Policy Notes: Purchases Requiring a Bilateral Contract

There are special considerations, government regulations and University policies that pertain to hiring services providers, contractors, and consultants.

On this page:

 

What Should a Contract Include?

A Stanford Contract must be issued by the Contracts Group for all construction-related projects (including architectural services) of any dollar amount, and for other projects performed by contractors, consultants and service providers that meet certain conditions. It is in the best interest of the University to have the following items clearly committed to by the supplier:

  • The scope of services or deliverables
  • Use and ownership of data
  • Acceptance criteria
  • Guarantees / Warranties
  • Identification of who specifically will provide the services
  • Payment terms
  • Insurance requirements
  • Commissioned work when the results for the work may be copyrighted
  • Performance schedule
  • Terms and Conditions from funding sponsor required to "flow-down" to a subcontract

Prior to the start of any work, make sure a Stanford-generated contract is in place. A contract generated by an outside firm is usually not acceptable, and if one is presented to your department for the contemplated services / work, please do not sign it, instead attach it to your iProcurement requisition.

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How Are Stanford Contracts Processed?

Stanford Contracts are executed between the Contracts Group and the supplier, and in general, follow this process:

For New Requisitions Less Than $25,000

Click each block to navigate through details for each step:
Contract Process Flow for requisition less than 25,000 - click each block to navigate through details for each step click to view details for Step 1 click to view details for Step 2 click to view details for Step 3 click to view details for Step 4 click to view details for Step 5

icon of Step 1School / Department Requester Submits Requisition in iProcurement

checkoffStaff member creates requisition for services or construction in Oracle Financial System. If contracts "yes" is selected, requisition should include (but is not limited to):

  • supplier name and address
  • scope of services or construction required
  • project schedule
  • fund accounts for payment
  • payment amounts and limits
  • contact information for staff and project manager
  • any proposals and/or bids

Note:  Providing complete information helps to speed up process.

checkoffRequisition is sent electronically to Procurement

checkoffFor more information see Checklist for Purchases Requiring a Contract or Purchases Requiring a Bilateral Contract

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icon of Step 2Procurement Contracts Team Reviews Requisition, Selects Appropriate Terms & Conditions, and Approves Requisition

checkoffContract Advisor reviews requisition, may gather additional information and/or review history of contracting with specified vendor. Review ensures requisition has proper insurance, sufficient scope of work

checkoffContract Advisor selects appropriate Terms and Conditions* and approves requisition

* Terms and Conditions

checkoffRequisition is returned electronically to Department staff with financial approval authority over fund accounts designated in requisition

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icon of Step 3School / Department Financial Approver Approves Funding for Requisition

checkoffDepartments have control over financial accounts and must approve expenditures

checkoffRequisition is automatically assigned purchase order number by Oracle Financial System

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icon of Step 4Oracle Financials Sends Purchase Order

checkoffOracle Financials automatically creates a Purchase Order and send the Purchase Order to the supplier

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icon of Step 5Supplier Receives Purchase Order

checkoffSupplier receives email that purchase order has been approved. Email contains link to purchase order and to applicable Terms and Conditions*. School / Dept. Requester also receives a copy of the approved Purchase Order.

* Terms and Conditions

Note:  Contract Advisor may attach notes to purchase order with additional or clarifying Terms and Conditions. Contract Advisor approves purchase order in the Oracle Financial System; updated purchase order is sent via email.

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See additional process change details

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For New Requisitions $25,000 and Greater

Click each block to navigate through details for each step:
Contract Process Flow for requisition 25,000 and greater - click each block to navigate through details for each step click to view details for Step 1 click to view details for Step 2 click to view details for Step 3 click to view details for Step 4 click to view details for Step 5 click to view details for Step 6

Note:  Analysis under way to improve process for requisitions greater than $25,000.

icon of Step 1School / Department Requester Submits Requisition in iProcurement

checkoffStaff member creates requisition for services or construction in Oracle Financial System. If contracts "yes" is selected, requisition should include (but is not limited to):

  • supplier name and address
  • scope of services or construction required
  • project schedule
  • fund accounts for payment
  • payment amounts and limits
  • contact information for staff and project manager
  • source and price justification form
  • any proposals and/or bids

Note:  Providing complete information helps to speed up process.

checkoffRequisition is sent electronically to Procurement

checkoffFor more information see Checklist for Purchases Requiring a Contract or Purchases Requiring a Bilateral Contract

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icon of Step 2Procurement Purchasing Reviews and Approves Requisition

checkoffPurchasing reviews the requisition and may contact the staff person for additional information. Purchasing will:

  • Check for document presence, not content.
  • Reject a requisition if a document is missing.
  • Process each requisition within 24 hours after it is received.

checkoffReviewed requisitions are returned electronically to Department staff with financial approval authority over fund accounts designated in requisition

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icon of Step 3School / Department Financial Approver Approves Funding for Requisition; Unapproved Purchase Order Created

checkoffDepartments have control over financial accounts and must approve expenditures

checkoffAfter financial approval, Oracle Financials automatically creates a purchase order from the requisition. Incomplete purchase order is automatically routed to Contracts Team.

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icon of Step 4Procurement Contracts Team Reviews Unapproved Purchase Order and Creates Contract Draft

checkoffContracts Manager assigns incomplete purchase order to Contract Advisor

checkoffContract Advisor reviews all information contained in and attached to the unapproved purchase order, and may review the prior history of contracting with supplier

checkoff Contract Advisor will ensure that proper insurance, scope of work and source and price justification are sufficient.

checkoff Contract Advisor drafts written contract (either for Services, Construction, or Architecture and Design Services). Draft contract may be sent to staff contact for review

checkoffDraft contract sent to the Supplier for signature, and, if necessary to procure any additional information

Contract templates:(coming soon)

  • Short form construction
  • Long form construction
  • Services
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icon of Step 5Supplier Receives and Signs Contract Draft

checkoffAny negotiation of Terms and Conditions between Contracts Team and supplier would occur at this point

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icon of Step 6Procurement Contracts Team Signs Contract and Approves Purchase Order

checkoffUpon receipt of supplier signature and any required additional information, Contract Advisor obtains appropriate Stanford signatures

checkoffContract Advisor attaches fully-executed contract to Oracle Purchase Order file, and approves purchase order in Oracle Financial System

checkoffContract Advisor sends a copy of fully-executed contract with attachments to supplier, staff contact and/or project manager

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Hiring Service Providers, Contractors and Consultants

University policy requires that acquisition of products or services be by competition between potential suppliers, to the maximum practical extent subject to the requirements of quality, price and performance. When a department needs to use a single or sole source in the acquisition of a product or service with a cost of $5,000 or more, a written source justification is required. ("Single source" means other sources are available but the requisitioner chooses to use only one particular source. "Sole source" means that no other sources, other than the one recommended are available.) The source justification should include the following information:

  • A specific description of the supplies or services required to meet needs, and a statement of fact that shows the unique qualifications of the services or items selected to satisfy those needs.
  • A description of efforts made to locate other sources of supply.
  • Documentation that the anticipated cost is fair and reasonable. This can be a comparison of prices when the item is generally available or, when the item is to be specially fabricated, an analysis of the manufacturer's cost.

For assistance with the preparation of a Request for Proposal "RFP"* packet, or an Invitation for Bid "IFB"** packet, please contact your assigned Contract Specialist in the Contracts Group.

For Bid / Proposal solicitations managed by the department, without assistance from the Contracts Department, please know that there are special considerations, government regulations and University policies that pertain to hiring contractors and consultants. Please provide all bidders / proposers the following contract documents, as part of your Request for Proposal "RFP"* or Invitation for Bid "IFB"**, as applicable.

* A Request for Proposal (RFP) is needed when the vendor selection will be based on important factors in addition to cost.
** An Invitation for Bid (IFB) is needed when the vendor selection will be based solely on the lowest Bid received.

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Additional Information

Considerations Applies To
Minimum Insurance Requirements All
IRS Qualification as Independent Contractor or Consultant Individuals / Sole Owners
California State Requirements for Contractors Construction / Janitorial / Security
Living Wage and Benefits Guidelines All
EH&S Notifications for Non-Construction Contractors Non-construction Services
EH&S Notifications for Consultants Consultants
Environmental Health & Safety Document (Long Form) All construction-related work and services involving pollutants, hazardous materials, contaminants, chemicals, toxins, and all other "harmful-to-the-environment" materials
Tree and Shrub Protection Construction / Trade work
Stanford Truck Routes map All services
General Conditions for Construction Projects Construction / Trade work
Storm Water Special Conditions Construction / Trade work / Landscape work / when solvents or detergents used
Payment & Performance Bonds As required; see below
Affirmative Action Special Conditions All
LBRE Facilities Project Initiation Policy (Form 1) Facilities and Infrastructure Projects
Facility Design Guidelines Architectural and Landscape Design Services


Minimum Insurance Requirements

Service providers to the University must carry insurance policies that meet or exceed the University's minimum insurance requirements.


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IRS Qualification as Independent Contractor or Consultant

The IRS requires that independent contractors and consultants qualify as such. When an individual does not qualify, they must be treated as employees or hired through a temp agency. Please see the Independent Consultants and Contractors Checklist.

An individual qualifies as an independent consultant or contractor when the individual:

  • provides similar services to other clients and/or businesses outside of the University
  • engages in entrepreneurial activities in an established business, at risk for profit or loss
  • receives little or no training, supervision or instruction from the University, other than conveying the scope of services desired
  • currently does not receive a paycheck from nor is an employee of Stanford University
  • will be responsible to determine means and methods to use to perform services
  • will provide his/her own supplies, equipment, forms, etc., necessary to perform services and cost for such will be included in rate or total fee
  • will maintain sufficient insurance to protect against work related injuries and damage to University property
  • will set his/her own priorities on time, amount of effort, and hours of work to accomplish services within stated time frame
  • services to be provided are not similar to those currently being provided by Stanford employee(s)
  • time period, maximum fee, scope of services are not intended to be modified at a later date

For more information:


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California State Requirements for Contractors (For Construction Trades)

In addition to IRS requirements, the state of California has further requirements for contractors. Contractors must:

  • be licensed by the Contractors State License Board (CSLB).
  • be bonded.
  • carry Worker's Comp insurance if they have one or more employees.

For more information, go to the Contractors State License Board web site and select "Hire a contractor" under the Consumer tab.

For contractors providing construction, janitorial, or security guard services, the following additional state requirement applies:


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Living Wage and Benefit Guidelines

For information about Stanford's current Living Wage and Benefit Guidelines please read Policies and Initiatives:  Living Wage and Benefit Guidelines:

Please inform all contractors and consultants under consideration by your department that the University performs random audits to ensure that Stanford's Living Wage and Benefit Guidelines are adhered to by "applicable" contractors and consultant, and that non-compliant contractors and consultants will be deemed in default of their agreement with the University and subject to immediate termination, unless the matter is fully rectified retroactively.


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EH&S Notifications for Non-Construction Contractors

In accordance with Proposition 65, please advise all contractors that supply the University with non-construction related services that they must read the Environmental Health & Safety Contractor Notifications, and must present these Notifications to their employees that are performing work on the Stanford University campus.


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EH&S Notifications for Consultants

In accordance with Proposition 65, please advise all consultants that provide consulting services to the University that they must read the Environmental Health & Safety Consultant Notifications, and must present these Notifications to their employees that are providing consulting services on the Stanford University campus.


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Environmental Health & Safety Document (Long Form)

The multi-page Environmental Health & Safety document intended for construction contractors must be included in all RFP's and IFBs for construction-related projects. This document should also be presented to contractors involved in projects where any of the following might be used, disposed of, or cause a disturbance or risk to the environment or the Stanford community:

  • Asbestos, or Asbestos-Containing Materials
  • Lead-Containing Paints and Other Surface Coatings
  • Urea-Formaldehyde Products
  • Volatile Organic Compound (VOC) used indoors
  • Potentially Toxic or Odor Producing Products with Material Safety Data Sheets (MSDS)
  • Excessive Noise, Vibration, and Dust
  • Pest Control
  • Hazardous and Flammable Materials
  • Hazardous Material Spills
  • Explosives
  • Mercury-Containing Devices
  • Batteries
  • Electronic Devices
  • Treated Wood Waste
  • PCBs (Fluorescent Light Ballasts, Insulating Oils)
  • Lead Metal (Plumbing Components, Lead Bricks, Counterweights, Drain Pans)
  • Mechanical System Fluids
  • Refrigerants
  • Radioactive Materials
  • Mold

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Tree and Shrub Protection

Section 01532 of the Facilities Design Guidelines - Tree and Shrub Protection must be included in all RFPs and IFBs for construction-related projects, and other projects, where there might be danger of injury to trees and shrubs nearby.


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Stanford Truck Routes Map

The Stanford Truck – Routes Map should be included in all RFPs and IFBs for contracted work / services.


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General Conditions for Construction Projects

The General Conditions for Construction Projects apply, and should be included in all RFPs and IFBs for construction projects on campus.


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Storm Water Special Conditions

To keep pollution out of storm drains, it is important to include the Storm Water Special Conditions document in all RFPs, IFBs, and contracts where a contractor might be in charge of a project (whether construction, trade work, or other) where pollutants might end up in surface water runoff.


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Payment & Performance Bonds

Even though Stanford's current policy (per Risk Management) is that Stanford departments must request Payment & Performance Bonds for construction-related Projects that cost $50,000 or more, a department may request a waiver of those requirements provided that such waivers are authorized by that department's Executive Director, and the authorization is based on the fact that the contractor selected for the Project is well known to the University, has an excellent track record with the University, and is in good financial standing.

Notwithstanding a department's request to waive the P & P Bonds, the Contracts Group may determine that P & P Bonds be required from any contractor.


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Affirmative Action Special Conditions

The Affirmative Action Special Conditions flows down anti-discrimination provisions from the Federal Acquisition Regulations "FARs" to the contractors.


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LBRE Facilities Project Initiation Policy (Form 1)

All requests for Stanford University campus and off-campus academic facilities and infrastructure projects are required to be submitted electronically on a Form 1 prior to the project's commencement.

Investment, Hospital and Stanford Linear Accelerator Center projects typically do not require a Form 1 unless University funding or facilities are involved.


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Facility Design Guidelines (FDG)

The University's Facility Design Guidelines shall apply to any Project that includes Design Services.

The Facility Design Guidelines (FDG) is a set of guideline design documents, technical specifications, and detail drawings to be used by architects, consultants, and contractors in the design and construction of new buildings, infrastructure, and remodeling projects on the Stanford campus. Stanford University's intent is to build cost-effectively without restricting the consultant's latitude for innovation.

To review the Campus Guidelines, please go to http://maps.stanford.edu/fdg_available.


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