1

Mandatory Provisions In State Contracts and Grants

State Controller Policy

Effective Date: 1/24/2023

Approved by: Robert Jaros, CPA, MBA, JD, Colorado State Controller

Authority

State Agencies and Institutions of Higher Education (IHEs) shall include all of the provisions outlined in this policy in all State Contracts in accordance with Fiscal Rule 3-3 and Grants in accordance with Fiscal Rule 3-4. For the purposes of this policy, State Contracts and Grants are both considered to be “Agreements”.

Identification of the Parties 

All State Contracts and Grants shall clearly identify the parties to the Agreement on the Agreement’s Signature and Cover Page or, if the Agreement does not have a Signature and Cover Page, in the “Parties” section of the Agreement.

  • Party Names. The State Agency or IHE should be referenced by that State Agency’s or IHE’s name, and not by the name of a specific division or office. The Contractor or Grantee shall be named by its full legal name, including any business entity identifier, such as “Inc.” or “LLC”, and shall match the name registered with the Secretary of State if such a registration is required. In Agreements with public entities, such as cities and special districts, the Agreement should be entered into with the highest level of the entity and not an agency of that entity, except that the party can be written as “[Public Entity] by and through [Agency or Division]” if applicable.
  • Party Addresses. The address is not required for the State Agency or IHE as there is low risk of confusion as to who the contracting party is. The address for the Contractor or Grantee is not required unless there is potential confusion as to who the entity is, such as an individual who shares a common name with other individuals, and the inclusion of the address is required to specify the contracting party.
  • Party References. In general, the State should be referred to as the “State” or the State Agency’s or IHE’s acronym if one is included in the “Parties” section of the Agreement. In general, a Contractor should be referred to as “Contractor” and a Grantee should be referred to as “Grantee” throughout the document to match with the terminology used in the model forms. Other terminology may be used as follows, but all references to a party shall be consistent with the terms defined in the “Parties” section of the Agreement:
    • In real property leases, the party that leases the property to another may be called the “Lessor” or “Landlord” and the party that will lease the property from the other party may be called “Lessee” or “Tenant”.
    • In Agreements with political subdivisions, the non-State party may be referred to as “City”, “County” or “District” as appropriate.
    • In Agreements between states, the State Agency or IHE may be referred to as “Colorado” and the other state may be referred to by its proper name.
    • The terminology used for the parties does not impact the classification of the Contractor or Grantee under the OMB guidance or Fiscal Rules and a determination of each entity under that guidance and the rules is still required.
    • Structure of Parties Section. All Agreements shall have a “Parties” section that is substantially similar to the clause shown in the most appropriate Model Contract or Model Grant issued by the Office of the State Controller (OSC), unless otherwise approved in writing by the CCU.

Statutory Authority

Each Agreement entered into by a State Agency shall cite the Colorado Revised Statutes section or sections, or other applicable law, which gives it the authority to enter into the Agreement. This requirement does not apply to IHEs.

Statement of Work

All State Contracts shall contain a statement of work (SoW) that includes, at a minimum, all of the following:

  • Description of the Goods and Services. A description of the goods to be delivered (including quantity), the services to be performed, and any other obligations of the Contractor and the State Agency or IHE, described in enough detail for a third party without prior knowledge of the State Contract to be able to easily determine if the parties successfully completed their requirements under the State Contract. This description shall include all of the following, if applicable:
    • Any definitions of important words or acronyms used in the SoW that are uncommon, have multiple possible definitions or are used differently than the common definition, if those words or acronyms are not already defined elsewhere in the State Contract.
    • A clear description of each deliverable (the tangible and/or intangible outcomes of the work performed) the Contractor is required to provide to the State Agency or IHE, including a clear description of what the deliverable must contain and when the deliverable is due.
    • A clear description of each performance standard that the Contractor is required to meet, including the specific standard to be met, how the standard will be measured and the timeframe for measuring the standard.
    • A clear description of the operational requirements of the Contractor’s work, such as the location of work (if location is material), personnel requirements (both general and position specific if specific personnel are required), testing and acceptance criteria (if applicable), and general Contractor requirements.
    • A clear description of any contingencies on the Contractor’s performance, such as activities the State Agency, IHE or another entity will perform prior to the Contractor performing some or all of the work.
    • Timelines and milestones for the completion of all activities the Contractor is required to complete that do not result in a deliverable or are measured by a performance standard.
  • Use of Solicitations and Contractor Proposals as SoWs Prohibited. A State Contract may not include either a complete solicitation or a Contractor’s proposal in response to a solicitation in its entirety as the SoW to that State Contract. Only the contractual obligations of a solicitation may be included in the SoW, and all response questions, evaluation criteria and other solicitation information that does not create a contractual obligation may not be included in the SoW. Any contractual obligations included in the SoW originating from a Contractor’s proposal may only be used if they are modified to use the proper terminology of the State Contract, are enforceable, and do not conflict with any other contractual requirement. Large portions of very long proposals may be included as an exhibit so long as they comply with this section, but a best practice is to only draft into the SoW the specific requirements needed from those proposals. This prohibition does not apply to proposals received from Contractors under an existing Master Task Order contract, so long as those proposals are negotiated by the State Agency or IHE and otherwise comply with the requirements in §4.a above.

Description of the Work for Grants

All Grants shall contain a description of the work that the Grantee will perform and the goals that the Grant is intended to achieve. This may be in the form of a SoW, as described in §3). If a SoW is not used, then this description shall contain sufficient detail for the State Agency or IHE to be able to determine if the Grantee successfully performed its obligations under the Grant, whether it is entitled to payments under the Grant, and whether the Grantee achieved the goals of the Grant or not.

Payment Terms

All Agreements shall clearly describe all payment obligations under the Agreement in enough detail for a third party without prior knowledge of the Agreement to be able to easily determine if the parties have paid the proper amounts at the proper times.

  • Maximum Amounts. The Agreement shall clearly state the total maximum amount payable under the Agreement by the State Agency or IHE. The Agreement shall also clearly state the maximum amount by State fiscal year, unless the funding for the Agreement originates from a grant or other funding source that is not subject to State fiscal year appropriations limitations. This requirement does not apply to master task order contracts, so long as the maximum amount for each task order issued under that master task order contract is shown in that task order.
  • Payment Only for Work Accepted. Unless specifically allowed by the fiscal rules, all Contractors and Grantees shall be paid for work only after the Contractor or Grantee has completed that work. Whenever advance payments are included in an Agreement, such payments shall be in accordance with Fiscal Rule 3-1, Section 9, and shall include all appropriate contractual requirements to minimize the risk to the State Agency or IHE if the Contractor or Grantee fails to perform after the State Agency or IHE has paid for the work.
  • Payment Types. The following describes the payment types that are allowed or not allowed in Agreements and the requirements for those Agreements:
    • Firm fixed price payment structures that pay a fixed amount for the completion of deliverables, meeting milestones, or achieving performance standards are the most advantageous method to the State to incentivize Contractor and Grantee performance and should be used whenever possible. Firm fixed price Agreements that pay on a regular basis (e.g. fixed monthly payments) should be avoided when possible as the State Agency or IHE may be required to continue paying even if the Contractor or Grantee failed to perform or performed below the State Agency’s or IHE’s expectations.
    • As with fixed monthly payments, time and material or labor hour Agreements should also be avoided because of the risk of paying for unsatisfactory performance. If a State Agency or IHE proceeds with time and material or labor hour Agreements, clear specifications as to what work is acceptable for payment shall be included in those Agreements to minimize this risk. Additionally, since there is an increased risk of exceeding the maximum amount of the Agreement, these Agreements shall include provisions that do not permit the work to continue after the maximum amount is reached and clearly state the obligations of the Contractor or Grantee to stop performance in such a scenario.
    • A cost-reimbursement Agreement may be used only when a determination is made in writing that such Agreement is likely to be less costly to the State Agency or IHE than any other type of Agreement; that it is impracticable to obtain the supplies, services, or construction required unless the cost-reimbursement Agreement is used in accordance with §24-106-104 C.R.S; or programmatic or funding requirements necessitate cost-reimbursement be used for a Grant. If a cost reimbursement Agreement is used, it shall contain clear descriptions of what types of costs are reimbursable by the State Agency or IHE.
    • Cost-plus-percentage-of-cost contracts may never be used.

Performance Period and Effective Date

All Agreements shall show the date on which the State Controller or a proper delegate approved and signed the Agreement (the “Effective Date”) and the performance period of the Agreement, except for Agreements for Major Information Technology Projects which shall show both the date on which the State Controller or a proper delegate and the date on which the Chief Information Officer or a proper delegate approved and signed the Agreement and the performance period of the Agreement.

  • Effective Date and Performance Beginning Date. Performance of the obligations may begin at any time after the Effective Date, but if that date is different from the Effective Date, then that date shall be clearly stated in the Agreement and it shall be clear that work cannot begin before the Effective Date.
  • Initial Term End Date. All Agreements shall clearly show the date on which the initial term of the Agreement will end absent the exercise of any extension or early termination.
  • Total Term of the Agreement. A State Contract that is subject to the Colorado Procurement Code may not extend longer than the term contained in the solicitation that resulted in the State Contract. A State Contract subject to the Colorado Procurement Code may not exceed 5 years under any circumstances, even if that longer term was included in the solicitation, without the prior approval of the Chief Procurement Officer before the State Contract is executed or the solicitation is posted in accordance with the Colorado Procurement Code, unless the State Contract is extended in accordance with §24-106-105(1), C.R.S Any Agreement modification that extends the term of the Agreement beyond the date that the initial term of the Agreement ends shall clearly state the new end date of the Agreement.
  • Multi-Year Contracts. Any State Contract that has any initial or extension term that exceeds one year (Multi-Year Contracts) shall comply with Procurement Code CRS 24-106-105 and the Procurement Rules promulgated thereto. “Evergreen” Agreements, agreements that are renewed automatically from year to year until canceled by the either party with no firm termination date or limitation in the total number of renewals, is strictly prohibited.
  • Structure of Term and Effective Date Section. All Agreements shall have a “Term and Effective Date” section that is substantially similar to the section shown in the most appropriate Model Contract or Model Grant issued by the OSC, unless otherwise approved in writing by the CCU.

General Terms and Conditions

State Agencies and IHEs shall use the general terms and conditions in the most appropriate Model Contract or Model Grant for the work being performed and not change those terms except as described in the State Controller Policy entitled “Model State Contracts and Grants”.

State Special Provisions

All Agreements shall contain the special provisions shown in Fiscal Rule 3-3 as required by that rule. If the special provisions are changed subsequent to the execution of an Agreement, any amendment or assignment following the change must include language modifying the Agreement in accordance with the change in the special provisions unless otherwise directed by the OSC.

Signature Page

All Agreements shall have a signature page as shown on the proper model form for that Agreement, as required under the State Controller Contract, Grant, and Purchase Order Policy entitled “Model State Contracts and Grants.”.

  • Required Signatures. This signature page shall contain a statement that the Agreement shall not be valid until it has been approved by the State Controller or a delegate. If the Agreement is for a Major Information Technology Project, then the page shall also contain a signature block for the Chief Information Officer that includes a statement that the Agreement shall also not be valid until it has been approved by the Chief Information Officer or a delegate. If the OSC agrees to allow the Agreement to use a form other than the Model Contract or Model Grant, then the signature page shall be substantially similar to the signature page on the Model Contract unless the OSC has approved otherwise.
  • Spending Authority. All Agreements shall be supported by sufficient funding that is appropriated or otherwise made available and encumbered for the Agreement.
    • Ensuring Funds Are Available. All State Agencies and IHEs shall ensure the expenditure is authorized by appropriation in accordance with §24-30-202, C.R.S., and shall properly encumber funds as required by Fiscal Rule 3-1 and all IHE’s shall either properly encumber funds or follow their institutional procedures in order to ensure that sufficient funding is available for all obligations under an Agreement.
    • Citing Spending Authority in Agreements. State Agencies and IHEs are not required to specifically cite the statutory authority or appropriation in an Agreement so long as the funding is appropriate or otherwise made available for the current term of the Agreement.

Exhibits and Attachments

Exhibits and attachments may only be included in an Agreement if they are referenced somewhere in the Agreement so that it is clear how those exhibits impact the obligations of the Parties. If exhibits or attachments are added to the Agreement, they shall be included in the order of precedence.

  • Federal Exhibits. If an Agreement is subject to the requirements of either the Federal Funding Accountability and Transparency Act (FFATA) or the Office of Management and Budget (OMB) Uniform Guidance, or both, then the Agreement shall contain the proper federal funding exhibits issued by the OSC. If the Agreement will contain any information protected under federal law, then the Agreement shall contain the appropriate exhibits or addendums related to the protection of that information, such as the HIPAA Business Associate Addendum or Federal Tax Information Exhibit issued by the OSC.

Personally Identifying Information

Agreements shall not contain social security numbers or federal employment identification numbers, or any other protected personally identifying information related to an individual or entity.

 State Controller Policies