Legal Aspects of Purchasing How to Navigate the Jungle Presented by:

1. Legal Aspects of Purchasing How to Navigate the Jungle Presented by: Bramby Ann Tollen, C.P.M.,CPPO, CPSM, CPSD Director, Purchasing & Warehousing Clark County School District Las Vegas, Nevada

2. Legal Aspects of Purchasing Overview Purchasing Law-Navigating the Jungle Staying on Solid Ground with Terms & Conditions Avoiding Quicksand Surviving the Swamp Going Forward with Sturdy Footing Using Life Lines Time for Questions

3. Legal Aspects of Purchasing The Jungle-Purchasing Law-Can you Navigate it? Purchasing competes requirements because: • We are naturally competitive people. • We enjoy the extra paperwork. (Not!) • We like to torture our customers with anticipation. • It is a good business practice and those pesky State statutes and Board policies require that we do so.

4. Legal Aspects of Purchasing The Jungle-Purchasing Law-Can you Navigate it? 2. State statutes and Board regulations are usually created in response to : • Legislative whimsy. • Divine inspiration. • The need for more red tape. • Actual incidents of fraud, waste, and abuse.

5. Legal Aspects of Purchasing The Jungle-Purchasing Law-Can you Navigate it? 3. It is okay to accept gratuities from suppliers when: • The supplier is your uncle Bob. • You have never played golf at Pebble Beach and this is a great opportunity. • You are really hungry and you do not have any cash for lunch. • Never

6. Legal Aspects of Purchasing The Jungle-Purchasing Law-Can you Navigate it? 4. Conflict of Interest arises when: • You want to go to an action movie and your spouse wants to see a romantic comedy. • You have to choose between wearing the paisley green & orange sweater your mom gave you or the plaid purple & yellow sweater your grandma gave you. • You have the opportunity to spend the mortgage money on a great deal on a really cool motorcycle. • You need to purchase volleyballs for the athletic department and your uncle sells them and offers you a personal rebate.

7. Legal Aspects of Purchasing The Jungle-Purchasing Law-Can you Navigate it? 5. The reason indemnification is important is: • The airports require a picture id to get on the airplane. • The lawyer is paid by the word and he has not billed you the full contract amount yet. • Letters look better when paragraphs are indemnted. • Funds are better spent on textbooks than injury, loss, or damage caused by suppliers.

8. Legal Aspects of Purchasing Staying on Solid Ground with Terms & Conditions Lions, Tigers and Small Print….. Assignment of Contract only with Agency Consent Should not be unreasonably withheld Attorney Fees Paid by Each Party American Rule vs. Equitable Remedies Conflict of Interest Duty of Loyalty

9. Legal Aspects of Purchasing Staying on Solid Ground with Terms & Conditions Lions, Tigers and Small Print….. 4. Cooling Off Period Separated Employee-similar work? Earning maximum? Dispute Resolution Process Written issues of non-compliance Informal Mediation Arbitration and/or Litigation 6. Fiscal Fund Out

10. Legal Aspects of Purchasing Staying on Solid Ground with Terms & Conditions Lions, Tigers and Small Print….. 7. Four Corners Rule Overall intent rather than individual words 8. Full Disclosure Employee Buyer Authorizing Official Governing Body Supplier

11. Legal Aspects of Purchasing Staying on Solid Ground with Terms & Conditions Lions, Tigers and Small Print….. 9. Indemnity Mandatory requirement? Insurance Work with Risk Management Department Provide certificate of insurance with agency named. Working with students? Insurance should include coverage for abuse, molestation, and corporal punishment…normally a part of, or an endorsement to, a commercial liability policy.

12. Legal Aspects of Purchasing Staying on Solid Ground with Terms & Conditions Lions, Tigers and Small Print….. Payment Tied to Performance Pay for items delivered or performed Lock in firm pricing for maintenance and increased based on index Allow increases & decreases based on market 12. Prevailing Law & Jurisdiction Your paper, your rules!

13. Legal Aspects of Purchasing Staying on Solid Ground with Terms & Conditions Lions, Tigers and Small Print….. 13. Sub-contracting Not unless defined and approval in advance. Supplier Defines “Team” & Project Manager Do not allow “Bate and Switch” Define account/project managers Define who is responsible for each task/deliverable Termination for Convenience

14. Legal Aspects of Purchasing Avoiding Quicksand-Terms to Avoid Anti-Trust Collusion Conflict of Interest • Current Employees • Relatives & Friends • Work Day & Responsibilities Credits Favors

15. Legal Aspects of Purchasing Avoiding Quicksand-Terms to Avoid Gratuities Limited Time Offer or Special Deal “Just for You” Nepotism Oral Agreements Perceived Advantage • Advance Knowledge • Incumbent Supplier Prepayments

16. Legal Aspects of Purchasing Avoiding Quicksand-Terms to Avoid Rebates Split Purchases Suppliers-Arms Length Principle Vendor’s Contract/Agreement/Paper Verbal Representations

17. Legal Aspects of Purchasing Surviving the Swamp Prepackaged software licenses Software & equipment maintenance Subscription services Speaking engagements Musicians & other performers Other low risk ventures that do not include on-site services nor interacting with students

18. Legal Aspects of Purchasing Going Forward with Sturdy Footing Full Disclosure Use your own “paper” Indemnity Point of Contact/Responsible Party • Supplier & Buyer Deliverables defined with time frame and payment Acceptance and rejection process Project management or communication process

19. Legal Aspects of Purchasing Going Forward with Sturdy Footing Competition • Consumption or Purchase Estimates • Right to negotiate if quantities increase or decrease by 25% • Warranty & Specifications • Take advantage of UCC • Balance of Line Discount • Discount for future unidentified requirements • Must equal discount for identified bid items • Question & Answer Phase • No pre-bid conferences • All information sent out via addenda

20. Legal Aspects of Purchasing Going Forward with Sturdy Footing Top Five Reasons to Compete • Despite the offers of free lunches and trinkets, suppliers’ best interests rarely coincide with the buyers. • Our Legal and Risk Management Departments are not sitting around idly in eager anticipation of liability claims due the actions of uninsured suppliers. • Our Superintendent stubbornly clings to the notion that the budget is limited and insists that we get the best value for our money. • Contracting with relatives may get you a better holiday present, but ask for a sweater. It gets cold in the unemployment line. • State statutes are not suggestive in nature.

21. Legal Aspects of Purchasing Using Life Lines NAEP Legal Department Suppliers GSA & Cooperatives Other Purchasing Agencies Internet Search Friends & Contacts

22. Legal Aspects of Purchasing Summary Questions? Thank you! Contact Information: Bramby Tollen batollen@interact.ccsd.net 702-855-5461