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OCR for page 27
Contract Terms and
Conditions Definitions
The following list defines general contract terms and conditions and those associated with the
seven types of procurement packages listed in Table 5:
Agency-Furnished Property Describes how agency property will be delivered to a con-
tractor for use during the term of the contract.
Allowable Costs and Payment Identifies all contractor costs that will be allowable under the
contract and the process of payment for those costs.
Anti-Bribery Requires the contractor to affirm that none of its officers,
directors, partners, or employees has been convicted of
bribery under the laws of any state or the federal government.
Assignment of Claims Allows the contractor the right to assign its rights to be paid
to a bank, trust company, or any other financing institution.
Bid Guarantee Protects the agency in the event bidders do not provide an
acceptable bid guarantee as required at the time of bid
submission.
Bid Samples Insures the contractor provides bid samples, in the quantities,
(Sealed Bidding Only) sizes, etc., required for the items identified in the bid and must
be submitted and received before or at the time for opening
the bids.
Brand Name of Equal Requires the contractor to provide the brand name product
or one that will be equal in all material respects.
Commercial Computer Describes the specific restricted rights for contracts computer
Software-Restricted Rights software of the agency and contractor.
Commercial Warranty Insures the contractor agrees to provide the most favorable
commercial warranties the contractor gives to any of its cus-
tomers for supplies or services.
Compensation and Identifies the terms of compensation and the method of
Method of Payment payments the agency will pay to the contractor.
Compliance with Laws Requires the contractor to be in compliance with all laws (fed-
eral, state, local etc.) To qualify for award of a contract.
Conflicting Terms Protects the agency from any terms the contractor may
attempt to add to the contract with the agency terms taking
precedence.
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28 Guide to Contracting ITS Projects
Contingent Fee Prohibition Allows the agency to terminate a contract if the contractor is
found to have employed or retained to solicit a contract a
bona fide employee of agency.
Contingent Fees Protects the agency from any commission, percentage, bro-
kerage, or other fee that is contingent on the success that a
person or firm has in securing a contract with the agency.
Contract Affidavit Affirms that the contractor is indeed a recognized business
entity, either domestic or foreign, and the individual signing
the contract is duly authorized to do so by the business.
Contractor Inspection Requires the contractor to be responsible for performing all
Requirements inspections and tests necessary to insure conformance with
contract requirements.
Contractor's Invoices Describes what the agency requires from the contractor on all
its invoices for payment purposes.
Cost and Price Certification Requires the contractor to certify that their cost or price
information is accurate and complete.
Definite Quantity Used when exact numbers of the requirements are known
and can often protect the agency from paying more for
known quantities.
Delays and Extensions of Time Describes the process and protects the agency in the event
delays and/or extensions of time are encountered or
requested by the contractor.
Delivery and Acceptance Describes the delivery and acceptance process with which the
contractor must comply.
Delivery of Supplies Insures the agency is free of expense and the contractor will
F.O.B. Destination be responsible for all costs associated with delivery of supplies
and or materials.
Delivery Orders (Task Orders) Describes the process the agency will use to order specific
work under the contact.
Descriptive Literature Requires the bidder to furnish literature that shows the
(Sealed Bidding Only) item(s) in the bid for which it pertains by the time specified
in the bid for receipt.
Design within Funding Requires the contractor to design the requirement within a
Limitation not-to-exceed amount of funding available for the project.
Discount for Prompt Payment Provides for the agency to receive a percentage discount for
payments made to the contractor normally within a certain
number of days from the submittal of an invoice to the agency
from the contractor.
Disputes Defines the parties to the contracts rights in the event of any
disputes associated with the contract.
Equal Low Bids Provides for the agency to award a contract when there is eco-
nomic benefit that is in its best interest (in-state versus out-
of-state contractor).
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Contract Terms and Conditions Definitions 29
Execution and Commencement Requires the contractor to sign and return the contract
of Work document by a specific date and also to proceed with the per-
formance of the work, including the purchase of necessary
materials as required by the contract.
Extras Prevents the contractor from receiving payment for extras
unless such extras are authorized in writing by the agency
contracting official.
Federal Grant Identifies the federal contract terms and conditions (clauses)
Flow-Down Provisions that must be used in agency contracts when using federal
grant funds.
Federal, State, Local Taxes Assures the contractor warrants that no federal, state, or local
taxes have been included (excise taxes) in the amounts quoted
in the bid or proposal.
Financial Disclosure Requires the contractor to file specific information to include
disclosure of beneficial ownership of business interests.
Fixed Fee Provides the contractor with a predetermined amount of fee
to be paid by the agency assuming the contractor satisfacto-
rily completes the requirements under contract.
Fixed Price Provides for the agency to assume the least financial risk and
places the most risk on the contractor.
Gratuities Insures the agency's right to terminate a contract in the event
the contractor offers or gives a gratuity to any officer, official
or employee of the agency.
Incentive Fee Provides for the contractor to receive additional compensa-
tion providing it exceeds the agency's requirements.
Incorporation by Reference Protects the agency by stating that all terms and conditions of
the contract and any changes are made a part of the contract.
Indefinite Quantity Used when the exact numbers of the requirements are not
known and can cost the agency more as more risk is placed on
the contractor.
Indemnification Protects the agency from any obligation to indemnify, hold
harmless, or pay attorney's fees that result from the contract.
Independent Pricing Insures the contractor's offer has been arrived at independ-
ently without attempting to limit full and open competition.
Inspection of Supplies Requires the contractor to maintain an inspection system that
is acceptable to the agency.
Insurance Defines the types and amounts of insurance coverage the con-
tractor shall provide to perform any work under a contract.
Intellectual Property Indemnifies the agency with respect to any claim, cost or
action for patent infringement or trademark or copyright
violation as a result of the contract.
Late Bids, Modifications, Describes the process by which late bids, modifications, or
or Withdrawals of Bids withdrawals of bids from the contractor will or will not be
accepted by the agency.
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30 Guide to Contracting ITS Projects
Liquidated Damages Provides for the agency to receive from the contractor com-
pensation in the event the contractor fails to perform in
accordance with the contract.
Modifications Describes the process by and for which modifications will be
executed under the contract.
Multiple Contract Awards Allows the agency to award more than one contract if multi-
ple awards are in the best interests of the agency.
Multi-Year Contracts Protects the agency for long-term contracts in the event
Contingent Upon that the funding authority does not make future-year fiscal
Appropriations appropriations.
Negotiation Identifies the agency's process for a negotiated procurement.
Nondiscrimination Insures the contractor will not discriminate against any race
in Employment when employing individuals to perform work under the
contract.
Non-Hiring of Employees Prevents the contractor from hiring agency employees during
the contract term and sometimes vice versa.
Notice of Cost Comparison Puts all contractors on notice of the agency's intent to
perform cost comparisons of proposals before award of a
contract.
Officials Not to Benefit Protects against agency officials sharing or benefiting in any
way from a contract.
Option for Increased Quantity Allows the agency to increase the quantities of supplies called
for in the contract at the contract bid price.
Order of Precedence Describes the order in which each part of the contract will
govern and generally protects the agency more in the event of
contract disputes.
Ordering Describes how the agency will order supplies or services from
the contractor under the contract.
Parties to the Contract Identifies and defines all legal entities to the contract.
Patent Infringement Describes how the contractor indemnifies the agency for
Indemnification infringement of agency patent.
Patent Rights Protects the agency against any claims made against them for
any alleged infringements of patents by the contractor or
other third parties.
Payments Under Describes how the contractor will be paid by the agency for
Transportation Contracts transportation or transportation-related services.
Performance-Based Payments Describes how the agency will make payments to the con-
tractor based strictly on performance of specific requirements
(normally specific deliverables) under the contract.
Performance/Payment Bond Requires the contractor to purchase a bond equal to 100% of
the total contract value, which insures the contractor will per-
form all the work and/or pay all their subcontractors; other-
wise, the agency can call in the bond to insure the work will
be performed even if it is by other contractors.
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Contract Terms and Conditions Definitions 31
Political Contribution Requires the contractor to file specific information for political
Disclosure contributions made for elective office in any primary general
election.
Pre-Existing Regulations Protects the agency in the event there may be other regula-
tions to consider that may take precedence over the specific
terms and conditions within a contract.
Redesign Responsibility Requires the contractor to redesign the requirement at no
for Design Errors cost to the agency in those cases where the contractor has
or Deficiencies errors, deficiencies, or inadequacies in the design.
Retention of Records Requires the contractor to maintain all records pertaining to
a contract for a specific period of time.
Rights in Data Describes the agency's and contractor's rights for data,
including source code ownership and use, and identifies the
specific types of data under the contract.
Scope of the Contract Describes in as much detail as possible what the agency is
soliciting and expects to receive from the contractor and
becomes a part of the contract at time of contract award.
Specifications Requires the contractor to ensure that all materials, equip-
ment, supplies, or services conform to federal and state laws
and regulations and to the specifications contained in the
contract.
State Law Prevails Protects the agency in the event of contract disputes in that
their own state laws will be used to litigate those disputes.
Suspension of Work Allows the agency to suspend the contractor's work if it is in
the best interests of the agency.
Tax Exemption Protects the agency from paying any taxes borne by the con-
tractor under the contract.
Termination for Convenience Allows the agency to terminate a contract at any time for its
convenience with minimal financial risk to the agency.
Termination for Default Protects the agency in the event of contractor non-performance
and results in early termination of a contract due to actions
or inactions solely by the contractor.
Truth-In-Negotiation Requires the contractor to certify that their wage rates and
Certification other factual unit costs are current and accurate at the time of
contract award.
Unnecessary Elaborate Informs the contractor that elaborate proposals are not
Contractor Proposals desired and may be an indication of the contractor's lack of
cost consciousness.
Variations in Estimated Protects the agency when it becomes necessary for the agency
Quantities to order more or less work under the contract.
Work Oversight Allows for general oversight, supervision, direction, and
approval by the agency over the contractor for prosecution of
the work under the contract.
