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:
- When Does a Purchase Require a Stanford Contract?
- How Are Stanford Contracts Processed?
- Hiring Service Providers, Contractors and Consultants
- Required Documents
When Does a Purchase Require a Stanford Contract?
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, where the total amount to be spent is greater than $2,500. 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.
How Are Stanford Contracts Processed?
Stanford Contracts are executed between the Contracts Group and the supplier, and in general, follow this process:
- The end-user (school or department staff within the University) initiates a Standard Services (or Consultant, or Blanket) Requisition and secures appropriate department approval via iProcurement.
- An approved requisition, with required documentation attached to your iProcurement requisition as a PDF file, is routed to the Contracts Group and is assigned to a Contract Specialist, as an incomplete PO.
- The Contract Specialist prepares the contract and sends the contract to the supplier for review and execution. On occasion the supplier may request revisions to the Stanford Contract. Such requests may require the assistance of other Stanford departments (such as Legal or Risk Management) and may effect the length of time for getting the contract executed.
- Once the contract is deemed acceptable, the supplier signs the contract and returns it to the Stanford Contract Specialist with insurance documents and bonds, as required.
- The Contract Specialist countersigns the contract and approves the PO in Oracle. A fully executed contract is sent to the supplier and a copy to the Stanford Project Manager.
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.
|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.
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:
- Visit the IRS web page on Independent Contractor (Self-Employed) or Employee?
- See Administrative Guide Memo 35, University Payroll
- Contact the Contracts Group in the Purchasing & Contracts department
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:
- Unless the contractor's employees are represented by a bargaining unit, the contractor must provide all of the information solicited by the state in the CLC2810 Questionnaire, which is in accordance with the California Labor Code Section 2810.
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.
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.
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.
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
- Mercury-Containing Devices
- Electronic Devices
- Treated Wood Waste
- PCBs (Fluorescent Light Ballasts, Insulating Oils)
- Lead Metal (Plumbing Components, Lead Bricks, Counterweights, Drain Pans)
- Mechanical System Fluids
- Radioactive Materials
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.
Stanford Truck Routes Map
The Stanford Truck – Routes Map should be included in all RFPs and IFBs for contracted work / services.
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.
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.
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.
Affirmative Action Special Conditions
The Affirmative Action Special Conditions flows down anti-discrimination provisions from the Federal Acquisition Regulations "FARs" to the contractors.
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.
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.