Contracts & Debt Collection

1. Contracts & Debt Collection • October 2001 • North Carolina State University • David Drooz

2. Contracts • What is a contract? • Who can sign contracts for NCSU? • What is the NCSU contract procedure?

3. What is a contract • AN AGREEMENT BETWEEN TWO OR MORE PARTIES TO DO OR NOT DO A PARTICULAR THING • Oral or written or electronic • Even if no money is involved

4. What is a contract • Requirements are: • Clear terms • Mutual agreement on the terms • Mutual obligations • Exchange of value • Legally competent parties

5. What is a contract - hypos • Donor makes unrestricted gift to NCSU • Organization makes grant to NCSU, where NCSU must provide research report to them • Prof gives stipend to TA for grading papers • Staff downloads free Adobe software • Dean hires caterer for campus event • College gets use of Reynolds Col. for event

6. What is a contract - hypos • College gets use of Civic Center for event • NCSU lab performs materials test for outside company • Dept head sends offer letter to applicant for tenure track position • Prof seeks permission to use journal article in a coursepack

7. Who can enter a contract • Authority to bind NCSU to contracts is limited • Chancellor has full executive authority based on statute and the UNC Code • includes the authority to sign contracts for NCSU unless otherwise prohibited

8. Who can enter a contract • Chancellor can delegate the power to sign • Provost: academic cooperation agreements • V.C. for Research: sponsored programs and tech transfer agreements • V.C. for Finance & Business: everything else*

9. Who can enter a contract • V.C. for F & B: almost everything else* • * contracts over $250,000 are routed to Purchase & Contract in the NC Dept of Adminstration for approval. • Once approved, NCSU Purchasing agent may sign a university purchase order.

10. Who can enter a contract • V.C. for F & B: almost everything else* • * some other transactions require special approvals: • real estate transactions • construction projects • hiring outside counsel • etc.

11. Who can enter a contract • Sub-delegations: • Director of Purchasing may sign contracts involving $35,000 or less (except real estate, sponsored programs, employment) • Some other units have limited authority

12. Who can enter a contract • What happens if someone without authority signs a contract? • NCSU may ratify the contract, or • NCSU may not accept the contract • signer may have personal liability to other party • signer may face disciplinary action at NCSU

13. Who can enter a contract • Resource: • NCSU Admin Regulation on authority to sign contracts is at http://www.fis.ncsu.edu/ncsulegal/areg-Authority%20to%20Sign%20Contracts.html

14. What is the procedure? • 1. For purchases: Check with NCSU Purchasing to see if the item or service is on state contract or requires competitive bidding. • 2. Use a University form contract if you can. • 3. Send the contract to Contract Management for review and signature.*

15. What is the procedure? • *Contracts within the Finance & Business authority should be sent to Contract Management for review and signature • Jim Garrison at 515-6134 • Applies to non-purchase contracts, too. • Does not apply to bids accepted by NCSU P.O. • Does not apply to small purchases*

16. What is the procedure? • *Small purchases must meet all the following criteria: • non-written agreements (except for NCSU purchase order form) • for < $5,000 • for items not on State term contract • Such agreements may be executed by any employee with departmental approval

17. What is the procedure? • Contract Management will review and mark up contracts according to a Contract Checklist. • The Checklist consists of contract terms that are unlawful or bad business policy • See http://www.fis.ncsu.edu/ncsulegal/checklis.htm

18. What is the procedure? • Campus users may accept dangerous contract terms by signing Contract Advisory • except terms prohibited by law. • G.S. 143-291 and sovereign immunity • G.S. 22B-3: if contract is entered into in NC, then any lawsuits must take place in NC • G.S. 143-34.2: payments beyond current fiscal year must be expressly subject to legislative appropriations

19. What is the procedure? • Special considerations • Consulting contracts - academic vs. administrative • Other personal services • independent contractor status • tax with-holding on some out-of-state contractors • Licenses - especially online and software • Bid requirements! (over $5000 and not on State contract)

20. Contracts • Conclusion • Use bid procedure or NCSU form contracts where appropriate • Identify who is designated to review and sign each type of contract • Understand why the Contract Checklist exists • Make risk assessment on undesirable contract terms

21. Contracts • Resources • Call NCSU Purchasing: 515-2171 • Purchasing website: • http://www.fis.ncsu.edu/materialsmgmt/purchasing/ • Contract Management website: • http://www.fis.ncsu.edu/materialsmgmt/purchasing/contract.htm

22. Contracts • End of slides on contracts

23. Debt Collection • State law requires NCSU to attempt to collect past due debts. • G.S. 147-86.11(e)(3) and G.S. 147-86.21 • Debts include “claims, damages, fees, fines, forfeitures, loans, overpayments, and tuition as well as penalties, interest, and other costs authorized by law.”

24. Debt Collection • Types of debts • Student loan defaults are outsourced - special procedure • Other student debts - refer them to NCSU Cashier. • Collection methods include a “hold” on enrollment and transcripts

25. Debt Collection • Types of debts • Separated employee • deduct from last paycheck the value of state property the employee did not return • deduct from last paycheck the value of overdrawn vacation or sick leave

26. Debt Collection • Types of debts • For all other types of debts, use the following procedures

27. Debt Collection • Invoice or demand letter • Send an invoice (with a due date, typically 30 days after invoice) http://www.bas.ncsu.edu/procman-a/a5-1.htm • or a letter explaining what’s owed, why, how payment may be made, and due date

28. Debt Collection • Past Due • Refer to Accounts Receivable if payment is not made in full by 30 days after its due • send complete documentation of debt • Accounts Receivable will issue 30-60-90 day past due letters

29. Debt Collection • Past Due - remedy #1 • When more than 90 days past due, Accounts Receivable will refer to a State-contracted collection agency or the Attorney General’s office

30. Debt Collection • Past Due • Interest - should be added to past due principal, based on floating rate from Dept of Revenue • Late fee - up to 10% may be added • Bad check fee - $25

31. Debt Collection • Past Due - remedy #2 - for vendors who owe $ to NCSU • May lose opportunity for future contracts • Possible offset of amounts NCSU owes to the vendor by the amount of the debt owed to NCSU

32. Debt Collection • Remedy #3 - Set Off Debt Collection Act • Accounts Receivable notifies NC Dept of Revenue of debts over $50 and over 90 days past due • Revenue may send debtor’s tax refund to NCSU • Debtor has right to hearing to contest the debt

33. Debt Collection • Remedy #4 - State Employees Debt Collection Act • State agency that is owed debt sends letter to state agency that employs debtor • can be challenged via State grievance procedures • Debtor must usually agree to garnishment of 10% or more of net disposable earnings, or lose job

34. Debt Collection • Conclusion • Promptly and properly send invoices or demand letters for money owed to your unit • Identify all debts 30 days or more past due, and send them to Accounts Receivable