Required Contract Clauses

The only clause that is required in all contracts is the correct identification of the College:

The College shall be identified as The Trustees of Smith College in all agreements and contracts. Departments and individuals may not contract in their own name on behalf of the College, but must identify the College as the contracting party. (The department may be identified in the agreement as the office though which the contract is being made.) The official College address is Smith College, Northampton, MA 01063 in all contracts and agreements.

There are no other clauses that are required in all contracts; every contract is unique. However, there are a few clauses that are required in most contracts.

The Equal Opportunity Clause prohibiting discrimination in employment must be included in any subcontract in excess of $10,000.

The Electronic and Information Technology (EIT) Clause (see ABC Contract Clauses) ensuring compliance to accessibility standards and regulations must be included in any contract or RFP involving the purchase or procurement of EITs.

The College also requires an Indemnity Agreement and an Insurance Clause (see ABC Contract Clauses).The indemnity clause sets forth the legal foundation for another entity to be liable to the College for any action of the entity that brings a claim to the institution. The insurance clause, or the insurance in place because of this requirement, provides some guarantee that the entity will have the financial wherewithal to meet their indemnity obligations, if any should arise. Changes to the clauses should be made only after review by the risk manager or other legal counsel.

The most common exceptions to this standard are 1) invited speakers and 2) small professional services directly related to personal scholarship activities, such as hiring a book editor, indexer, translation or transcription services, analysis services, requisition of instruments or equipment, or small immediate repairs to instruments or equipment that the person hiring the services has budget authority for through his/her grants, research accounts, or faculty fellowship. However, an indemnity agreement and insurance should be used if the equipment to be repaired or serviced is on campus and the work is potentially hazardous. If the contracting party has any questions, the Risk Manager should be consulted.

For more information on contract clauses and contract language, see ABC Contract Clauses.

The “Equal Opportunity Clause” or “EO Clause” is required by the regulations under Executive Order 11246, the Vietnam Era Veterans’ Readjustment Act, and the Rehabilitation Act (OFCCP regulations) because Smith is a federal contractor. The EO Clause reads:

“The contractor and subcontractor shall abide by the requirements of 41 CFR 60-1.4(a), 41 CFR 60-300.5(a), and 41 CFR 60-741.5(a). These regulations prohibit discrimination against qualified individuals on the basis of race, color, religion, sex, national origin, veteran status, or disability, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified minorities and females, qualified protected veterans, and qualified individuals with disabilities.”

By college policy, the EO Clause must be included in any “subcontract” in excess of $10,000. If a contractor strongly objects to the EO Clause, the Smith contract manager, working with the Office of Compliance and Risk Management, may agree to assess whether or not the contract is a “covered contract” under the federal regulations in order to determine if the EO Clause can be left out of the contract. This is a fact-intensive inquiry that must be assessed on a contract by contract basis, often with college counsel, with a particular emphasis on understanding whether the contract at issue is “necessary to the performance” of the federal contract/s held by the College. The issue of whether a subcontract is “necessary to the performance” of a federal contract has been addressed by administrative law judges and courts, but no bright line tests or other guidance have emerged from those decisions.

A “subcontract,” under the OFCCP regulations, is defined as: “any agreement or arrangement between a contractor and any person (in which the parties do not stand in the relationship of an employer and an employee): (1) for the purchase, sale or use of personal property or nonpersonal services which, in whole or in part, is necessary to the performance of any one or more [of the federal] contracts [held by the college]; or (2) under which any portion of the contractor’s obligation under any one or more [federal] contracts is performed, undertaken or assumed. 41 C.F.R § 60-1.3 (emphasis and language in brackets added). (The term “nonpersonal services” includes, but is not limited to, the following services: “utilities, construction, transportation, research, insurance, and fund depository.”).

Accordingly, under the regulations, the size of the subcontract (in excess of $10,000), the nature of the contract (i.e.,” purchase, sale or use of personal property or nonpersonal services”), and the relationship between the subcontract and the federal contract (i.e., “necessary to the performance” of any federal contract) are all considered when assessing whether a contract is a “subcontract.”

Please note: a purchase order is a form of contract under the regulations. Accordingly, all purchase orders in excess of $10,000 must include the EO clause.

The OFCCP regulations require only that the federal contractor (in this case, Smith) include the EO Clause in its subcontracts. Smith is not required to verify that its subcontractors are in compliance with their affirmative action obligations.

OFCCP reviews contractor compliance through periodic reviews and compliance evaluations. As part of its audit, OFCCP often requests that the employer produce documentation to demonstrate that it includes the EO Clause in its subcontracts. In any audit, OFCCP’s emphasis, of course, is more on the outreach, hiring, and other employment data. Nevertheless, the EO Clause is an important part of a contractor’s affirmative action obligations. The OFCCP recently updated certain aspects of the EO Clause requirements in regulations that become effective March 24, 2014, and contractors should anticipate that OFCCP would inquire about this matter in any audit.