Risk Management Office Contract Processing FAQ's
Where can I find the policies that relates to signing contracts for Penn State?
Under Penn State policies, only certain authorized individuals may sign contracts on behalf of Penn State. Information relating to Contracts can be found in University Policy FN11. This policy states the authority for approving contractual documents for the University. FNG02 outlines the Limited Delegation of Contract Approvals for the University which the Senior Vice President for Finance and Business / Treasurer has delegated to specific persons the execution of certain standardized agreements and contracts.
What is meant by a contract?
At a basic level, a contract is an agreement between two or more parties that creates a binding obligation, financial or otherwise.
What is meant by an internal contract and can I sign those?
An “internal” contract exists when all parties to the contract are part of the legal entity “The Pennsylvania State University”. Internal contracts do not need to go through the Risk Management review process and are signed by the various University departments involved, rather than an authorized signatory per FN11 and FNG02.
Can I sign a contract?
No, unless I have been delegated signature authority for the contract per University policy. If an unauthorized individual signs the contract, the contract may not be legally binding on Penn State and the person signing the agreement may be held personally responsible for it.
Does Risk Management process all agreements?
No, only certain types of contracts are processed by Risk Management. Please refer to the following for more details: Type of Contract and the University Office to Process.
What do you do if your payment method is a Purchase Order or Purchasing Card?
All agreements that are paid with either a Purchase Order or P-Card will need to be processed through Purchasing Services. P-card payment related contracts should be sent to email@example.com with the subject line of Contract/Agreement Review for P-Card Transaction.
Are “click-through” agreements online considered contracts?
Yes. Although no “signature” is required per Policy FNG02, Any agreements that are required to be accepted online on behalf of the University must be reviewed by the Risk Management Office and submitted to the Corporate Controller for a one-time delegation. The Corporate Controller or Assistant Treasurer will approve acceptance of the agreement and instruct the appropriate individual to accept the contract terms electronically on behalf of the University. This one-time approval from the Office of the Corporate Controller to electronically accept the agreement online will be if approved, returned to the Contract Requestor via email. The email will serve as evidence of the University’s acceptance of the agreement and the official University record.
There are special instructions in FNG02 regarding electronic Software Agreements or the Software Agreement Decision Tool can be used to assist faculty and staff in determining how Software Agreements should be processed.
How are “click-through” agreements submitted to Risk Management for a one-time delegation?
The Contract Requestor will need to complete the Electronic Agreement Cover Sheet and submit it to firstname.lastname@example.org. Any correspondence from the Office of the Corporate Controller and the Risk Management Office will be done electronically via Email to the requestor.
Is there a rule stating which party signs the contract first?
Penn State’s practice is to have the party that drafts the agreement sign last.
Why does the party that drafts the agreement sign last?
This ensures that the drafting party is made aware of any edits made by the other party prior to signing the contract.
What is Risk Management looking for in its contract reviews?
Contracts are reviewed in terms of the risk to the University rather than in terms of the dollars involved. A zero dollar contract may have huge potential liability which could also be uninsured. Contracts are being reviewed for policy and liability ramifications and will be changed accordingly to protect the University's interests. The University only wants to be held responsible for its own actions and not the acts or negligence of other parties. Contracts are not reviewed for accuracy of content or business purpose. It should be noted that it is the responsibility of the department, college or campus to have reviewed the contract and to make any desired changes in the business terms before submitting the contract to Risk Management.
What does fully executed contract mean?
A contract is considered fully executed only when it has been reviewed and signed by all necessary parties. All contracts must be fully executed BEFORE any work, the delivery of goods or services, or the usage of any University facilities may begin.
What office is responsible for maintaining the fully executed contract on behalf of the University?
The Initiating Department is the office that must keep the executed contract in accordance with the retention period. See link below.
What policy governs Records Retention?
University Policy AD35 University Archives and Records Management. There is a specific retention schedule that pertains to Contracts located at: https://policy.psu.edu/general-retention-schedule#E
What if the other party to the contract wants to make revisions to a Penn State drafted contract?
Ask the other party to document their requested changes as redlines or notes on the PSU contract template. Submit the redlined contract with the Contract Cover Sheet to the Risk Management Office.
How long will my contract review take?
Agreements are processed on a first-in first-out basis and can take from one day to several weeks to execute, depending on the complexity of the contract and volume of contracts already in process. Requests for Rush/Priority processing will be accommodated on a case-by-case basis.
How do I submit a contract to Risk Management?
Submit the completed cover sheet along with the contract and any additional terms/conditions/appendices etc. to the Risk Management Office by one of the following methods: Email – email@example.com, Fax – 814-865-4029, Campus mail – 103 Rider Building or US Mail - 227 W. Beaver Ave., Ste. 103, State College PA 16801.
Is there a contract approval process that Risk Management follows?
Yes. Click here to view the Risk Management Office Contract Approval Process flowchart.