Contracting at the School Contracting at the School of Medicineof Medicine

Joshua A. Barwick, J.D. Joshua A. Barwick, J.D. Assistant Dean for AdministrationAssistant Dean for Administration

Emory University School of MedicineEmory University School of MedicineDepartment Administrator Training ProgramDepartment Administrator Training Program

November 3, 2006November 3, 2006

This Presentation’s FocusThis Presentation’s Focus

Contracts that are not the subject of Contracts that are not the subject of any formal process (e.g., OSP, GME, any formal process (e.g., OSP, GME, OMESA, CME) and are routed through OMESA, CME) and are routed through Josh for execution by Dr. Adkison or Josh for execution by Dr. Adkison or the Deanthe Dean

Purpose of this PresentationPurpose of this Presentation

Help you be more effective in getting Help you be more effective in getting those “miscellaneous” contracts to those “miscellaneous” contracts to signaturesignature

Main Elements of this Main Elements of this PresentationPresentation

Universe of SOM contractsUniverse of SOM contracts

How do we distinguish“miscellaneous” How do we distinguish“miscellaneous” contracts that are routed directly to contracts that are routed directly to Dean’s Office from other contracts?Dean’s Office from other contracts?

How are those “miscellaneous” How are those “miscellaneous” contracts processed?contracts processed?

How can you make the process work How can you make the process work better for your Department?better for your Department?

First, some nomenclature….First, some nomenclature….““Agreement” and “contract” are Agreement” and “contract” are synonymoussynonymous– Can be oral or writtenCan be oral or written– Should rarely be oral, especially not if Should rarely be oral, especially not if

involving financial commitmentsinvolving financial commitments

““MOU” (Memorandum of MOU” (Memorandum of Understanding) usually means a Understanding) usually means a relatively informal written agreement.relatively informal written agreement.

The Bottom Line:The Bottom Line:

There is no legal distinction among the There is no legal distinction among the terms “agreement”, “contract”, and terms “agreement”, “contract”, and “MOU”!“MOU”!

What are the major types of What are the major types of contracts at the SOM?contracts at the SOM?

Agreements routed to OSPAgreements routed to OSPFaculty consulting agreementsFaculty consulting agreementsGift agreementsGift agreementsGME affiliation agreementsGME affiliation agreementsAllied health affiliation agreementsAllied health affiliation agreementsMedical student affiliation agreementsMedical student affiliation agreementsVA MOUs for researchVA MOUs for researchAgreements for EPIC transactionsAgreements for EPIC transactionsConstruction/renovation agreementsConstruction/renovation agreementsReal estate acquisition/leasingReal estate acquisition/leasingSoftware licensing and acquisitionSoftware licensing and acquisition““Miscellaneous” agreements Miscellaneous” agreements OUR FOCUSOUR FOCUS

What agreements get routed to What agreements get routed to OSP (via Pat Davis in B&F with a OSP (via Pat Davis in B&F with a

SPAF)?SPAF)?Agreements w/ federal, state or local Agreements w/ federal, state or local governmentsgovernments– But not those with government authorities (e.g., But not those with government authorities (e.g.,

Fulton-Dekalb Hospital Authority, State University Fulton-Dekalb Hospital Authority, State University Board of Regents)Board of Regents)

Agreements relating to research (IRB or Agreements relating to research (IRB or IACUC approval, EHSO review, identified IACUC approval, EHSO review, identified conflict of interest, research compliance conflict of interest, research compliance issues)issues)Agreements requiring detailed scientific or Agreements requiring detailed scientific or financial reportingfinancial reporting

What agreements get routed to What agreements get routed to OSP? (Cont’d)OSP? (Cont’d)

See “Proposal and Solicitation Routing See “Proposal and Solicitation Routing Procedures” [attached to handout; Procedures” [attached to handout; includes decision tree]includes decision tree]

If you believe an agreement may need If you believe an agreement may need to go to OSP but you’re not certain, to go to OSP but you’re not certain, contact Pat Davis [7-3119] contact Pat Davis [7-3119]

Where are other agreements Where are other agreements routed?routed?

Faculty consulting agreements: Brenda Faculty consulting agreements: Brenda Seiton, J.D.Seiton, J.D.Gift agreements: Institutional Advancement Gift agreements: Institutional Advancement (Development Office - Maggie Mackay) – (Development Office - Maggie Mackay) – these go to B&F (Sharen Olson) with DUR these go to B&F (Sharen Olson) with DUR routing formrouting formGME affiliation agreements: through GME affiliation agreements: through program directors to Marilane Bond, Ed.D., program directors to Marilane Bond, Ed.D., M.B.A.M.B.A.Allied health affiliation agreements: through Allied health affiliation agreements: through program directors to OMESAprogram directors to OMESA

Where are other agreements Where are other agreements routed? (Cont’d)routed? (Cont’d)

Medical student affiliation agreements Medical student affiliation agreements (isolated): through Dept to OMESA(isolated): through Dept to OMESA– New process to be created for affiliations required New process to be created for affiliations required

to support new curriculumto support new curriculum

Emory-VA MOUs regarding VA faculty time: Emory-VA MOUs regarding VA faculty time: B&F (Pat Davis) B&F (Pat Davis) – As part of annual process and also with proposalsAs part of annual process and also with proposals

Agreements for EPIC transactions: Agreements for EPIC transactions: Procurement ServicesProcurement Services

Where are other agreements Where are other agreements routed? (Cont’d)routed? (Cont’d)

Renovation/construction agreements : Renovation/construction agreements : Charlie Andrews (Assoc VP for HSC Space Charlie Andrews (Assoc VP for HSC Space Planning and Construction)Planning and Construction)Real estate purchase agreements and Real estate purchase agreements and leases: Office of Exec VP for Finance and leases: Office of Exec VP for Finance and Admin (Beverly Cormican)Admin (Beverly Cormican)Software licensing and acquisition Software licensing and acquisition agreements: Rehan Khanagreements: Rehan KhanOther “miscellaneous” agreements: Dean’s Other “miscellaneous” agreements: Dean’s Office (Josh Barwick) Office (Josh Barwick)

What are these “miscellaneous” What are these “miscellaneous” agreements that go directly to the agreements that go directly to the

Dean’s Office?Dean’s Office?

Agreements to provide services of Agreements to provide services of faculty or staff to outside partiesfaculty or staff to outside parties

Agreements to obtain services from Agreements to obtain services from individuals or vendors that don’t go individuals or vendors that don’t go through EPIC through EPIC

When we’re providing services When we’re providing services to someone else, which Emory to someone else, which Emory

entity is the correct party?entity is the correct party?If clinical or admin services (e.g., If clinical or admin services (e.g., medical director) of a faculty member medical director) of a faculty member whose primary appt is in Dept of Peds whose primary appt is in Dept of Peds ECC ECC

If clinical or admin services of a faculty If clinical or admin services of a faculty member whose primary appt is not in member whose primary appt is not in Peds Peds TEC TEC– Some very limited exceptions – you know Some very limited exceptions – you know

who you are!who you are!

When we’re providing services When we’re providing services to someone else, which Emory to someone else, which Emory

entity is the correct party? entity is the correct party? (Cont’d)(Cont’d)

If services of a faculty member that are If services of a faculty member that are not clinical or admin (e.g., not clinical or admin (e.g., educational)educational) SOM SOM

services of non-faculty SOM employee services of non-faculty SOM employee SOM SOM

anyany services to Grady services to Grady SOM SOM

Services of EHC employeeServices of EHC employee EHC EHC

What service contracts go What service contracts go through EPIC? Dean’s Office?through EPIC? Dean’s Office?

EPICEPIC– commercial suppliers commercial suppliers – Obtaining services that are applied to tangible Obtaining services that are applied to tangible

items (i.e., maintenance, repair, upgrade, items (i.e., maintenance, repair, upgrade, enhancement, modification of something)enhancement, modification of something)

Dean’s OfficeDean’s Office– Individuals or other educational institutionsIndividuals or other educational institutions– Services unrelated to tangible itemsServices unrelated to tangible items

““Gray areas” between EPIC and Gray areas” between EPIC and Dean’s OfficeDean’s Office

These can go either route:These can go either route:– Catering servicesCatering services

Procurement Services is working on “event Procurement Services is working on “event order” system with preferred caterersorder” system with preferred caterers

– Web design servicesWeb design services– technical support servicestechnical support services

Recommendation: use EPIC for these Recommendation: use EPIC for these unless there’s some unusual aspect to unless there’s some unusual aspect to the arrangementthe arrangement

For information about EPIC and For information about EPIC and Emory’s procurement Emory’s procurement

processes….processes….

Website for Emory Procurement:Website for Emory Procurement:

https://https://www.finance.emory.edu/procurement/iwww.finance.emory.edu/procurement/index.cfmndex.cfm

Procurement Office Services Directory:Procurement Office Services Directory:

https://www.finance.emory.edu/https://www.finance.emory.edu/procurement/other/directoryassign.cfmprocurement/other/directoryassign.cfm

““EPIC On-line Requisitioning” (training EPIC On-line Requisitioning” (training offered through Emory HR)offered through Emory HR)

Who signs agreements for SOM?Who signs agreements for SOM?

Most agreements: Dr. AdkisonMost agreements: Dr. Adkison

Agreements with significant strategic Agreements with significant strategic partners: Dean Lawleypartners: Dean Lawley

GME agreements: Dr. ZaidanGME agreements: Dr. Zaidan

Allied health and med student affiliation Allied health and med student affiliation agreements: Dr. Eleyagreements: Dr. Eley

CME agreements: Josh BarwickCME agreements: Josh Barwick

Emory University Signature Emory University Signature Authority PolicyAuthority Policy

Became effective January 1, 2006Became effective January 1, 2006

Requires formal written delegation of Requires formal written delegation of authority for all agreementsauthority for all agreements

Delegations of authority for SOM Delegations of authority for SOM agreements already have been put into agreements already have been put into placeplace

What the Signature Authority What the Signature Authority Policy Means to You…..Policy Means to You…..

No Department Administrator, Chair, No Department Administrator, Chair, faculty member, or staff member faculty member, or staff member should sign any agreement without a should sign any agreement without a letter from the Dean or Dr. Adkison letter from the Dean or Dr. Adkison formally delegating signature authority formally delegating signature authority to him or herto him or her

What could happen if someone What could happen if someone signs an agreement without signs an agreement without

formal authorization?formal authorization?

Personal financial liabilityPersonal financial liability

DisciplineDiscipline

Inappropriate contractInappropriate contract

Damaged relationships (internal and Damaged relationships (internal and external)external)

If you’re not sure how an If you’re not sure how an agreement should be routed agreement should be routed or who can sign it, contact or who can sign it, contact

Josh BarwickJosh Barwick(2-9793 or (2-9793 or

joshua.barwick@emory.edu)joshua.barwick@emory.edu)

The rest of this presentation The rest of this presentation deals with the deals with the

“miscellaneous” agreements “miscellaneous” agreements routed to the Dean’s Office.routed to the Dean’s Office.

Two basic situationsTwo basic situations

You receive a proposed agreement You receive a proposed agreement from an outside partyfrom an outside party

You have identified a need for a You have identified a need for a contract and want to get one draftedcontract and want to get one drafted

What should you do when you What should you do when you receive a proposed agreement receive a proposed agreement

from an outside party?from an outside party?Review the basic terms and make sure they’re Review the basic terms and make sure they’re appropriateappropriate– Description of servicesDescription of services– CompensationCompensation– TermTerm

Review the basic terms with your chair and get Review the basic terms with your chair and get his/her approvalhis/her approvalForward to Josh Barwick (no routing form required)Forward to Josh Barwick (no routing form required)– Obtain and provide an ELECTRONIC version please! It’s Obtain and provide an ELECTRONIC version please! It’s

easier to circulate to Counsel and others and to easier to circulate to Counsel and others and to communicate requested changes back to outside party.communicate requested changes back to outside party.

What should you do when you What should you do when you need an agreement drafted?need an agreement drafted?

Develop a list of key terms:Develop a list of key terms:– Who will do what?Who will do what?– For how long?For how long?– Starting when?Starting when?– For how much money?For how much money?– For our services, how was compensation For our services, how was compensation

determined?determined?– For other party’s services, what evidence For other party’s services, what evidence

do we have that proposed fee is do we have that proposed fee is reasonable?reasonable?

What should you do when you What should you do when you need an agreement drafted? need an agreement drafted?

(Cont’d)(Cont’d)Do NOT try to draft a full-blown Do NOT try to draft a full-blown contract yourselfcontract yourself– This will likely DELAY the processThis will likely DELAY the process– Let Josh and the Office of the General Let Josh and the Office of the General

Counsel do it for youCounsel do it for you

Review the list of key terms with your Review the list of key terms with your Chair and get his/her approvalChair and get his/her approvalForward it to Josh Barwick (no routing Forward it to Josh Barwick (no routing form required)form required)

What questions should you and What questions should you and your Chair ask in determining your Chair ask in determining

whether a proposed arrangement whether a proposed arrangement is appropriate?is appropriate?

Is the party expected to do the work (us Is the party expected to do the work (us or them) capable of doing it?or them) capable of doing it?– If other party, does agreement describe If other party, does agreement describe

exactly what we need them to do? Are exactly what we need them to do? Are appropriate deliverables defined in enough appropriate deliverables defined in enough detail?detail?

– If we’re doing the work, does the proposed If we’re doing the work, does the proposed arrangement further our mission? How?arrangement further our mission? How?

What questions should you and What questions should you and your Chair ask in determining your Chair ask in determining

whether a proposed arrangement whether a proposed arrangement is appropriate? (Cont’d)is appropriate? (Cont’d)

Is the compensation appropriate? Is the compensation appropriate? (more on this later…)(more on this later…)

Is the timing right? Does the Is the timing right? Does the arrangement begin and end when it arrangement begin and end when it should?should?

What is appropriate What is appropriate compensation when we’re compensation when we’re

providing the services?providing the services?

Must cover the cost of salary and benefits Must cover the cost of salary and benefits (currently 26.5%), at a MINIMUM(currently 26.5%), at a MINIMUM– Build in salary and fringe benefit increases when Build in salary and fringe benefit increases when

agreement spans multiple fiscal yearsagreement spans multiple fiscal years– Can tie payments to actual salary and benefits or Can tie payments to actual salary and benefits or

use pre-defined COLA-type increase (3-5% use pre-defined COLA-type increase (3-5% recommended)recommended)

SOM Fringe benefit rate generally is increased by an SOM Fringe benefit rate generally is increased by an additional 0.5% annuallyadditional 0.5% annually

What is appropriate What is appropriate compensation when we’re compensation when we’re

providing the services? (Cont’d)providing the services? (Cont’d)

Don’t forget to consider G&A (10% Don’t forget to consider G&A (10% applied to all expenditures from SOM applied to all expenditures from SOM accounts)accounts)– Whenever possible, G&A should be built Whenever possible, G&A should be built

into contract rateinto contract rate

It’s okay for us to make a It’s okay for us to make a “profit” on a service “profit” on a service

agreement!agreement!

In rare cases, it’s okay not to In rare cases, it’s okay not to make a profit---but only when make a profit---but only when there’s compelling mission-there’s compelling mission-

related justification.related justification.

Watch out for UBIT!Watch out for UBIT!

UBIT = Unrelated Business Income TaxUBIT = Unrelated Business Income TaxWe must pay tax on revenue we receive for We must pay tax on revenue we receive for services that don’t express our mission.services that don’t express our mission.Example: we employ a person to take care of Example: we employ a person to take care of flowers and plants in our offices, and we flowers and plants in our offices, and we contract his services to other institutionscontract his services to other institutions– It’s not educationIt’s not education– It’s not researchIt’s not research– It’s not patient careIt’s not patient care– It’s competing with professional plant service It’s competing with professional plant service

providers who aren’t tax-exemptproviders who aren’t tax-exempt

If the other party is doing the If the other party is doing the work, is its compensation fair work, is its compensation fair

market value?market value?

Always an important question – we Always an important question – we must all be responsible fiscal stewards.must all be responsible fiscal stewards.

If purchasing non-unique services, get If purchasing non-unique services, get multiple quotes.multiple quotes.

Use Emory’s preferred vendors Use Emory’s preferred vendors whenever possible.whenever possible.

Faculty services to healthcare Faculty services to healthcare providers to whom our faculty providers to whom our faculty

refer patientsrefer patientsSometimes we contract with a party Sometimes we contract with a party that receives referrals from our faculty that receives referrals from our faculty (e.g., a local hospital)(e.g., a local hospital)Compensation must be set in advance Compensation must be set in advance and be fair market value to comply with and be fair market value to comply with Stark and anti-kickback lawsStark and anti-kickback lawsTerm of agreement must generally be Term of agreement must generally be for at least a yearfor at least a year– No termination without causeNo termination without cause

Other payment considerationsOther payment considerations

Requirement payment in advance of Requirement payment in advance of providing services whenever possibleproviding services whenever possible

After contract is signed, contact B&F to After contract is signed, contact B&F to set up account receivable for central set up account receivable for central invoicing and receipt/processing of invoicing and receipt/processing of paymentspayments– Don’t invoice customer directly or have Don’t invoice customer directly or have

payments sent directly to Department!payments sent directly to Department!

What happens after Josh What happens after Josh receives your list of key terms receives your list of key terms

and request for a draft contract?and request for a draft contract?1. He reviews and modifies/supplements 1. He reviews and modifies/supplements

where needed, in consultation with youwhere needed, in consultation with you– Timeframe: about 1 weekTimeframe: about 1 week

2.2. He either drafts agreement and sends to He either drafts agreement and sends to OGC for review or sends term sheet to OGC OGC for review or sends term sheet to OGC with request to draft with request to draft

– see OGC “Request Form for Contract Review see OGC “Request Form for Contract Review and contract Drafting” attached to handout; Josh and contract Drafting” attached to handout; Josh completes this completes this

– Within a week, OGC identifies attorney assigned Within a week, OGC identifies attorney assigned to projectto project

– Usual timeframe for completion of draft/review: Usual timeframe for completion of draft/review: 2-4 weeks2-4 weeks

What happens after Josh What happens after Josh receives your list of key terms? receives your list of key terms?

(Cont’d)(Cont’d)3. Josh gets comments or sign-off from 3. Josh gets comments or sign-off from

anybody else needed to review anybody else needed to review proposed final draft (e.g., ORIS, SOM-proposed final draft (e.g., ORIS, SOM-IT, CME)IT, CME)

4. He sends it to you for approval4. He sends it to you for approval

5. You (or in some cases, Josh) share 5. You (or in some cases, Josh) share proposed final version with outside proposed final version with outside partyparty

What happens after Josh What happens after Josh receives your list of key terms? receives your list of key terms?

(Cont’d)(Cont’d)6. Josh meets with Dr. Adkison, reviews 6. Josh meets with Dr. Adkison, reviews

proposed agreement with her, and obtains proposed agreement with her, and obtains her signature on multiple copiesher signature on multiple copies

– Josh meets with her to review pending contracts Josh meets with her to review pending contracts about twice monthly, so typical timeframe is 1-2 about twice monthly, so typical timeframe is 1-2 weeksweeks

– She signs most agreements; the Dean signs She signs most agreements; the Dean signs strategically significant agreementsstrategically significant agreements

– We should have as many original signed copies We should have as many original signed copies as there are partiesas there are parties

7.7. Josh returns original copies signed by Dr. Josh returns original copies signed by Dr. Adkison or the Dean to youAdkison or the Dean to you

What happens after Josh What happens after Josh receives your list of key terms? receives your list of key terms?

(Cont’d)(Cont’d)

7.7. You obtain signatures from other You obtain signatures from other party (sometimes Josh does this)party (sometimes Josh does this)

8.8. You return one original signed copy You return one original signed copy to Josh and retain a copy for the to Josh and retain a copy for the Department fileDepartment file-- If agreement involves faculty -- If agreement involves faculty member’s services, Josh inserts copy member’s services, Josh inserts copy in faculty filein faculty file

What happens after Josh What happens after Josh receives from you a proposed receives from you a proposed

draft agreement prepared by the draft agreement prepared by the other party?other party?

Josh reviews and modifies proposed Josh reviews and modifies proposed draft and then forwards to OGC for draft and then forwards to OGC for reviewreview– If same form as previous agreement, OGC If same form as previous agreement, OGC

review not neededreview not needed

Then essentially same process as Then essentially same process as described abovedescribed above

Contract “Effective Date”Contract “Effective Date”

This is the date on which the contract This is the date on which the contract performance is owed consistent with the performance is owed consistent with the contract’s termscontract’s terms

The effective date is independent of the date The effective date is independent of the date the contract is signedthe contract is signed

Should always be a future date – Avoid Should always be a future date – Avoid retroactive contracts whenever possible!retroactive contracts whenever possible!

If contract for us to provide services is If contract for us to provide services is not yet signed by planned effective not yet signed by planned effective date, please consult with Joshdate, please consult with Josh

Contract Legal NoticesContract Legal Notices

These are formal notices that a contract These are formal notices that a contract right is being exercised (e.g., right is being exercised (e.g., termination), not routine termination), not routine communicationscommunications

Must go to Department Chair in all Must go to Department Chair in all casescasesCopies to Dept Administrator or other Copies to Dept Administrator or other responsible administratorresponsible administrator

Why don’t we have ready-made Why don’t we have ready-made contract templates?contract templates?

We do! But only for those limited We do! But only for those limited situations that recur regularly, like our situations that recur regularly, like our faculty service contracts with Georgia faculty service contracts with Georgia Tech and GradyTech and GradyWe don’t have them for more We don’t have them for more applications because…. applications because…. – There is an infinite variety of potential There is an infinite variety of potential

arrangements and termsarrangements and terms– in many situations, the other party in many situations, the other party

requires use of its own form agreementrequires use of its own form agreement

Important things to note about Important things to note about the contracting processthe contracting process

You and your Chair are recommending these You and your Chair are recommending these arrangements to the Dean, so you need to arrangements to the Dean, so you need to think them through carefully think them through carefully – Josh can help you with this, if neededJosh can help you with this, if needed

For turnaround time, the quality of For turnaround time, the quality of information you provide and your response information you provide and your response time on follow-up inquiries is criticaltime on follow-up inquiries is criticalProcess typically requires 3-6 weeks Process typically requires 3-6 weeks (depending in part on whether we’re drafting)(depending in part on whether we’re drafting)

Ways you can make the process Ways you can make the process more efficientmore efficient

Think through the arrangementThink through the arrangementIdentify the needed information clearly Identify the needed information clearly and thoroughlyand thoroughlyBe a responsible steward of University Be a responsible steward of University resourcesresourcesGet your Chair’s approval of the Get your Chair’s approval of the proposed arrangement before proposed arrangement before submitting it to the Dean’s Office submitting it to the Dean’s Office (unless you need preliminary guidance)(unless you need preliminary guidance)

Ways you can make the process Ways you can make the process more efficient (Cont’d)more efficient (Cont’d)

Respond to follow-up inquiries Respond to follow-up inquiries promptly and thoroughlypromptly and thoroughly

Build in appropriate lead timeBuild in appropriate lead time

Know who other party’s contact person Know who other party’s contact person is and keep in touch with that person is and keep in touch with that person regarding statusregarding status

How can you get an update on How can you get an update on the status of your proposed the status of your proposed

agreement?agreement?

Email Josh Email Josh [joshua.barwick@emory.edu][joshua.barwick@emory.edu]

(We hope to roll out an online contract (We hope to roll out an online contract status facility sometime in 2007.)status facility sometime in 2007.)