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Please see below notes on the contract package and its fiscal year basis.
Subject: service contracts -- contract package
As it relates to all service contracts, contract language should start with the County's contract package. Please see below the list of documents that make up the contract package that the County now uses for all service contracts.
DOCUMENT A contractual agreement with the County
DOCUMENT B general terms and conditions
DOCUMENT C general confidentiality and business associate agreement
DOCUMENT D certifications
DOCUMENT E other requirements and certifications
DOCUMENT F sample services agreement
DOCUMENT SIGNATURES
---Document A requires minor modifications to add contact information, terms, funding breakdowns, etc.
---Document E requires minor modifications to address audit requirements of grantor agencies. (Document E can be excluded for contracts below $10,000 per year.)
---Document F requires major modification (or even replacement, as long as the replacement is labeled as Document F) to include scope of work, description of service to be provided, and any other terms required by the service provider.
---The signature document may be modified to include printed names and titles of the service provider's authorized signer(s).
Subject: service contracts -- fiscal year basis
And, service contracts should coincide with the County budget year. The County’s annual budget starts July 1 and the State limits our authority to sign service contracts that do not expire on June 30. Since budgetary authority ends June 30, authority to sign a contract that extends beyond June 30 is not there. Thus, I ask you to transition all service contracts to a fiscal year period, a quarterly service period that is going to end on June 30, or a month-to-month service period.
Of course, contractual obligations under a project budget are excluded since that budgetary authority extends for the life of the project.
Q1.How will payment work for contracts to begin on July 1? Most vendors require a PO or payment prior to the beginning of the agreement.
A1. Many vendors will understand the requirement and will be happy with a purchase order and payment as soon as possible in the new fiscal year. For those that require pre-payment before July 1, we will charge a non-expenditure account before July 1 and will charge the correct expenditure account after the new year begins – just like we do now for insurance and other contracts already on a fiscal year basis.
Q2.Do you also want to change contracts that have already been signed/paid beyond June 30? If so, how would you like to proceed with canceling the agreement and receiving a credit?
A2. No cancellation of existing contracts is needed. This rule has been established by State law for many years and we’ve been side-stepping it. I would just suggest that we get on board with the next renewal. I’m not trying to be difficult to get along with. I want the County to comply with State rules and guidelines regarding local government budget and fiscal control matters.
Q3.Is this a situation where a vendor has to comply for Montgomery County to do business with them?
A3. Every situation is that a vendor has to comply for the County to do business with them. Ideally, most of the vendors that we use would not disregard this request. You can point to NCGS 159-28 for authority to change. This is the specific statutory reference that spells out that our budget ordinance ends on June 30 and that the County has no authority to obligate County funds before a budget is established.
Q4: What about the situation when a warranty, service, and/or support is included in the purchase cost and where a periodic service or support fee will be incurred after the expiration of the initial warranty, service, and/or support?
A4: We consider the initial warrany, service, and/or support to be part of the purchase and that amount for these costs, if known, will NOT need to be broken out to a different expenditure account. Then, after the initial period ends and we negotiate to sign a contract for the support alone, then we’ll need to address the budgetary issue, realizing we cannot technically obligate funds from a future budget, and limit the time period to the remainder of that fiscal year.
For any exception to this practice, please consult with the Finance Director.
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