Office of
Procurement
and
Contract Services
http://opcs.dhhs.state.nc.us
DHHS
Performance-based
Contracting
Where are the tracks taking us ?
Training Agenda
 Center of Excellence and PBC
 Competitive Bid Process and Waiver of
Competition
 Overview of Contract Administration
 General Contracting Requirements & Specific
Contract Documents
 DHHS Compliance with Contracting
Center of Excellence
What is PBC all about?
DHHS
Departmental Center of Excellence
 What is the purpose?
 Who attends?
 What’s in it for me?
Divisions, Offices,
Schools and Facilities
Division Center of Excellence
What is the Center of Excellence?
A process used to help managers make better, more
informed decisions in managing the programs and
services within their agencies. This tools helps to assure
leaders that the agency is on course with the goals set for
the agency by allowing them to know what was
accomplished as well as guide them to improvement efforts.
Division Center of Excellence
MISSION STATEMENT
To drive performance based contracting and
process reform through best practices,
information gathering and the sharing of ideas,
networking and training for all DHHS divisions,
offices, schools and facilities
Division Center of Excellence
What’s the purpose of having a center of excellence
in your division?
Identify and approve program needs; produce
clear, meaningful data; identify and approve
outcomes; train and assist division program
staff; and reassess contract services.
Division Center of Excellence
What is managing for results?
– It’s a system of management used
to focus decisions and activities on clear
and measurable results.
– It’s purpose is to aid the division in maximizing
the efficiency, quality, and effectiveness of
services and programs.
– It’s fact-based, results-oriented and
accountable.
Division Center of Excellence
Who attends COE?
A select group of people come together to assist in
quality assurance of performance based
Contracting.
– Senior Management (director, section chief,
budget
– Subject Matter Experts (contracting, budgeting,
programming, policymaking, technology, etc).
Division Center of Excellence
 How often does your division meet?
 Do you attend?
 Do you have the right people with the right skills to
make those important decisions about whether your
contract objectives are meeting your division objectives?
 Do you perform contract analysis and outcome review on
all new, renewals and amended contracts?
Division Center of Excellence
What structure will your division have in place
to review contracts for state fiscal year 2008 and
2009?
Understanding
Performance-based Contracting
S.M.A.R.T. Measures
What are S.M.A.R.T. Measures?
Specific
Measurable
Achievable
Relevant
Time-bound
S.M.A.R.T. Measures
Specific
Your goals should be stated as simply,
concisely and explicitly as possible.
S.M.A.R.T. Measures
Measurable
Goals should be measurable and quantifiable.
If you’re stating an increase, that increase must
be measured.
S.M.A.R.T. Measures
Achievable
An achievable goal has an outcome that is
realistic given your current situation, resources
and time available.
Is your goal possible?
S.M.A.R.T. Measures
Relevant
A relevant goal should help you on your
mission or your “bigger” objectives.
Is this important to the overall objective?
S.M.A.R.T. Measures
Time-bound
A time-bound goal includes realistic
timeframes.
Whenever possible, time constraints must be
defined.
Summation
 All measures should be SMART:
•
•
•
•
•
Specific
Measurable
Achievable
Relevant
Time-Bound
 State and Contracting Agency need to work together to
develop SMART measures.
 Research may be necessary to make the measures SMART.
 Work In Progress
5 Basic ELEMENTS of
Performance-based Contracts
Five Basic Elements of PBC
1.
Needs Assessment
2. Project Goals & Objectives
3. Project Methods or Design
4. Project Evaluation
5. Reimbursement
1. Needs Assessment
– The needs assessment is a key element of a
contract.
– It should be a clear, concise, well-supported
statement of what the problem is and why the
proposed solution is needed.
– The needs assessment includes a narrative of
factual data including statistical information to
support what the need is and why the service
is needed.
2. Project Goals & Objectives
– The project objectives clearly describe the
goals of the project.
– Explain, in terms of results not outputs, the
benefits of each objective.
– The objectives are to identify the
changes/effects the project will have on
people’s lives (result) rather than the number
of people served by this project (output).
3. Project Methods or Design
– Project methods or design outline the activities
(outputs) that will be accomplished with the
available resources (inputs).
– Structure the project methods or design as a
time line and identify the target population
(who receives/benefits from the service).
– List the tasks and deliverables that must be
completed to meet the objectives of the
project.
4. Project Evaluation
 Develop evaluation criteria to evaluate the progress towards project
objectives.
– It is important to define carefully and exactly how success will be
determined.
– Describe performance measures that are specific, measurable,
accountable, results-oriented and time-bound. Basic measures of
time, dollars, units or stages of work can be supplied.
 To be useful, the project evaluation should identify:
–
–
–
–
–
–
who (individual, agency)…
is doing what (change in condition, behavior)…
to whom (target population), and…
why (bottom-line of the project)?
when (change occurs by this specific date), and…
how that change is measured (what data shows changed condition or
behavior)?
5. Reimbursement
Define the plan for reimbursement of services.
– Expenses are to be outlined in the budget
narrative.
– The budget is to demonstrate consistency with
project objectives.
– When possible, link the payment with meeting
the performance measures.
Performance Measures
What are Performance Measures?
Performance measures are tools that
provide a powerful means of focus
within an agency by assuring that goals
are on track.
The previous 5 Mandated Elements
include six performance measures.
Six Performance Measures
1.
2.
3.
4.
5.
6.
Demand
Input
Output
Outcome
Service Quality
Efficiency
1. Demand

Supports the need for the service – What is
the problem?

Includes statistical evidence on 3 levels:
•
National
•
State
•
Catchment Area

Defines how many people in Catchment Area
need the service

Found in the Needs Assessment of the SOW
Demand Measures - Example
Found in the Needs
Assessment section.
Includes statistical
evidence on 3 levels:
National
State
Catchment Area
Defines number of
persons in catchment area
who need service.
Expressed as a number.
US:
 Population approx 300 million
 37 million people below the federal poverty line
 Rate of poverty 13%
NC:
 Population approx 9 million
 1.2 million people below federal poverty line
 Rate of poverty 15%
Service Area:
 23 counties = Poverty rates > 18%
 All rural and 19 located in Coastal Plain Region
 10 small businesses
 100 families meeting eligibility criteria
Need
 Low Income North Carolinians (below the federal
poverty level) lack the necessary resources to
become Self Sufficient
Demand: Statistical Resources

http://www.census.gov/census2000/states/nc.html
http://www.ncruralcenter.org/databank/index.html
http://www.ncjustice.org
http://www.acf.hhs.gov/programs/ocs/csbg/
http://www.roma1.org/about_roma.asp?pid=2
http://www.waptac.org/
http://www.nationalhomeless.org/publications/facts.html
http://www.nccaa.net

http://www.nccommerce.com/







Six Performance Measures
1.
2.
3.
4.
5.
6.
Demand: Supports the need for the service
Input
Output
Outcome
Service Quality
Efficiency
2. Input
 Defines the amount of resources
being used to develop, maintain or
deliver a product, activity or service
 Found in the Budget. It is the Contract
Total.
 Expressed as a dollar amount.
Input Measures - Example
Found in the Budget.
Total amount of the
contract, including
local match, if
applicable.
Expressed as a dollar
amount.
$500,000
Performance Measures
1.
2.
3.
4.
5.
6.
Demand: Supports the need for the service
Input: Defines the amount of resources invested
Output
Outcome
Service Quality
Efficiency
3. Output

Show the quantity of work activity completed

Expressed as a number or quantity

Used to monitor how much was produced or
provided the services provided under the
contract –

States the number of units of services that is
expected to be delivered to customer in order to
help solve the problem?

Provide a number indicating how many items,
referrals, action, products, etc. were involved

Found in the Project Methods & Design section
of the SOW
Output Measures - Example
Found in Project
Methods and Design
section.
Defines the number of
unique participants or
clients in the program.
States the services and
quantity of the services
provided.
Technical assistance will be provided to
10 small businesses to obtain small
business loans

All or (10) small business will create and submit
loan packages to financial institutions for
approval

At least 8 small business (out of 10) will have
their loan packages approved

At least 5 of the 8 businesses will be funded total
amount requested for small business
development

8 of the small businesses whose loans were
approved will at least maintain 15 jobs for low
income persons

5 small businesses who received full funding will
expand or create 15 additional jobs for low
income persons
Expressed as a number.
Output Measures - Example
Found in Project
Methods and Design
section.
Defines the number of
unique participants or
clients in the program.
Minimize barriers to homeownership for
100 families through community and
economic development services,
service plan coordination, and
agency/community collaboration
 All or 100 families will complete prehomeownership education and
counseling
States the services and
quantity of the services
provided.
 At least 75 families out of 100 will have
their homeownership loan packages
approved
Expressed as a number.
 At least 50 families out of the 75 will
become home owners
Performance Measures
1.
2.
3.
4.
5.
6.
Demand: Supports the need for the service
Input: Defines how much money is needed
Output: Defines the services provided
Outcome
Service Quality
Efficiency
4. Outcome

Defines the results achieved from the contract

Must tie back to the service or activity of the
contract and ultimately the main purpose of the
program – How will the program effect the
problem?

Includes short-term, interim and long-term results

Found in the Project Evaluation Section of SOW

Expressed as a Percentage or Rate
Outcome Measures - Example
Loans for Small Businesses
Found in the Project
Evaluation Section.

100 % of small business (N=10) will
create and submit loan packages for
Approval
Defines the results
achieved from the contract.

80% of small business (N= 8) will have their
loans approved

63% of small businesses (N=5) will
be funded total amount of funding
requested for small business development

All or 80 % of small business whose loans
were approved will at least maintain 15 jobs
for low income persons

63% of small businesses (5) who received
full funding for small business development
will expand or create 15 additional jobs for
low income persons
Includes short-term,
interim and long-term
results
Expressed as a % or rate.
Outcome Measures - Example
Found in the
Performance
Requirements section.
Minimizing Barriers to Homeownership

100% of families (N=100) will complete pre
home ownership education and counseling

75% of families (N=75) completing pre home
ownership, education and counseling will have
their homeowners loan packages approved

66% of families ( N=50) will become
homeowners
Defines the results
achieved from the
contract.
Includes short-term,
interim and long-term
results
Expressed as a % or
rate.
Long -Term
 The projected outputs, outcomes, goals and
objectives will contribute to the increase of
those moving above the federal poverty level
and into self sufficiency in the catchment area
by 50% in 3 years
Performance Measures
1.
2.
3.
4.
5.
6.
Demand: Supports the need for the service
Input: Defines how much money is needed
Output: Defines the services provided
Outcome: Defines the results achieved
Service Quality
Efficiency
5. Service Quality

Defined as how well the service was delivered, based
on characteristics important to the recipient

Used to determine if we are meeting the expectations
of the recipient

Takes the form of:

•
Timeliness
•
Accuracy
•
Meeting regulatory requirements
•
Courtesy
Found in the Project Evaluation section of SOW
Demonstrating Service Quality
 It’s not just delivering the service to the
recipients…
 It’s HOW well it’s delivered!
Service Quality Measures - Example
Found in the Project
Evaluation section.
Defines how well the
service was delivered,
based on
characteristics
important to the
recipient.
Describe in the form of
timeliness, accuracy,
regulatory
requirements, courtesy,
and meeting recipient’s
needs.
 90% of the small businesses will say
that the training and technical
assistance they received was helpful
 90% of small businesses will say that
the trainers were knowledgeable
 For those loans not approved
feedback from bank will show denial
resulted from other than technical
errors or things the trainer can not
control such as type of project,
financial projections, credit history or
character.
Performance Measures
1.
2.
3.
4.
5.
Demand: Supports the need for the service
Input: Defines the resources invested
Output: Defines the services provided
Outcome: Defines the results achieved
Service Quality: Defines how the services will
be provided to the recipient’s satisfaction.
6. Efficiency
6. Efficiency

Monitors the relationship between the
amount produced and the resources used

The cost per output or result (such as an
evaluation or a study).

Expressed as a dollar amount

Found in the Reimbursement section of the
SOW
Efficiency Measures - Example
Cost per
participant or
result.
$200,000 (SB) ÷ 10 (SB) =
$20,000 per small business
Expressed as a
dollar amount.
300,000 (home project)
÷100(families) =
$3,000 per family
Found in the
reimbursement
section
Performance Measures
1.
2.
3.
4.
5.
Demand: Supports the need for the service
Input: Defines how much money is needed
Output: Defines the services provided
Outcome: Defines the results achieved
Service Quality: Defines how well the
service was delivered
6. Efficiency:
Cost per participant or result
Benefits of Performance Measures
 Strengthens the program
 Contractor learns what is working and where
improvement is needed
 Builds a strong case for future funding
 More people in need are served with the best
possible programs
Competitive Bid Process
&
Waiver of Competition
What is the best way to find the
appropriate Vendors?
Competitive Bid Process
RFP
– A Request for Proposal (referred to as RFP)
is an invitation for suppliers, often through a
bidding process, to submit a proposal on a
specific commodity or service.
– A bidding process is one of the best methods
for leveraging a company's negotiating ability
and purchasing power with suppliers
– The Request process brings structure to the
procurement decision and allows the risks and
benefits to be identified clearly upfront.
– The Request purchase process is lengthier than others,
so it is used only where its many advantages outweigh
any disadvantages and delays caused. The added benefit
of input from a broad spectrum of functional experts
ensures that the solution chosen will suit the company's
requirements.
– Unlike an RFA, the applicants are not aware of the
reward amount. Award is made to the offeror presenting
the most advantageous overall proposal to the State.
– These are posted by OPCS on the IPS site for all
interested vendors to have access to the information.
Competitive Bid Process
RFA
– Request for Application - A competitive process
that usually results in the award of more than
one contract. Unlike the RFP, applicants are
knowledgeable of the award amount and are
asked to submit an application that includes a
description of services to be performed and a
budget narrative of the potential award
amount.
– These are posted to the DHHS website for all
vendors to be able to access the information.
Competitive Bid Process
So, what’s the difference in the RFA and RFP?
– RFA’s are used when the funding
source is acting as flow-through for
grant funding.
– RFA’s are used with non profit
entities.
Competitive Bid Process
RFP or RFA?
– Resource and Referral services using funds from Child
Care and Development Block Grant to support or carry
out a program.
– Janitorial maintenance services from for the State
– Evaluation Recommendation and Implementation of a
new medical records system for the State.
– Expand after school program services for at risk
children using funds from Temporary Assistance for
Needy Families Block Grant
Competitive Bid Process
What if I need information prior to issuing an RFP?
RFI
– Request for Information - An informal method of
soliciting general information to aid in later
planning of specification writing. NO contract
results from this process. To be used to obtain
technical information NOT pricing.
Competitive Bid Process
RFQ
– The Request for Quotation (RFQ) is used where
discussions aren't required with bidders (mainly when the
specifications of a product or service are already known),
and price is the main or only factor in selecting the
successful bidder.
– RFQ may also be used as a step prior to going to a fullblown RFP to determine general price ranges. In this
scenario, products, services or suppliers may be selected
from the RFQ results to bring in to further research in
order to write a more fully fleshed out RFP.
Waiver of Competition
Sole source and Government Contracts
Contracts with public agencies (other state
departments, UNC system, community
colleges, local government agencies) do not
justify a waiver of competition.
• Sole source contracts with a for profit, non profit, or
individual must justify a waiver of competition.
• ALL contracts must justify how costs were
determined as reasonable.
Waiver of Competition
Does this meet waiver of competition
requirements?
a) The contractor is in close proximity of clients
and parents.
b) The feds said to use this contractor.
c) The division does not have the resources.
Waiver of Competition
Does this meet waiver of competition requirements?
a) Discussions were held to ensure resources were
allocated appropriately
b) The division has contracted with this vendor since 1987
c) Performance has been satisfactory.
d) The vendor home office is in NC
e) Legislative mandate states that we must provide this
service
Waiver of Competition
Does this meet a waiver of competition?
a) A particular medical service is required.
b) Competition was solicited, but no satisfactory
offers were received.
c) An emergency existed.
Waiver of Competition
Waivers of competition
should be explained in detail
and defended if challenged later.
Overview of Contract
Administration
What should I be doing?
Overview of Contract Administration
 WHEN IS A CONTRACT NEEDED?
The use of a bi-lateral contract signed depends on the parties
involved, whether the purchase is for goods or services, and
sometimes even the type of services.
 BI-LATERAL CONTRACT REQUIRED
A bi-lateral contract serves as a check and balance that monitors
procurement activity for improper relationships, fraud, conflict of
interest issues, regulatory requirements, etc. The contracting review
and signature process provides for review by more than one
individual which gives more opportunity to correct potential
problems before a contract is executed.
Overview of Contract Administration
 Contract Administration is any action by either party to the contract
from the time of contract award until completion.
 Contract Administrators are responsible for the day to day
management of the contract.
 Contract Manager serves as a resource for the division, oversee all
contracts within the agency and provide technical knowledge,
training, necessary information and logical methods to help the
accuracy in the contracting process and increase efficiency.
Overview of Contract Administration
Main objectives are to:
– ensure compliance to general contracting
requirements;
– ensure contractor’s progress and performance
complies with the contract;
– resolve issues that arise during the life of a
contract;
Overview of Contract Administration
Main objectives continued:
– ascertain contract amendments or revisions,
negotiate fair adjustments, and determine
which parties are responsible for approving
cost increases;
– keep accurate records and documentation
pertaining to the contract;
– prevent lapse in service.
Overview of Contract Administration
Components of Contract Administration Process
1.
2.
3.
4.
5.
6.
7.
8.
Relationship Management
Planning
Pre Award Orientation
Post Award
Monitoring
Payment
Termination
Close Out
Overview of Contract Administration
Relationship Management
 Creating a good working relationship,
establishing mutual goals upfront, and
partnering with all those involved in the
contracting process helps prevent disputes and
conflicts that may arise during the life cycle of
the contract
Overview of Contract Administration
Planning
 Review start and end dates to make sure that
there is no lapse in service.
 Review procurement file and identify those
critical contract issues
 Read the Contract in full
 Establish a performance monitoring plan
 Identify team members and responsibilities
Overview of Contract Administration
Pre Award Orientation
 Pre-meeting with applicable program and contracting
officials prior to the post award orientation conference so
that there is a clear understanding of their specific
responsibilities and restrictions in administering the
contract.

Items that should be discussed at the pre award meeting
include such things as the responsibility of the personnel
who will administer the contract, risks, quality control and
testing, the specific contract deliverable requirements,
special contract provisions, procedures for monitoring and
measuring performance, contractor billing, voucher
approval, and payment procedures
Overview of Contract Administration
Post Award

Post award orientation, either by conference, letter or some
other form of communication, should be the beginning of
the actual process of good contract administration.

This communication process can be a useful tool that helps
government and contractor achieve a clear and mutual
understanding of the contract requirements, helps the
contractor understand the roles and responsibilities of the
government officials who will administer the contract, and
reduces future problems.
Overview of Contract Administration
Post Award continues
 However, it is not a substitute for the contractor’s
fully understanding the work requirements at
the time offers are submitted, nor is it to be used
to alter the final agreement arrived at in any
negotiations leading to contract award.
Overview of Contract Administration
Monitoring
 Monitoring plans should be implemented to
monitor the contractors performance
 Examine potential risk to the agency
 Establish required level of monitoring
 Establish conformance to requirements set in the
monitoring plan
Overview of Contract Administration
Monitoring continues
 Monitoring should be commensurate with the
criticality of the service or task and the resources
available to accomplish monitoring
Overview of Contract Administration
Payments
 Payment to a contractor implies work is progressing
according to the contract; therefore the contract
administrator must be assured that the government is
getting what it paid for.

Payments should only be made to contractors that perform according to
contract terms and conditions. This can be determined by monitoring
contractor’s performance through review of monthly reports, onsite visits,
surveillance reviews, etc.
Overview of Contract Administration
Payment Continues
 Prior to certifying invoices for payment review
invoices to evaluate accuracy and cost allow
ability and reasonableness
 Measure submitted costs against funds available
 Ensure invoices/payments are consistent with
contract payment schedule
Overview of Contract Administration
Termination
 Use this choice as a last resort
 High risk option
 Contractor or bonding agent may protest
 Negotiation/litigation may take months
 May be the only/best option
Overview of Contract Administration
Close Out

Contract closeout begins when the contract has been physically
completed, i.e., all services have been performed and products
delivered.

Closeout is complete when all administrative actions have been
completed, all disputes settled, and final payments have been made.
This process can be simple or complex depending on the contract type
for cost-reimbursement contracts.

Process requires close coordination between contract office, budget
office, program office and the contractor.
Overview of Contract Administration
Close Out Process Continues
 Collect all required forms and reports
 Settle outstanding issues
 Conduct joint final inventory
 Make final payments
 Close out Contract file
 Conduct agency debriefing
 Recommend changes to next procurement contract
Overview of Contract Administration
Ethics
Impartiality – it is the basic obligation of public
service that employees shall act impartially
and not give preferential treatment to any
private organization or individual. Even the
appearance of partiality or preferential
treatment is a violation of the regulation on
standards of conduct.
Overview of Contract Administration
Ethics
– You are the contract administrator to specific program
related service contracts and are working on an RFA to
send to several non profits.
– One of the non profits and potential subcontractor invites
you to lunch.
Should you go?
Overview of Contract Administration
Ethics
Conflict of Interest with contracts:
No DHHS employee will draft, negotiate,
administer, accept or approve any contract
or subcontract on behalf of the State if
he/she or his/her immediate family has,
directly or indirectly, any financial interest in
such a contract or subcontract.
Overview of Contract Administration
Ethics
A romantic relationship has developed
between the contact administrator and a
contractor employee.
How should this be handled?
Overview of Contract Administration
Ethics
Gifts – anything of value.
No DHHS employee may request or receive
any gift or favor from any contractor,
subcontractor, supplier or other business
entity or individual that has a present, past,
or anticipated financial interest in any matter
under the jurisdiction of DHHS.
Overview of Contract Administration
Ethics
The contractor offers hockey tickets to the
contract administrator for his birthday.
Should he accept the tickets?
Overview of Contract Administration
Ethics
Gifts received from a contractor, subcontractor
or supplier doing business directly or indirectly
with DHHS must be reported to the Secretary of
DHHS.
Overview of Contract Administration
Ethics
The company your contract is with offers you
weekend use of a beach or mountain home...
Should you accept the gift?
Dealing with the Information
Overview of Contract Administration
Budget revisions :
can change the contract line items,
but cannot change the total contract amount.
What’s the process for a budget revision?
Overview of Contract Administration
Budget revisions to contract in grant form
“Wiggle Room”
• The Controller’s Office allows a 10% adjustment in
line items without having the contractor send through
a formal budget revision -- as long as this does not
affect the total dollar amount.
• Be sure to keep track of what item has been
modified, total line item adjustments cannot exceed
10%.
Overview of Contract Administration
Line item budget revision example:
•
•
•
•
•
Salaries = $ 50,000
Supplies = $ 8,000
Equipment Rental = $ 2,000
Travel = $ 10,000
Total contract amount = $ 70,000
The contractor has higher expenses in
Supplies than first expected, and wants to shift
money to compensate for this increase. The
increase is $ 2,000.
Where can this adjustment come from?
Overview of Contract Administration
Line item budget revision example:
The amount for salaries can be adjusted:
•
•
•
•
•
Salaries = $ 48,000
Supplies = $ 10,000
Equipment Rental = $ 2,000
Travel = $ 10,000
Total contract amount = $ 70,000
The Total Contract Amount did not change.
Overview of Contract Administration
Line item
title
Original
amount
+ or -
New
Salaries
$50,000
- $2,000
$48,000
Supplies
$8,000
+ $2,000
$10,000
Equipment
$2,000
$2,000
Travel
$10,000
$10,000
Total
$70,000
Overview of Contract Administration
Using the same example:
•
•
•
•
•
Salaries = $ 50,000
Supplies = $ 8,000
Equipment Rental = $ 2,000
Travel = $ 10,000
Total contract amount = $ 70,000
The contractor wants to take the $ 2,000 from travel, and move it to
supplies.
Is the contractor able to do this?
Overview of Contract Administration
That will not work, 10% of travel is $1,000.
The contractor would only be able to shift the 10% from this
category, and would have to look at another category to shift the rest.
•
•
•
•
•
Salaries = $ 50,000
Supplies = $ 10,000
Equipment Rental = $ 1,000
Travel = $ 9,000
Total contract amount = $ 70,000
Leaving the Total Contract Amount unchanged.
Overview Contract Administration
Line item
title
Salaries
Original
amount
$50,000
+ or -
New
Supplies
$8,000
+ $2,000
$10,000
Equipment
$2,000
- $1,000
$1,000
Travel
$10,000
-$1,000
$9,000
$50,000
Overview of Contract Administration
Budget Amendments
Any change to the
TOTAL CONTRACT AMOUNT
must be completed through a
contract amendment process.
Overview of Contract Administration
Budget items must match
– CAF, Justification Memorandum, Contract
Cover, SOW, Line Item Budget, DHHS
Contract System Entry
• Carefully review all budget entries and totals for the
contract. They must match.
• Review invoices for accuracy. Think about what
we’re paying for? And how much?
• Controller’s Office requests that the amount of
invoice being approved for payment along with the
account and center coding be circled.
Overview of Contract Administration
– The CAF details the funding and total amount to be:
• $155,435.
– The General Contract Cover specifies:
• The contractor will be paid $155, 435.
– The SOW specifies:
• The amount allocated for this contract is $150,435.
– The Line Item Budget Detail documents:
• The total for the contract is $150,435.
– The entry in the DHHS Contract System and NCAS mirrors the
funding on the CAF
• the total entered is: $155,435.
How much is the contract really for?
What should the contractor expect to get paid?
You must track down where the difference is coming from and have all
documents within the contract reflect the same amount.
Overview of Contract Administration
Invoice Accuracy
– The Contract Administrator is responsible for making
sure the invoices that come from the contractor are
timely and accurate. Double check what is being billed
for, and what is being paid.
– It is essential that you keep accurate records and
complete documentation to be able to efficiently monitor
the contract.
– If there are any discrepancies on an invoice, check with
the contractor right away to get clarification and resolve
and issues.
– Insure that all mathematical computations are correct
including year-to-date expenditures.
Overview of Contract Administration
“Playing catch up on invoices”
If a batch comes in for July – December and it’s
missing Sept. and Oct., then Nov. and Dec.
can’t be paid without Sept. and Oct. invoices.
Overview of Contract Administration
Budgets
If, for example, the state funded contract for
administrative services is expending 10% less than
projected budget...
What should the administrator do?
a)
b)
Wait until the end of the year and revert funds?
Do a contract amendment prior to the end of the year
and use the funds in other effective services?
Overview of Contract Administration
CONTRACT APPROVAL FORM – BUDGET INFORMATION
Original
A-1
Total or Amend.
$300,000 $125,000
Amt
Current Contact
0
$300,000
Total
New Contract Total $300,000 $425,000
A-2
$(25,000)
$425,000
$400,000
Overview of Contract Administration
FISCAL YEAR FUNDING INFORMATION
SFY
Co# Acct
Center Amount
Federal
State
2009 2B01 52399 1212
$200,000
$100,000 $100,00
0
2010
$100,000
$75,000
2B01 53299 1212
$ 300,000
Total Contract amount
Other
$25,000
Overview of Contract Administration
Contract Funding Information
Amount
Percentage
Fund Source
CFDA #
$100,000
50%
MCHB
XXXX
$100,000
50%
STATE
$75,000
75%
TANF
$25,000
25%
OTHER
$300,000 Total Contract amount
XXXX
Overview of Contract Administration
Program and Service Type Information by Fiscal Year Funding
SFY
Co#
Acct
Center
Amount
Program
Name
Service
Type
2009
2B01
52399
1212
$ 200,000
Direct
2009
2B01
53299
1212
$100,000
Direct
JOE's MEDICAL OUTREACH SERVICES
Original Contract
Budget Item
Salaries
Fringe
Rent
Supplies
Travel
Client Services
Amount
$100,000.00
$25,000.00
$25,000.00
$5,000.00
$10,000.00
$135,000.00
Total
$300,000.00
JOE'S MEDICAL OUTREACH SERVICES
Amendment I
Budget Item
Salaries
Fringe
Rent
Supplies
Travel
Client Services
Amount
$ 100,000.00
$ 25,000.00
$ 25,000.00
$ 5,000.00
$ 10,000.00
$ 135,000.00
New
A-1
Contract Budget
$
100,000.00
$
25,000.00
$
25,000.00
$ 20,000.00 $
25,000.00
$ 5,000.00 $
15,000.00
$ 100,000.00 $
235,000.00
Total
$ 300,000.00
$ 125,000.00
$
425,000.00
Amendment 2
Budget Item
Salaries
Fringe
Rent
Supplies
Travel
Client Services
Total
Current
$ 100,000.00
$ 25,000.00
$ 25,000.00
$ 25,000.00
$ 15,000.00
$ 235,000.00
$ 425,000.00
New
A-2
Contract Budget
$
100,000.00
$
25,000.00
$
25,000.00
$ (15,000.00) $
10,000.00
$ (10,000.00) $
5,000.00
$
235,000.00
$ (25,000.00) $
400,000.00
Overview of Contract Administration
Deliverables
– Accurate records are necessary to keep track
of the contract activities and deliverables.
– Creating a timeline of activities, reports and
deliverables will help you monitor what is
expected from the contractor and resolve
issues if expectations are not met.
Overview of Contract Administration
Should contracts have a final report due after
the ending date?
If the contract has a report due after the ending
date of the contract, is final payment made
without a report?
Overview of Contract Administration
Deliverables
– SOW lists:
• progress report due 12/31/07 and
• annual report due 06/30/08.
So, what should the report include?
Overview of Contract Administration
How do you use this information?
– If the Contractor is not meeting objectives,
review objectives to see if it’s reasonable for adjustment
or issue a Corrective Action Plan
– But, don’t wait until the end of the year to find out how
the contractor is doing or what’s going on with the
program.
– Present this to your COE for discussion.
Overview of Contract Administration
 My contract ended 6/30/08.
– Can I amend it on 7/03/08?
 My contact was effective on 10/01/06 and ends
on 09/30/08.
– Can I amend the contract to extend the period of time?
 My contact was effective on 7/01/05 and ends
on 06/30/08.
– Can I amend the contract to extend the period of time?
Overview of Contract Administration
What happens when work begins before the
contract is fully effective?
– The contractor is acting at their own risk when working without
a contract.
– Any assurances by the division to the contractor are outside of
their legal authority and therefore not binding.
– If a dispute arises between the start of performance and the
signing of the contract, there is nothing to use to resolve it.
– A contract contains protections for both parties – the division
and contractor. If there’s work and no fully executed contract,
neither one of them has those protections.
– Also, by statute, anyone spending money for a purpose other
than for which it was appropriated may be held personally
liable for the sum so spent.
Overview of Contract Administration
Why revise the scope of work when its a no cost
extension?
– If the original scope of work specifically covers the
contract period, then technically no work is required
during the no cost extension.
For example, timelines in the original scope of work.
Overview of Contract Administration
Previous Audit Findings
– Program manager had a personal service
contract with a non profit agency while
simultaneously acting as contract administrator
for a division contract.
– Failure to determine that a secondary
employment situation did exist and thereby
permitting the conflict of interest to exist.
Overview of Contract Administration
Previous Audit Findings
– An 80,000 contract with another state agency
was not handled in accordance with the State
rules and regulations.
– Invoices were paid without adequate
supporting documentation, and the contract
was incorrectly classified as a personal
service contract.
Overview of Contract Administration
Previous Audit Findings
The division failed to adequately identify the
federal awarding agency or Catalog of
Federal Domestic Assistance (CFDA) number
in the sub recipient contracts.
General Contracting
Requirements
&
Specific Contract Documents
Contract Approval Flow
General Contracting Requirements
Contract Approval Flow
Use the Contract Approval Flow chart to determine the
correct approvals for your contract.
Know the following to determine contract approval flow:
•
•
•
•
service type
dollar amount
options (how procured)
contractor agency type
General Contracting Requirements
Contract Approval Flow
– All Contracts must go through an internal
approval process.
– The Contract Approval Form (CAF) walks you
through the necessary approvals.
General Contracting Requirements
Internal Approvals
◊ Contract Administrator
◊ Section Chief Signature
◊ Division Contract Office
◊ Division Budget Office
◊ Division Personnel Manager
(if Personal Service)
◊ COE Chair
◊ Division Director
General Contracting Requirements
Contract Approval Flow
– Some contracts will need External approval.
– The requirements for external approvals will
depend upon the service type, dollar amount,
options (how the contract was secured), and
type of contractor.
General Contracting Requirements
External Approvals
◊ DIRM – containing any IT related service
◊ Public Affairs – containing any Media related service
◊ DHHS B&A – depending upon the service, contract amount, how the
contract was selected, and the type of contract.
◊ DHHS Personnel – Personal Service, $10,000
◊ OPCS – depending upon the service, contract amount, how
the contract was selected, and the type of contract.
◊ The Secretary – any Other State Agency
◊ AG’s Office - RFP over $25,000
◊ Other
General Contracting Requirements
Examples
You have a Contract that focuses on specialized
training of staff.
The contract includes items such as:
–
–
–
–
Travel
Supplies
Computer Equipment purchase ($6,000)
Maintenance of computer equipment and software.
At a Glance… will this need External approval?
General Contracting Requirements
The Computer items should raise a flag.
– This contract deals with IT purchase and maintenance –
and needs DIRM approval.
– The IT Checklist is to be completed for every contract, and will
guide you through determining whether the contract needs to
go through DIRM for approval.
General Contracting Requirements
Examples
You have a Contract that focuses on educating
consumers about birth defects and the importance of
prenatal care.
The contract includes items such as:
–
–
–
–
Salaries
Supplies
Office Equipment
Design and Publishing of promotional materials
At a Glance… will this need External approval?
General Contracting Requirements
The Media item should raise a flag.
– This contract deals with Design and Publishing of
promotional materials – and needs Public Affairs
approval.
– The Publication Approval Form can be found on the
Public Affairs web site. The web site also contains
useful information about required elements in all
publications, etc.
General Contracting Requirements
Examples using the Flow Chart:
– You have an education contract that was awarded from
an RFP.
– The contract is with a Non-Profit agency for
$ 50,000.
What approvals are required?
General Contracting Requirements
–
–
–
–
This is a Program Related Service = Education
Value = $50,000
The Option = RFP
Type of Contractor = Non-Profit
Approval levels required for this contract
– All internal (except HR)
– External approvals required for this contract
•
•
•
•
DHHS B&A
OPCS
AG
State P&C
General Contracting Requirements
Examples using the Flow Chart:
– A training contract in the amount of $230,000 with the
Department of Administration.
What approvals are required?
General Contracting Requirements
–
–
–
–
This is a Program Related Service = Training
Value = $230,000
The Option = Government
Type of Contractor = Other State Department
Approval levels required for this contract
– All internal (except HR)
– External approvals required for this contract
• OPCS
• Secretary
General Contracting Requirements
Examples using the Flow Chart:
– You have an maintenance contract that was awarded
from an RFQ.
– The contract is with a For-Profit agency for
$ 9,000.
What approvals are required?
General Contracting Requirements
–
–
–
–
This is an Operation = Maintenance
Value = $9,000
The Option = RFQ
Type of Contractor = For-Profit
Approval levels required for this contract
– All internal (except HR)
– No external approvals required for this contract
General Contracting Requirements
Examples using the Flow Chart:
– You have a sole source direct medical service contract.
– The contract is with a For-Profit agency for
$ 190,000.
What approvals are required?
General Contracting Requirements
–
–
–
–
This is an Program Related Service = Direct Medical Services
Value = $190,000
The Option = Sole source
Type of Contractor = For-Profit
Approval levels required for this contract
– All internal (except HR)
– No external approvals required for this contract
General Contracting Requirements
If the value of that contract was
over $200,000, then
the contract would require approval
from the Office of Procurement &
Contract Services.
General Contracting Requirements
Examples using the Flow Chart:
– Providing staff training to DHHS
– This is a sole source contract with a for
profit for $20,000.
What approvals are required?
General Contracting Requirements
–
–
–
–
This is an Operations Related Service = Staff Training
Value = $20,000
The Option = sole source
Type of Contractor = For-Profit
Approval levels required for this contract
– All internal (except HR)
– B&A
– OPCS
General Contracting Requirements
Examples using the Flow Chart:
– A personal services contract (with an
individual) providing IT related services
for $9,000 at a rate of $80 per hour.
What approvals are required?
General Contracting Requirements
–
–
–
–
This is an IT related service = Programming
Value = $8,000
The Option = Personal Services
Type of Contractor = Individual
Approval levels required for this contract
–
–
–
–
All internal (including HR)
DIRM
DHHS HR
B&A
General Contracting Requirements
 Personal Service Contracts
Specific Documents
Required Contract Documents
Contract Documents (depending upon the Type of contract)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Contract Approval Flow Chart
Contract Approval Form (CAF)
Contract Determination Questionnaire
Indirect Cost Rate
Cash Advance Documentation
Contract Justification
IT Checklist
HIPAA Checklist/BA Addendum
General Contract Cover (a. UNC b. General)
Terms and Conditions (a. Private b. Local Gov. c. State Dept. d. Health Care)
SOW (including elements and measures)
Line Item Budget and Budget Narrative
Conflict of Interest Policy/Acknowledgement
Federal Certifications (a. Tobacco b. Debarment c. Lobbying d. Drug-Free Workplace
e. Lobbying Activities)
No Overdue Tax Certification
ITS Tax Exempt Letter/Verification
Required Contract Documents
 Contract Approval Form
Requires specific information about the contract
along with appropriate routing and signature
approval. The contracting review and signature
process provides for review by more than one
individual which gives more opportunity to
correct potential problems before a contract is
executed
Required Contract Documents
 Audit Determination Questionnaire
– States, local governments, and non-profit organizations
that receive federal and/or state funds must comply with
the audit requirement in OMB Circular A-133
– Contractors that meet the definition of “sub recipient”
are subject to the audit requirement, but contractors
that meet the definition of “Vendor” are not.
– The audit determination form is a guide used to help
determine whether payments constitute a federal award
or a payment for goods or services
Required Contract Documents
Audit Determination Questionnaire (Cont.)
– Unless otherwise required, for-profit/commercial entities
are not subject to these requirements
– To distinguish between the two types of contracts, refer to
OMB Circular A-133 and NCAC T10 C1 S/B.0400. There
is a list of question to assist in distinguishing between a
purchase of service or financial assistance
arrangement
Required Contract Documents
Subrecipient Characteristics:
 Determines who is eligible to receive financial
assistance;
 Has it performance measured against whether the
objectives of the programs are met;
 Is responsible for adherence to applicable state
program compliance requirements; and
 Uses funds to carry out a program of the organization
as compared to providing goods or services for a
program of the pass-through entity.
Required Contract Documents
Vendor Characteristics:
 Provides the goods and services within normal business
operations;
 Provides similar goods or services to many different
purchasers
 Operates in a competitive environment
 Provides goods or services that are ancillary to the
operations of the state program; and
 Is subject to the compliance requirement of the state
program.
Required Contract Documents
At a Glance, what is your determination of the following (FA
or POS):
– Contract award to evaluate a new program
– Contract award to administer NC Food Stamp program
– Contract award to provide psychiatrist to Cherry Hospital
– Provide HIV services to low income citizens
Required Contract Documents
Congratulations if you made the following determinations.
– Contract award to evaluate a new program (POS)
– Contract award to administer NC Food Stamp program
(FA)
– Contract award to provide psychiatrist to Cherry Hospital
(POS)
– Provide HIV services to low income citizens (FA)
Required Contract Documents
Indirect Cost
Any cost that is incurred for common objectives and therefore cannot be directly
Charged or traced to a specific activity or any single cost objective.
If a contractor budget include indirect (or administrative) cost :
 Contractor may include indirect cost in the contract budget for reimbursement if they have have a
predetermined indirect cost rate, fixed rate or provisional rate

Review contract funding source to determine possible limitations regarding administrative cost

Official documentation of indirect cost include either an official document for the cognizant federal
agency or an independent source (not the contractor)

Verify indirect cost computation to ensure that indirect cost is not computed on excluded line items or
those with dollar limitations

A copy of the official indirect cost documentation must be attached to the executed contract
Required Contract Documents
 Cash Advance Request Requirements
Advances may be allowed if they meet the Dept criteria
and “Advance of Financial Assistance Funds Policy”
– Approved only when the lack of an advance would create
an economic hardship for the contractor
– Not allowed for procurement of goods and services and
Purchase of Services contracts
– Advance should not exceed the cash requirement for up to
sixty days
– Requesting agency must document the need via the DHHS
Certification of Cash Need and submit to the DHHS
Controllers Office
Required Contract Documents
 Cash Advance
– Signature required by Entity’s director, board chair person
and entire board
– If contractor is funded with federal funds, the division must
identify and budget state funds to support the advance;
however, federal funds may be used to support the
advance if allowed by the federal regulations
– Must include “advance request” payment for service
language in the contract
– All advances must be settled before June 30 the fiscal
year end
Required Contract Documents
LET’S TEST YOUR KNOWLEDGE....
1. What types of contracts may be eligible for cash advance?
(A) Financial Assistance or (B) Purchase of Service
2. Cash advances typically should not exceed what time period
(A) 60 days or (B) 90 days
3. Contract must be signed and in place prior to cash advance
(A) True or (B) False
Required Contract Documents
4. State or Federal funds must be budgeted to support the advance
pay
(A) True or (B) False
5. DHHS Certification of Cash Need form must be completed and
submitted to:
(A) Division Budget Office or (B) DHHS Controllers Officer
6. Contract document must include the “advance request” payment
for service language”
(A) True or (B) False
Required Contract Documents
 Contract Justification Memorandum
Serves a stand alone contract and substantiate
the reason for entering into the contract.
Key Components include:
•
•
•
•
Purpose and expectation of the contract
Contractor Selection Method
Selection Justification
Contract and Program Funding
Required Contract Documents
IT Determination Letter
DIRM must review and approve all contracts
containing an Information Technology
component. Refer to DIRM website for
additional information.
http://dirm.state.nc.us/dirmhome
Required Contract Documents
HIPPA
The Health Insurance Portability and Accountability Act of 1996
(Public Law 104-191)
Individually Identifiable Health Information
 Information that is a subset of health information, including
demographic information collected from an individual, and:
 (1) Is created or received by a health care provider, health plan,
employer, or health care
clearinghouse; and
Required Contract Documents
 (2) Relates to the past, present, or future physical or mental
health or condition of an individual; the provision of health
care to an individual; or the past, present, or future payment
for the provision of health care to an individual; and
 (i) That identifies the individual; or
 (ii) With respect to which there is a reasonable basis to
believe the information can be used to identify the individual.
Required Contract Documents
Business Associate
A business associate relationship may arise when
a person or organization performs a function or
activity on behalf of a covered entity or provides
certain legal, financial or management services
to the covered entity and the function, activity or
services involved in the use or disclosure of
individually identifiable health information.
Required Contract Documents
HIPAA forms, instructions and other materials can be located on the
HIPAA web site: http://hipaa.dhhs.state.nc.us/index.html
Documentation needed for contracts may include:
External Business Associate Assessment Tool (Instructions)
Internal Business Associate Assessment Tool (Instructions)
HIPAA Business Associate Addendum for Contract
HIPAA Business Associate Addendum for Memorandum of
Agreement (MOA)
 HIPAA MOA (stand alone)




Required Contract Documents





Indirect Cost
Information Technology Checklist
NCAS
DHHS Contract System
Tax Exempt Status
– IRS Federal Tax Exempt Letter
– Verification of IRS Federal Tax Exempt Letter
Required Contract Documents
 General Cover
– UNC - Use only for UNC System-modified version due to
Master
Agreement
– Other-Use for all other Contractors
– Delete attachments that do not apply and label
attachments according to order of precedence as applicable
– Delete all instructions in blue italics
Required Contract Documents
 General Cover “must” include the following:
– This Contract
– General Terms and Conditions or Master
Agreement for UNC
– Scope of Work
– Budget (Line Item)
– Budget Narrative (descriptive)
– All other attachments are “If Applicable”
Required Contract Documents
General Terms and Conditions
–
–
–
–
–
–
Private Sector
Private Universities
Duke Medical
Public Agencies (local governments)
State Departments
Health Care Providers
Required Contract Documents
 Financial Assistance Requirements
– No Overdue Tax Debts
– Notice of Certain Reporting Requirements
– Grants Information Center (GIC)
 General Contract Cover
– UNC
– All Other
 General Terms and Conditions
–
–
–
–
–
–
Private Sector
Private Universities
Duke Medical
Public Agencies (local governments)
State Departments
Health Care Providers
Required Contract Documents
 Federal Assurances
– Federal Disclosure of Lobbying Activities
– Federal Certification Regarding Lobbying Form
– Federal Certification Regarding Debarment, Suspension,
Ineligibility, and Voluntary Exclusion-Lower Tier Covered
Transaction
– Federal Certification Regarding Drug-Free Workplace
Requirements
– Federal Certification Regarding Environment Tobacco
Smoke
Required Contract Documents
 Federal Certifications
– The Federal Government requires individuals and
organizations to sign certain certifications depending on
the amount for federal citations.
– Use the following guidelines to determine when these
certifications are required
Required Contract Documents
 Federal Certifications
CERTIFICATION REGARDING LOBBYING
(Referred to as the Hatch Act)
– Include in sub awards for all tiers (Federal award > $25,000 or
more)
– The main provision is to prohibit federal employees (applies by
extension to state and local government from engaging in
partisan political activity and to prevent pernicious political
activities which advocates the over throw of our constitution from
of government. It forbids officials paid with federal funds from
using promises of jobs, promotion, financial assistance,
contracts, or any other benefit to coerce (influence) campaign
contribution or political support.
Required Contract Documents
 Federal Certifications
CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY
AND VOLUNTARY EXCLUSION-LOWER TIERCOVERED TRANSACTIONS
– Include in sub awards for all tiers (Federal award > $25,000 or more)
– This executive order called for the creation of a government wide
debarment and suspension system in connection with all transactions with
federal agencies.
– To curb fraud, waste, theft, embezzlement, falsification or destruction of
records, and abuse in Federal programs, increase agency accountability
and ensure consistency among agency regulations concerning debarment
and suspension of participants in Federal programs
– Applicants for federal funds are required to certify that neither they,
their principals, nor their researchers are presently debarred,
suspended, proposed for debarment, declared ineligible, or voluntarily
excluded from covered transactions by any federal department or
agency or have a civil judgement or criminal offense in connection
with fraud, etc
Required Contract Documents
 Federal Certifications
CERTIFICATION OF DRUG FREE WORKPLACE REQUIREMENTS
– Must provide with any federal participation
– To inform about the dangers of drugs in the workplace
– Contractor certifies that he will provide a drug free workplace by:
Publishing a statement notifying employees that the unlawful
manufacture, distribution dispensing, possession or use of a
controlled substance is prohibited in the contractors workplace
and specifying the actions that will be taken against employees
for violation of such prohibition
Required Contract Documents
 Federal Certifications
Public Law 103-227, Part C-Environmental
Tobacco Smoke, also known as the
Pro Children Act of 1994 (Act)
Required if there is any federal participation and
the contractor provides health, child care,
education, or library services to children under the
age of 18 in indoor facilities)
Required Contract Documents
FEDERAL CERTIFICATION GUIDELINE REVIEW
If the federal participation value of the contract is $25,000 or more, the
Contractor must sign:
–
–
The Certification Regarding Lobbying
The Certification Regarding Debarment, Suspension, Ineligibility and Voluntary
Exclusion
If there is any federal participation, the Contractor must sign:
–
The Certification Regarding Drug-Free Workplace Requirements
If there is any federal participation and the Contractor provides health, child care,
education, or library services to children under the age of 18 in indoor facilities, the
Contractor must sign:
–
The Certification Regarding Environmental Tobacco Smoke
Include the appropriate attachments in the contract for any required certifications, if any.
Required Contract Documents
Example
You have a contract providing health services to
children. The contract amount consist of $250,000 in
Federal Funding, Individual with Disabilities Education
Act (IDEA), CFDA # 81.181.
At a Glance - are certifications required?
If certifications are required, state the
appropriate forms to attach.
Required Contract Documents
Example
You have a contract providing training to social
workers. The contract amount consist of $22,000 in
federal funds, social services block grant and 200,000
in state funds
At a Glance - are certifications required?
If certifications are required, state the
appropriate forms to attach.
Required Contract Documents
 Conflict of Interest Policy
What is a Conflict of Interest (COI): An actual or perceived
interest by a member of an organization or group in an
action that results in, or has the appearance of resulting in
personal, organization, or professional gain. The conflict
of interest occurs when the member or group has a direct
fudiciary interest in another relationship
Conflict of Interest Acknowledgement form
Accompanies the Conflict of Interest Policy and must be
notarized
COI Verification needed on a yearly basis
Required Contract Documents
 Conflict of Interest
– Contracts extending more than one state fiscal year must
include documentation in the file that the conflict of interest
policy has not changed from the previous year. If the policy
has changed a new conflict of interest policy is required
– Conflict of Interest Policy is required with all private, non profit
entities
– Contract document (General Cover) must include COI
language
– Conflict of Interest not required for UNC system, local
government and public authority agencies
Required Contract Documents
1. At a Glance – who are required to have a COI?
(A) Governmental Agencies (B) Private Entities (for-profit)
(C) Private Entities( non-profit)
2. COI verification is needed every three years
(A) True or (B) False
3. The contractor signed a three year contract but their COI
policy changed from when the contract was initially awarded.
Thus, the contractor should:
(A) Submit a new COI or (B) Do nothing
Required Contract Documents
Is the following a Conflict of Interest (yes or no)
1. A contract has been awarded to a contractor to review
insulin drug claims, but the contractor also serves on
the board for Eli Lilly & Company
2. A contract has been awarded to a church to carry out
youth services, whereby the contract administrator
belongs to the church and is also over the youth
services
Required Contract Documents
 Financial Assistance Contract Requirements
Certification of No Overdue Tax Debts
– Certifies that the contractor does not any overdue tax
debts
– Not required for UNC system, local government and
public authority agencies
– Contract document (General Cover) must include
“statement of no overdue tax debt language
Required Contract Documents
 Financial Assistance Contract Requirements
Notice of Certain Reporting Requirements
– Grantees, local governments, public authorities, and
subgrantees shall comply with all rules and reporting
requirements established by stature or administrative rules.
– G.S 143C-6-23 required every grantee that receives a State or
Federal pass-through funds directly from state agency to file
annual reports on how those grants funds were used
– 3 reporting levels (1) Less than $25,000, (2) At Less than
$500,000 and, (3) $500,000 or more
– Contract document (General Cover) must include “reporting
requirements” language
Required Contract Documents
 Financial Assistance Contract Requirements
Grants Information Center (GIC)
– All Annual grantee reports required by G.S.143C-6-23 must be
entered on line in the Grants Information Center
– A 15 digit GIC # is established for both Purchase of services and
Financial Assistance contracts
– Enter the GIC # in NCAS for FA and POS contracts paid under
“specified” account codes
– Enter new grantee information and update FA Grant award data
and GIC # into the GIC
– Controller will not process payment without a valid GIC
Required Contract Documents
 Financial Assistance Contract Requirements
Purchase of Service (POS) contracts are
exempt from the statement of no overdue
tax debts and reporting requirements
Testing your knowledge:
Which contract requires “no overdue tax debt”
and “reporting requirements” forms?
(a) Purchase of Service contract with a non profit
(b) Financial Assistance contract with a non profit
Required Contract Documents
TAX EXEMPT
IRS federal tax exempt letter applies when a
Contractor qualifies for a non-profit tax exempt
status.
– If your agency has a copy of the IRS federal
tax exempt letter on file, send the verification form
to the contractor. (Delete instructions)
Required Contract Documents
Tax Exempt - 501(c)(3) designation
 When the agency becomes a state private non profit corporation, it can
then apply for 501(c)(3) designation through the IRS.

Once the IRS grants 501(c)(3) status, the organization is exempt from
certain taxes and any donations to the charitable organization are tax
deductible.
 Many individuals and organizations prefer to make donations to 501(c)(3)
private non profits.
 Any organization or group can apply for 501(c)(3) status, provided their
charter or mission focuses on the non profit’s objective
DHHS Contract Compliance
How can we show the good work
that we are doing?
DHHS Compliance with Contracting
DHHS Compliance Review sheet
– This worksheet is helpful in preparing and
monitoring contracts.
– Use this as a checklist to make sure to include
all requirements and monitoring guide for the
contract period.
DHHS Compliance with Contracting
OPCS Tracking Log
– Tracks number of contracts that need OPCS
approval
– Tracks contract approval time, internal and
external (+30, 30, <30)
– Contract Compliance
– Average Number of Days for approval, internal
and external
DHHS Compliance with Contracting
Contract Approval Time-Frames
SFY 2007 - 2008
Other - Including
Legislative
increase
amendments
5%
Contracts or
amendments rec'd
for approval more
than 30 days prior to
the effective date
18%
Contracts or
amendments rec'd
for approval on or
after effective date
15%
Contracts or
amendments rec'd
for approval less
than 30 days prior to
the effective date
62%
Timely Approvals Trend Analysis
SFY 2006 – SFY 2008
SFY 2006 - 2008 Approval Time Frame Comparison
100%
80%
60%
40%
20%
0%
M ore than 30 days
SFY
2006
Less than 30 days
On or After
effective date
SFY
2007
Other - Including
legislative increase
SFY
2008
SFY 2006 - 2008 Compliance Comparison
100%
80%
60%
40%
20%
0%
DCD
DM H
DM H Fa ci l i ti es
SFY
2006
DPH
DSS
DVR
SFY
2007
ExecM gt
SFY
2008
SFY 2006 - 2008 Compliance Comparison
100%
80%
60%
40%
20%
0%
DHSR
SFY
2006
DIRM
DM A
DAAS
DSB&HH
SFY
2007
OES
Rur a l
Hl th
EconOpp
SFY
2008
Compliance Rating at the time of Approvals 2008 (SFY Totals)
Results include only Contracts and Amendments that are approved through OPCS.
Does not include RFPs that are sent to DOA or State P&C for approval
1
1
0
0
2
0
0
3
2%
2%
0%
0%
6%
0%
0%
2%
15
4
0
2
8
2
0
3
31%
9%
0%
15%
24%
3%
0%
2%
1
17
3
2
2
38
0
19
2%
40%
75%
15%
6%
52%
0%
15%
1
0
0
0
0
0
0
7
2%
0%
0%
0%
0%
0%
0%
5%
4
0
0
0
0
5%
0%
0%
0%
0%
14
0
1
1
5
16%
0%
14%
14%
8%
7
0
1
1
3
8%
0%
14%
14%
5%
1
0
0
0
1
0
0%
2
11%
1
5%
11
2%
57
9%
95
15%
Documents
P5
COE
Review
# Non Compliant
Performance
P2
Required
# Non Compliant
P3
Timely
Approval
# Non Compliant
problem in this area:
P1
Approval
Process
# Non Compliant
Division
DCD
48
DHSR
43
DIRM
4
DMA
13
DMH
33
DMH -Facilities
73
DAAS
2
DPH
130
DPH-MinH
DSB&HH
DSS
88
DVR
88
OES
7
Rural Hlth
7
EconOpp
61
HR
Prop & Constr
ExecMgt
19
More@4
Controller
DD Council
MMIS
Overall:
616 a
% of ALL
contracts that have
# Non Compliant
# of Contracts
or Amendments
Reviewed by
OPCS
# Non Compliant
Areas of Contracts or Amendments NOT in Compliance
OPCS Reviews
(Edits,
NCAS
header, etc.)
1
0
0
0
0
0
0
1
2%
0%
0%
0%
0%
0%
0%
1%
9
1
0
3
4
34
0
21
19%
2%
0%
23%
12%
47%
0%
16%
1%
0%
0%
0%
2%
0
0
0
0
0
0%
0%
0%
0%
0%
28
0
6
3
10
32%
0%
86%
43%
16%
0
0%
0
0%
3
16%
10
2%
2
0%
122
20%
P4
Measures
Other
Possible # of
points per
Row
Possible # of
points per
Column
# of contracts
reviewed
SFY 2008 - PBC Quality Rates
Demand
Input
Output
Outcome
Service
Quality
Efficiency
Total #
DAAS
33%
100%
100%
100%
100%
100%
89%
1
3
18
DCD
73%
98%
98%
98%
98%
92%
93%
17
51
306
DHSR
52%
100%
100%
36%
9%
21%
53%
11
33
198
DIRM
X
X
X
X
X
X
X
0
0
0
DMA
33%
100%
100%
67%
33%
33%
61%
1
3
18
DMH
83%
100%
100%
96%
88%
96%
94%
8
24
144
DMH -Facilities
90%
100%
100%
62%
71%
71%
83%
7
21
126
DPH
90%
100%
100%
81%
81%
86%
90%
43
129
774
DSS
80%
100%
99%
94%
93%
92%
93%
28
84
504
DVR
69%
100%
100%
100%
100%
100%
95%
16
48
288
100%
100%
100%
100%
100%
100%
100%
19
57
342
Exec Mgmt
X
X
X
X
X
X
X
0
0
0
OES
X
X
X
X
X
X
X
0
0
0
Rural H
33%
100%
100%
100%
0%
100%
72%
2
6
36
Department
Totals
81%
100%
100%
87%
83%
86%
89%
153
459
2754
Division
EconOpp
Areas of Compliance Trend Analysis
SFY 2006 – 2008
SFY 2006 - 2008 Areas of Non-Compliance
250
200
150
100
50
0
P1 Approval
Process
P2 Required
Documents
SFY 2006
P3 Timely
Approval
SFY 2007
P4 Performance
Measures
P5 COE Review
SFY 2008
P6 Other (Edits,
NCAS header, etc.)
DHHS Compliance with Contracting
System Integration
Advantages of Merging Systems:
– Consistency: combined structure fosters better information
management and reporting
– Accountability: demonstrate successes and sound
management
– Facilitate auditing: reduce the potential for non-compliance
penalties
– Monitoring: enhance performance component of monitoring
and contracting
– Contracts/Subrecipient: enhance sub recipient and contracts
component of program management
– Time Savings: anticipated savings of time, less burdensome
than three databases
DHHS
Performance
Management
Database
Program
Management
Database
DHHS Contract Numbers/Dollar Values/%
Reviewed/Compliance Rate
SFY 2008 Contract Data
Divisions
DCD
Contracts in
system
(as of 7/08)
sfy 2008
Approx. $ Value of
Contracts
as of 7/08
sfy 2008 funding
% of Contracts
Reviewed by
OPCS
Compliance
Rate SFY
2008
48
$
166,068,711
40%
52%
DHSR
115
$
10,759,660
19%
47%
DIRM
DMA
DMH
DMH - Facilities
DAAS
DPH
DPH-MinH
DSB&HH
DSS
DVR
OES
Rural Hlth
EconOpp
HR
Prop & Constr
ExecMgt
B&A
DD Council
MMIS
73
89
73
317
12
619
0
31
488
139
31
529
121
0
5
34
5
41
0
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
12,612,885
440,473,392
31,164,531
37,952,820
1,753,138
83,272,609
23,442,866
71,978,940
20,493,869
1,128,341
33,728,057
30,066,834
454,936
5,788,291
1,300,000
1,461,259
-
0%
7%
19%
18%
17%
9%
11%
29%
3%
1%
45%
44%
-
25%
69%
55%
30%
100%
64%
49%
99%
14%
43%
82%
74%
Government Accountability
 Efficient and Effective Management of State
Resources
 Center of Excellence
 Merge
Example: NC Rural Fund
Program Goal: Help low income person in NC attain economic self
sufficiency
The primary purpose of this Contract is to:
 (1) Assist low income families to attain homeownership
 (2) Assist small businesses to start, maintain and or expand small businesses
development resulting in jobs for low income citizens
How?
 Provide technical assistance to small businesses which will result in the
creation/maintenance of job opportunities for low-income citizens
 Increase awareness about local, state & federally sponsored initiatives that
focus on minimizing barriers to employment, education and housing
opportunities
Scope of Work
Types of Vendors
What’s a non profit?
Organization incorporated under State law and
whose purpose is not to make a profit, but
rather to further a charitable, civic, religious,
scientific, or other lawful purpose.
Q&A
Thank You
for your
Participation