The purpose of this memo is to advise departments of the updated Standard Contract Form in effect as of this date which is available for immediate use for FY2012 business.
The Standard Contract Form has been updated effective May 27, 2011 and is posted on the CTR Website under both Contracts-Forms, and Guidance For Vendors/Forms for Vendors and on the Operational Services Division (OSD) website under OSD Forms .
This form is jointly issued and published by the Executive Office for Administration and Finance (ANF), the Office of the Comptroller (CTR) and the Operational Services Division (OSD) as the default contract for all Commonwealth Departments (in all Branches of State Government) when another form is not prescribed by regulation or policy. The Expenditure Classification Handbook file size 1MB identifies which object codes require the use of the Standard Contract Form. The State Finance Law and General Requirements Policy identifies the use of the Standard Contract Form by all state departments.
This updated form replaces the Standard Contract Form issued in 2007. The updates are the result of comments obtained from departmental and secretariat advisors, updates necessary to identify new Executive Orders and requirements, and updates to enhance cost savings and efficiencies.
The revised Standard Contract Form should be used for all current contracts being amended or new contracts entered after 5/27/2011 (that are not already in process either under a pending procurement or under an amendment process that has already been issued). Departments should use their best judgment during transition between use of the old Standard Contract Form or the new Standard Contract Form, although the new form is shorter and easier to use. Departments should use it for new contracts and amendments immediately.
For pending procurements in which Contractors have not submitted Responses, Departments may amend the RFR identifying the new Contract form to be used or may notify Contractors during the selection process of this update. Since the terms have not materially changed for Contractor requirements, this change should not present a material change to the procurement and provides added protection to the Commonwealth.
ALL DEPARTMENTS USING COMM-PASS MUST UPDATE THEIR DOCUMENT LIBRARIES TO INCLUDE THE NEW CONTRACT FORM TO ENSURE THE CORRECT FORM IS USED. Please contact your procurement or fiscal staff to ensure that this important change is made.
Highlights of Updates:
- There are no changes to the Commonwealth Terms and Conditions
- Processing procedures for the Standard Contract Form remain the same.
- Vendor/Customer and W-9 Policy has been updated with more robust language for vendor/customer Authentication and Verification when registering a vendor in MMARS.
- Bill Payment Policy updated to include Prompt Payment Discount (PPD); Electronic Funds Transfer (EFT), and other payment issues referenced in other policies or practice that is now formalized in policy to support more robust attention to preventing fraud or misdirection of payments.
- State Finance Law and General Requirements Policy updated to reflect updates in policy and include the updates above. Also incorporates "Procurement Rules by Level (I, II, III)" (formerly in the Commodities and Services Policy which is redundant), and moves all relevant contract policy into one location. Incorporates the "Contract Negotiation" language from the OSD Procurement Information Center (PIC) into this policy and applies this policy to all contracts consistent with the Standard Contract Form.
- Standard Contract Form: Here are some of the key highlights:
- Form reduced from 11 pages to 5. Departmental and processing instructions and checklist have been removed which have been confusing to contractors. These instructions are being reformatted into instructional aids for Departments.
- Vendor Code field. ( Mandatory field). For new vendors, Departments should be setting up VCC prior to contract execution (as soon as a Contractor is selected for contract award) so that the Vendor Code, remittance address and EFT set up are available when the contract is signed. (See Vendor/Customer and W-9 Policy)
- Vendor Code payment remittance address is tied to this contract. ("A001", "AD002, etc.) Mandatory field. The payment remittance address is also required to verify whether or not EFT has been set up for that address. All contracts require Electronic Fund Transfers (EFT) payments to reduce the TRE costs associated with printing and mailing checks. (See Bill Payment Policy.)
- New Contract and Amendment options have been consolidated and reduced to make it easier to pick the appropriate option.
- Prompt Payment Discounts (PPD) (Mandatory field). PPD for "accelerated" payments are being enforced more strictly to obtain the highest levels of discounts if Contractors want their payments earlier than the standard 45 days, to ensure reasonable cash flow and increase investment opportunities. (See Bill Payment Policy and Prompt Payment Discounts Policy.)
- The Start date section has been structured to provide specific options for start dates rather than a free form date field:
- as of the latest signature date,
- a date in the future or
- to enable payments for performance made prior to the start date or for eligible reimbursements (settlement & release).
This is current practice and works very well, but the more specific options promote less mistakes with determining the start date and eliminates the use of a "creative" date selection. Note that option 3 does not automatically mean that a settlement applies or that this choice demonstrates a problem. Eligible reimbursements are allowable for certain contracts and grants and this option supports a legal and justifiable reimbursement that is contained in a contract or grant. Option 3 does not support the purposeful backdating of a contract, but rather enables payments for performance made during any lapse in dates that are covered by a settlement when a contract was not timely signed due to unforeseen circumstances. The back-up documentation will be critical to distinguish for auditors when this option was for a reimbursement program or for a late execution (which can result in an audit finding). Note that the settlement provides the legal basis for payment, but does not act as a rubber stamp for the timing of the execution.
We determined that the "Original Start Date" should no longer be included as part of the Amendment Section because the reasons given to keep this date did not support it (i.e., not having to look at MMARS or the Contract File) and due to the number of errors in completion that even years of training have not rectified. Since the original start date in the contract almost never changes, and is recorded in MMARS, this field was determined not to be a critical field and the risks of errors outweighed any currently identified need for this on the Amendment section.
- Contract End date section contains language enabling close out performance rather then a hard end date which functionally allows contracts to be completed without having to be amended for final payments.
- Execution Certifications have been updated to include the "hierarchy" of documents for interpreting the contract and identify the negotiation process outlined in 801 CMR 21.07 as the process that will be used for negotiating terms and the limited circumstances in which additional terms will take precedence over the RFR or Contractor's Response (best value). This "process" will apply even for contracts not subject to 801 CMR 21.00.
- Instructions are primarily Contractor instructions with terms to clarify payments, compensation, allotment reductions under c. 29, s. 9C, PPD and EFT. Since the Instructions are incorporated by reference, these terms clarify certain items that Contractors identified.
- Contractor Certifications have been updated based upon law changes.
- Invoicing and Payment sections have been enhanced to include language for practices already in process, including allowing payment of estimated final invoices if invoices are not submitted timely to prevent reversion of funds and Prior Year deficiency obligation for the subsequent fiscal year, as well as allowing a 10% penalty if budgetary funds revert due to a contractor submitting a late invoice forcing a PYD payment to be made in the next fiscal year. The language clarifies intercept of Commonwealth debts (since intercept and revenue collection are also being ramped up for Contractors).
- Privacy of data language has been enhanced and cross references Executive Order 504 which has been added to the Executive order section.
- Small Business Purchasing Program (SBPP) another Administration initiative has also been identified.
- Employment Law, Federal Law and Tax law sections have been updated and other key cites added to ensure contractors have notice of requirements.
- Certifications for a variety of contract required certifications and Executive Orders have been updated to eliminate the need for separate attachments.
- Electronic Distribution. The Standard Contract Form is designed to be populated and distributed electronically to Contractors, so that contractors can view hyperlinks and populate any Contractor fields. Manual entry of the Contract information (other than signature and date) is discouraged. Departments completing the Standard Contract Form for execution should enter the information electronically and send the form electronically to the Contractor to ensure timely completion and execution. A Contract may be completed and executed by a Contractor and faxed back or scanned and emailed back to the Department for signature by the Department Head to expedite processing. The original is then attached to the contract paperwork in the Contract file.
- The Amendments policy; Quick Reference and other guidance will be updated shortly.
A webcast to conduct a field walk through of the new Contract will be scheduled in early June. For the fastest response to questions or issues related to use of the new Form please email our Helpdesk at Comptroller.firstname.lastname@example.org or call us at 617-973-2468.
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