Cmwg contract breaches presentation

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  • Examples: reduced appropriation, suspected or known malfeasance by contractor, contractor indicates inability to perform
  • Acceptance of unsatisfactory deliverables by default can’t be fixed
  • Cmwg contract breaches presentation

    1. 1. Contract BreachesAssessment of Violations and Enforcement
    2. 2. General Provisions • Government immunity • Not liable for tortious actions, except those outside the scope of employment or wanton and willful actions • Available funds • Can only pay on the contract to the extent we have appropriated funds
    3. 3. General Provisions • Billing procedures • Important to set a standard for billing/ invoices, and review for appropriate payment • Intellectual Property • We own what we pay for, can/should get it all back at the end of the contract
    4. 4. General Provisions • Confidential information • Contracts are public documents, documentation received from vendor likely public • CORA exemption for confidential commercial, financial, or trade secret information
    5. 5. General Provisions • Conflict of interest • Vendor can’t engage in conflicting business • Must disclose
    6. 6. General Provisions • Records maintenance, performance monitoring and audits • Vendor must keep all records and allow us to inspect for up to (6) years following termination • Can get all documents back at contact end
    7. 7. General Provision • Inspection and Acceptance of Services • Can inspect at any time • May require contractor to redo • Watch for acceptance deadlines in contract • If have passed deadline for inspection, can’t later reject services/goods provided • If unacceptable and can’t reperform • Require contractor to correct in future • Equitably reduce payment due
    8. 8. General Provisions • Modifications • May need to adjust price, must be mutually agreeable • All modifications must be in writing • Annual Audits • Required for vendors expending $500,000 or more in federal funds – good source of information for potential performance issues
    9. 9. Special Provisions • Controller’s Approval • Can’t begin work until received – statutory violation for which the employee can be held responsible if payment rendered
    10. 10. Additional Provisions • Customize your requirements • Timeframes for deliverables • If performance of later deliverables contingent upon successful completion of earlier deliverables, so note this in the additional provisions and ensure that you adequately and timely inspect earlier deliverables for acceptance
    11. 11. Notice of Breach • Failure to timely complete a deliverable, or material breach of a term of the K • Missed a project deadline • Provides unsatisfactory deliverables • Bills inappropriately • Double bills for services • Lacks adequate supporting documentation • Bills for services not included in SOW
    12. 12. Notice of Breach • Process • Notify in writing of alleged breach within (10) business days of either date of breach or date you become aware of breach • Contractor has (10) business days to respond • Failure to respond entitles you to pursue any and all remedies
    13. 13. Notice of Breach • Contract allows for dispute resolution between parties to the K, to be elevated to senior management, then to the ED • Breaching contractor liable for damages to the State
    14. 14. Remedies • Withhold $ until satisfactory performance • Correct future performance • Require removal of incompetent or unacceptable employees of contractor • Deny payment for unperformed services or services that have no value for State
    15. 15. Remedies • Suspend performance pending corrective action – no contractor entitlement to cost adjustments • Modify or recover payments to correct an error due to omission, error, fraud and/or defalcation • Terminate the K
    16. 16. Stop Work Order• Written order by Controller’s delegee, telling the contractor to stop performing• Must be for a specified period of time• Contractor must take reasonable steps to minimize further costs• If SWO is cancelled, contractor may be entitled to an amended delivery schedule and/or contract price
    17. 17. Termination • Default (for cause) • Only reimburse for accepted work received up to date of termination • Can withhold final payment until audit completed • If ultimately found not to have defaulted, termination converts to term for convenience • Get your stuff back!!!
    18. 18. Termination• Convenience • At any time, can terminate with (20) day advance written notice • Should only be used when mutually agree to terminate, or an outside, intervening event essentially makes performance impossible or renders the service wholly unnecessary • Cannot use simply to get same services from another vendor at a lesser price
    19. 19. Termination• Convenience • Contractor can submit a claim within (10) days of termination for: • Costs of accepted work • Reasonable costs associated with preparing to perform work that was later terminated • Reasonable profits on completed but undelivered work • Settlement of claims by subs • Reasonable administrative costs
    20. 20. Termination • Immediate • When health, safety or welfare is in jeopardy • Fraud or other illegal acts • Funds not appropriated, or otherwise become unavailable
    21. 21. Enforcement• Work with fiscal officers, contracts and purchasing, internal auditors, and legal affairs to determine steps necessary to cite for breach• Can institute a SWO prior to notice of breach• May need site visits to review documentation to support breach findings
    22. 22. Enforcement• Important to look throughout the Department for other programs with contracts with the same vendor• Document, document, document!!! • Phone calls must be followed up with written correspondence noting problems• Stay on top of your monitoring obligations• Set deadlines for corrective measure

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