be found in the appendix for general use. Please note, however, that Procedure #97-1 sets guidelines for inter-institutional agreements related to sponsored programs.
As the Board of Regents Bylaws state (Article Ill, Section 1), "The exclusive control and administration of the Nevada System of Higher Education is vested by the Constitution of the State in an elected Board of Regents." One corollary of this is that the contracting party for any NSHE contract is the Board of Regents - not the universities, community colleges, state college, Desert Research Institute, or schools, colleges, centers, departments, or any other administrative sub-unit of an institution of NSHE.
To be valid, the agreement should state that it is entered into by the BOARD OF REGENTS OF THE NEVADA SYSTEM OF HIGHER EDUCATION, on behalf of__________________ (insert name of institution, followed by specific college or other sub-unit of the institution, if necessary).
Similarly, the signature block should read:
THE BOARD OF REGENTS OF THE NEVADA SYSTEM OF HIGHER EDUCATION, on behalf of (name of institution and college or sub-unit, if necessary)
Chancellor (or appropriate title if signature authority has been delegated)
The chancellor signs the contract as the contracting officer for the Nevada System of Higher Education. The chancellor's authority is derived from the Board of Regents Bylaws, Article VII, Section 3, which states that:
"The Chancellor is the Chief Executive Officer and Treasurer of the Nevada System of Higher Education, and is responsible for the financial management and coordination of the administration of the Nevada System of Higher Education and for the implementation of the Board's policies. The Chancellor may delegate any of the duties of the office unless expressly prohibited by Board policy. "Duties are prescribed by the Board of Regents and include the following:
* * *
"(h) To serve as contracting officer for the Nevada System of Higher Education and to execute all contracts and other instruments on behalf of the University unless authority has been expressly retained by the Board of Regents or delegated elsewhere."
Thus, the Chancellor has the sole authority to execute contracts unless such authority is delegated to an institution.
Yes. It is the policy of the chancellor that any contract sent to the chancellor for signature must first be recommended by the president of the appropriate institution or the president's designee. The purpose of this policy is to ensure that no institution will commit the Board of Regents or the institution to a binding contract without the knowledge of the institution's chief administrative officer.
In addition, due to the nature of contracts that are sent by an institution to the System Office for chancellor signature, all such contracts must be reviewed by the institution General Counsel's Office. In connection with that review, the General Counsel's Office is responsible for ensuring that the contract complies with Board and System policies, and should specifically identify any departure from those policies, along with the rationale for the departure.
Yes. During an absence from the office, the Chancellor delegates signature authority pursuant to written memoranda. The Chief Counsel's office may be contacted to determine the party to who such authority has been delegated.
No, except with prior approval as discussed below, because it is possible that the beginning of work on a proposed contract would be interpreted by a court as constituting acceptance of the contract and, thus, binding upon NSHE, especially if the other party was aware that work was proceeding. Only the chancellor, however, or the chancellor's designee in the specific instances defined in this policy document, has the authority to enter into contracts on behalf of the System. Therefore, such de facto acceptance of the offer of the other contracting party may place the employee who thus accepts the offer in the position of being in violation of the Board of Regents Bylaws and policies.
There is, in addition, the risk that the other party did not understand the verbal agreement exactly as NSHE negotiator did and that, in the absence of a written instrument, disputes might arise as to some aspect of the work to be performed. Anyone who performs work without a valid contract runs the risk of not being paid.
The only exception to this policy is in specific instances where it is in the best interests of the institution to initiate the work before the contract is fully executed and where the institution has adopted a procedure for approval of the commencement of work before the contract is fully executed. In such cases, the institution must accept full financial responsibility should the contract not be executed or should payment from the outside source be denied. In situations where work has begun prior to the formal contract execution, it is appropriate to commence the contract effective on the date the parties began to mutually comply with its provisions, irrespective of the date of execution of signatures.
Contracts should typically include standard insurance requirements for any party doing business with NSHE appropriate to the risks involved. Any exceptions should only be with the approval of the institution/Risk Manager and the institution/System counsel as the case may be.
Other parties may likewise require insurance. Unless an institution is prepared to pay expensive commercial insurance coverage, a contract provision that requires NSHE to have commercial general, business automobile, or professional liability insurance (other than medical malpractice) is not possible, as NSHE is self-insured for these coverages. The contractor should be informed of this and, if needed, a certificate of self-insurance may be supplied by institution Risk Manager. Contract terms that require NSHE to have commercial general and business automobile liability insurance must either be deleted from NSHE contracts or, alternatively, the following language may be added in lieu of such provisions:
"The (Board of Regents, University, College or other appropriate name) is self-insured in accordance with the limitations of NRS 41.0305 to NRS 41.039."
Education Affiliation Agreements. The insurance and indemnification clauses in all education affiliation agreements must be approved by the institution Risk Manager and the institution General Counsel's Office. The language contained in NSHE standard form Education Affiliation Agreements is approved for use by all institutions and units. NOTE: The language for medical school and allied health affiliation agreements is not the same. Be sure the correct insurance or indemnification clauses are selected.
Independent Contractor Agreements. NSHE standard form Contract for Services of Independent Contractor includes an Insurance Schedule setting forth various types of insurance that may be required of contractors with NSHE. The insurance requirements for workers' compensation, commercial general, and business automobile liability are mandatory in all independent contractor agreements. Whether other insurance should be required will depend on the subject matter and circumstances of each contract. Contact your institution/Risk Manager with any questions regarding insurance provisions.
The president may delegate his or her signature authority on contracts, including employment contracts, providing that such delegation is made in writing and is specific to a position rather than to a person. A copy of the written delegation of signature authority shall be kept by the institution in a secure and accessible location or established archive for inspection and audit purposes.
In the case of System units housed on NSHE campuses - such as System Computing Services - the delegation of signature authority for applicable contract documents shall be delegated by the chancellor to the appropriate vice chancellor in charge of the System unit.
Copies of NSHE contracts must be kept for a period of no less than six years after the expiration of the contract.
Institutions sending a contract to the chancellor for signature must include one extra copy of the contract for the Chancellor's Office files that is marked "Chancellor's copy" or "System copy." Both copies must contain flags on all pages requiring the chancellor's signature.
Contract officers should normally anticipate a one week time period for processing at the System office. When a contract is received by the Chancellor's Office, it undergoes tracking and summary review by the Chief Counsel's Office prior to signature by the chancellor. Questions about the status of a particular contract should be directed to the Chief Counsel's Office.
In cases where the person who has been delegated signature authority for a particular type of contract may be absent from the institution, he or she may redelegate signature authority to another person for the period of his or her absence. Such re-delegation must be in writing and designate a specific timeframe.
When there is doubt as to who has the authority to sign a contract, the contract should be sent through appropriate channels to the president for transmittal to the chancellor for signature.
Yes. Every open-ended or indefinite term contract must contain a mutual no-cause cancellation or termination clause. An appropriate notification period should be included as part of the cancellation or termination clause.
It is also recommended that NSHE institutions periodically review open-ended or indefinite term contracts on a regular basis to determine if the continuation or the cancellation of the contract is in order.
Yes. The location of a nuclear waste repository in Nevada is a highly controversial and politically charged issue. A number of highly placed public officials, as well as news media organizations, have criticized NSHE for entering into these contracts. The Board of Regents, however, has strongly supported the academic freedom of NSHE institutions and faculty to contract to perform research in this field.
The matter is complicated by the opinion of the Nevada Attorney General that by contracting with the United States Government or its contractors for research on the nuclear waste repository site, NSHE, as an instrumentality of the State of Nevada, may indirectly waive the State of Nevada's objections to the location of a nuclear waste repository in Nevada. Although the Chief Counsel's Office is not persuaded by this argument, nevertheless, as a matter of prudence, the issue must be addressed in NSHE's contracts.
Therefore, the following language must be included in every nuclear waste repository research contract (or grant) entered into between NSHE and the United States government or a contractor of the United States government:
"The parties to this contract expressly agree that neither the making or entering into of this contract, nor the terms, conditions or performance of this contract, shall be considered by the United States, the State of Nevada or any of their agencies, officers, employees or agents, either expressly or impliedly, directly or indirectly, or in any way whatsoever, as constituting the consent, permission or agreement of the State of Nevada or its legislature, agencies, officers, employees and agents to the location, establishment or creation of a nuclear waste repository site in Nevada."
Yes. Every contract with a term beyond the current biennial budget cycle that may be paid in whole or in part with state funds must have a clause allowing termination without penalties in the event the Legislature fails to provide funding for the contract obligation. The reason for such a clause is grounded in state law because if a clause is not included, the contract may impact the constitutional debt limitations of the State of Nevada. The following language is recommended:
"In the event no funds or insufficient funds are appropriated and budgeted or are otherwise unavailable in any fiscal period for payments due under this Agreement, then this Agreement shall terminate on the last day of the fiscal period for which appropriations were received without penalty or expense to (Institution) of any kind whatsoever."
Minor modifications of this language may be approved by institution/System counsel as long as the intent of such a clause is satisfied.
If a contract provides that the NSHE may terminate the contract for convenience (i.e. without cause) with a short notice period (suggested no more than 90 days), then an appropriation clause is not required as NSHE may simply use that clause to terminate a contract that has not received legislative funding.
No, unless the agreements exceed the contracting authority of the institution president. Nevertheless, any such agreements must be reviewed by institution counsel to ensure that such agreements have the proper release language contained in them before they are executed.
Many private contractors or state or local governmental agencies routinely insert a clause in their contracts that is worded something like this:
"The University of Nevada agrees to indemnify and hold harmless the John Doe Company (or the city of Gotham) from any and all claims and losses arising from the performance of this contract."
However, the State's self-insurance program, to which NSHE belongs, protects only against acts or omissions of NSHE employees that occur within the scope of public duty or employment and that are performed or omitted in good faith. By agreeing to a clause like the one above, NSHE would be agreeing to defend the John Doe Company or the City of Gotham from any and all claims and losses, whether or not caused by any fault of any NSHE employee. In effect, by signing such a clause, NSHE would become the insurer of the other contractor. This is not permitted by the State of Nevada.
In addition, under Nevada law (NRS 41.035), NSHE's liability for personal or property injury is Seventy-Five Thousand Dollars ($75,000) per cause of action. By signing such a hold-harmless clause without reference to this limitation, NSHE may open itself up to the argument that it has waived its Seventy-Five Thousand Dollar ($75,000) limitation on personal or property damage claims.
It is not necessary to have an indemnification clause in System contracts as such clauses seek to contractually allocate responsibility when existing state laws typically already provide a mechanism for such allocation. Nonetheless, system institutions may choose to require such a clause or the other party may request such a clause. If the other contracting party insists upon a hold-harmless clause, the statement that is acceptable to NSHE and the State of Nevada is one that states:
"To the extent limited in accordance with NRS 41.0305 to NRS 41.039, (Institution*) shall indemnify, defend, and hold harmless (name of other party) from and against any and all liabilities, claims, losses, lawsuits, judgments, and/or expenses, including attorney fees, arising either directly or indirectly from any act or failure to act by (Institution) or any of its officers or employees, which may occur during or which may arise out of the performance of this Agreement. (Institution) will assert the defense of sovereign immunity as appropriate in all cases, including malpractice and indemnity actions. (Institution's) indemnity obligation for actions sounding in tort is limited in accordance with the provisions of NRS 41.035 to $75,000.00 per cause of action."
*Or other appropriate term representing the Board of Regents, NSHE, or one of the institutions of NSHE as used in the contract.
It is recognized that contracts that are written by the other party may not have a "hold-harmless" clause that follows exactly the required form. Provided such hold-harmless clauses state that they are conditioned "To the extent limited in accordance with NRS 41.0305 to NRS 41.039," and provided they are limited to the acts or omissions in the course and scope of the public duties of NSHE and its officers, employees or agents, such language is acceptable. If a hold-harmless clause does not have this language, then it must be added before the contract is signed, and any language to the contrary stricken.
Except as provided below, no other form of hold-harmless clause than the statement provided above shall be authorized or accepted by NSHE. Contracts containing hold-harmless clauses using language other than that stated above will not be approved or signed by the chancellor or the chancellor's designee, nor should such other hold-harmless clauses be placed in the contracts signed at the institutional level except as provided herein. Other persons who have been delegated contract signature authority as provided herein are not authorized to sign any contracts containing a hold-harmless clause that is not in the form stated herein or as otherwise approved as provided below. The attached standard form agreements have indemnity language that is approved for use.
There will be no exceptions to this policy except as stated herein and except as specifically authorized by the institution General Counsel or System counsel for good cause shown.
NOTE: It is not generally the policy of NSHE to volunteer to put a hold-harmless clause in a contract that benefits the other party to the contract. Only where the other party requests such a clause should it be included. Also, whenever a hold-harmless clause is required by the other party, then NSHE must insist on a mutual hold-harmless clause that benefits NSHE, its officers, and employees. Such a mutual hold-harmless clause should be in the following form:
"(Contracting party) shall indemnify, defend, and hold harmless NSHE, its officers, employees, and agents from and against any and all liabilities, claims, losses, costs or expenses to the person or property of another, lawsuits, judgments, and/or expenses, including attorney fees, arising either directly or indirectly from any act or failure to act by (contracting party) or any of its officers or employees, which may occur during or which may arise out of the performance of this Agreement."
Sometimes a contract is simply ambiguous in its terms, indefinite as to time of performance, fails to state the consideration, fails to identify the parties, or fails in some other necessary element. No contract may be signed without resolving these matters.
Contract review exists for the purpose of protecting NSHE and its employees, not for the purpose of delaying a project or blocking payment for work already done. In this connection, it should be emphasized that work on a project should not be begun prior to the signing of a contract for that work.
As noted previously in Question 7, the Board of Regents Bylaws authorizes the chancellor to delegate certain contract-related responsibilities.
Except for those contracts identified in Question 12 which must always be sent to the chancellor for signature, and except as may be otherwise provided herein, the chancellor hereby delegates signature authority for the following contracts to the presidents of NSHE institutions or to the presidents' designee, subject to the institution's reasonable judgment, at the time of entering into the contract, that the threshold limits set forth below will not be exceeded.
"HIPAA" is an acronym for the federal Health Insurance Portability and Accountability Act of 1996. Contracts with certain health care entities or providers must contain provisions to ensure compliance with HIPAA healthcare privacy requirements. Contact the institution General Counsel's Office or the Chief Counsel's Office to determine what language is needed.
Contracts frequently provide that a contract is subject to the law of a particular state. It is NSHE's policy that if a contract is to be performed in Nevada, the contract must be subject to Nevada law. If a contract is to be performed outside the State of Nevada, NSHE would still prefer that Nevada law apply to the contract, but has no objection if the law of the state where the contract is to be performed is applicable to the contract. The application of this section shall be subject to the guidance and approval of the institution General Counsel's Office's as to whether this clause can be revised or eliminated in appropriate cases. It is preferable to eliminate the clause altogether, than to agree to have the laws of another state apply to the contract. The following language is recommended for choice of law:
The parties agree that the laws of the State of Nevada shall govern the validity, construction, interpretation, and effect of this contract. Any and all disputes arising out of or in connection with the contract shall be litigated only in the Judicial District Court in and for the County of , State of Nevada, and (name of contractor) hereby expressly consents to the jurisdiction of said court.
Any contract which is signed in violation of the policies stated herein is void and of no effect whatever. Any person who signs a contract in violation of these policies is subject to discipline up to and including termination and any other available remedies at law.
Attached to this hereto are several NSHE standard form contracts. These contract forms may be used by all NSHE institutions. Electronic copies of the forms may be obtained from the Chancellor's Office. The form contracts are for convenience purposes and the same rules apply as to approval requirements.
All contracts submitted for approval must contain the following:
Copies of all contracts entered into by an NSHE institution pursuant to a delegation of authority must be kept in a secure and accessible location at the institution in question or at an established archive. In addition, a copy of any contract signed by the chancellor shall be kept at the Chancellor's Office or at an established archive.
Contracts that must always be sent to the chancellor for signature are:
The person who was authorized in the original contract to send or receive notices. If no one is so designated, then the person who signed the contract on behalf of NSHE may sign a notice of termination, except that a notice of termination for an institution contract may be signed by the institution president, even if the contract required chancellor approval. The institution president should send the System Office notice of cancellation of contracts approved by the chancellor.
If the contract contains language specifically permitting authority to modify a contract, the contract provision controls. Otherwise, the modification should be signed by the highest ranking position signing the original agreement4, except that chancellor approval is not required if the modification does not exceed the authority granted in Question 13(A)(2) or the the modifications do not raise the contract amount in excess of $1,000,000 and/or extend the term of the contract to more than five years.