1. Contract Breaches
Assessment of Violations and
Enforcement

2. General Provisions
• Government immunity
• Not liable for tortious actions, except those
outside the scope of employment or wanton
and willful actions
• Available funds
• Can only pay on the contract to the extent we
have appropriated funds

3. General Provisions
• Billing procedures
• Important to set a standard for billing/
invoices, and review for appropriate
payment
• Intellectual Property
• We own what we pay for, can/should get it
all back at the end of the contract

4. General Provisions
• Confidential information
• Contracts are public documents,
documentation received from vendor likely
public
• CORA exemption for confidential commercial,
financial, or trade secret information

5. General Provisions
• Conflict of interest
• Vendor can’t engage in conflicting
business
• Must disclose

6. General Provisions
• Records maintenance, performance
monitoring and audits
• Vendor must keep all records and allow us
to inspect for up to (6) years following
termination
• Can get all documents back at contact end

7. General Provision
• Inspection and Acceptance of Services
• Can inspect at any time
• May require contractor to redo
• Watch for acceptance deadlines in contract
• If have passed deadline for inspection, can’t
later reject services/goods provided
• If unacceptable and can’t reperform
• Require contractor to correct in future
• Equitably reduce payment due

8. General Provisions
• Modifications
• May need to adjust price, must be mutually
agreeable
• All modifications must be in writing
• Annual Audits
• Required for vendors expending $500,000
or more in federal funds – good source of
information for potential performance
issues

9. Special Provisions
• Controller’s Approval
• Can’t begin work until received – statutory
violation for which the employee can be
held responsible if payment rendered

10. Additional Provisions
• Customize your requirements
• Timeframes for deliverables
• If performance of later deliverables
contingent upon successful completion of
earlier deliverables, so note this in the
additional provisions and ensure that you
adequately and timely inspect earlier
deliverables for acceptance

11. Notice of Breach
• Failure to timely complete a deliverable,
or material breach of a term of the K
• Missed a project deadline
• Provides unsatisfactory deliverables
• Bills inappropriately
• Double bills for services
• Lacks adequate supporting documentation
• Bills for services not included in SOW

12. Notice of Breach
• Process
• Notify in writing of alleged breach within
(10) business days of either date of breach
or date you become aware of breach
• Contractor has (10) business days to
respond
• Failure to respond entitles you to pursue
any and all remedies

13. Notice of Breach
• Contract allows for dispute resolution
between parties to the K, to be elevated
to senior management, then to the ED
• Breaching contractor liable for damages
to the State

14. Remedies
• Withhold $ until satisfactory
performance
• Correct future performance
• Require removal of incompetent or
unacceptable employees of contractor
• Deny payment for unperformed
services or services that have no value
for State

15. Remedies
• Suspend performance pending
corrective action – no contractor
entitlement to cost adjustments
• Modify or recover payments to correct
an error due to omission, error, fraud
and/or defalcation
• Terminate the K

16. Stop Work Order
• Written order by Controller’s delegee,
telling the contractor to stop performing
• Must be for a specified period of time
• Contractor must take reasonable steps to
minimize further costs
• If SWO is cancelled, contractor may be
entitled to an amended delivery schedule
and/or contract price

17. Termination
• Default (for cause)
• Only reimburse for accepted work received
up to date of termination
• Can withhold final payment until audit
completed
• If ultimately found not to have defaulted,
termination converts to term for
convenience
• Get your stuff back!!!

18. Termination
• Convenience
• At any time, can terminate with (20) day
advance written notice
• Should only be used when mutually agree to
terminate, or an outside, intervening event
essentially makes performance impossible or
renders the service wholly unnecessary
• Cannot use simply to get same services from
another vendor at a lesser price

19. Termination
• Convenience
• Contractor can submit a claim within (10)
days of termination for:
• Costs of accepted work
• Reasonable costs associated with preparing to
perform work that was later terminated
• Reasonable profits on completed but undelivered
work
• Settlement of claims by subs
• Reasonable administrative costs

20. Termination
• Immediate
• When health, safety or welfare is in
jeopardy
• Fraud or other illegal acts
• Funds not appropriated, or otherwise
become unavailable

21. Enforcement
• Work with fiscal officers, contracts and
purchasing, internal auditors, and legal
affairs to determine steps necessary to
cite for breach
• Can institute a SWO prior to notice of
breach
• May need site visits to review
documentation to support breach findings

22. Enforcement
• Important to look throughout the
Department for other programs with
contracts with the same vendor
• Document, document, document!!!
• Phone calls must be followed up with written
correspondence noting problems
• Stay on top of your monitoring obligations
• Set deadlines for corrective measure