Chapter 6 - Contracts and Leases
Chapter 6 – Contracts and Leases
A contract is a written agreement for the purchase or disposal of supplies, services, insurance, equipment or construction. To be effective, a contract must include an offer and acceptance by competent parties to furnish goods and/or services for an agreed monetary consideration.
|Contract Types||Procurement Facilitates access to Three Types of Contracts|
|1. Blanket Agreements. These contracts establish the commitment of a supplier to furnish the purchaser's requirements for items or services on an as-required basis.||1. University Contracts. Established by Procurement, these contracts are specifically intended either for university-wide purposes or for a specific school/department. Example: Filtered Water, Office Supplies etc.|
|2. Term Contracts. These contracts establish a source of supply for goods or services during a specified period of time. Often these have a discount off list price structure but have a firm start and end date.||2. Governmental Contracts and Other University's Contracts. These contracts are entered into by other higher-ed institutions and/or governmental entities. These agreements have a "piggyback" clause acknowledged by the contractor that may be used by other non-profit entities and institutions of higher-education, such as GW.|
|3. Requirements Contracts. These are agreements in which the supplier agrees to supply all of the purchaser's normal requirements for an item(s) at a specified price during a specified period. Quantity and delivery dates are unknown at award.||3. Cooperative Purchase Contracts. These are contracts where two or more named entities combine their requirements in order to realize a volume cost advantage. GW may use these contracts even if not specifically named in the original cooperative purchase.|
6.1.1 Use of University Contracts
Whenever Procurement has executed a contract for a particular commodity or service, schools and departments are encouraged to order from that contract. Contracts established for university-wide use can be found on the Procurement website and through the iBuy+ website.
Contracts should be processed in accordance with the Contract Process Guide. For further questions on contracts and delegation, please contact Procurement or the Office of the General Counsel.
6.1.2 Execution of Contracts/Agreements
Only individuals that have received specific delegation of authority are authorized to sign contracts that bind the university for the purchase of goods, services, insurance or construction. Please see the Signing of Contracts and Agreements Policy for further information, or visit the Procurement website for the Signature Authority Table.
There are two types of leases that the university will enter into for the purchase or use of equipment or services: capital and operational. With a Capital lease, at the end of the term of the lease, the university owns the item. With an operational lease, the university is paying for the use of the item, but as with a leased vehicle, after the term of the lease ends, the item is returned to the leasing company and GW is free to either lease another item or purchase the same item for its fair market value, or pre-determined price as established in the lease.
6.2.1 Lease-Purchase Decision
A lease-purchase decision is based on the results of a cost-benefits analysis of the costs to own, costs to lease, and the advantages and disadvantages of any other relevant factors [Institute for Supply Management, 2000].
Factors to be Considered: A cost-benefit analysis can take several forms, however consideration of the total costs associated with the life cycle of the equipment, to include asset management and disposal should be made prior to moving forward with a purchase. These factors include:
- Length of time the item will be used
- Total of rental payments for the period of time to be used
- Outright purchase price of item
- Transportation and installation price of item
- Maintenance and service costs
- Funds availability and cost of capital
- Obsolescence due to rapid advancement of technology
Additional considerations, depending on the cost, complexity and period of use could include:
- Alternate purchase options
- Use by others after initial purpose has ended
- Continued maintenance by in-house staff if purchased vs. leased