Higher Education Contract Management: Best Practices for Success

Effectively managing contracts is a critical function in higher education, impacting everything from procurement and vendor relationships to compliance and risk mitigation. Higher education institutions face unique challenges in contract management, requiring a strategic approach that balances operational efficiency with rigorous oversight. This article explores the best practices in higher education contract management, offering insights into optimizing processes, leveraging technology, and ensuring compliance.

The Role of the Contract Manager

The contract manager plays a crucial role in ensuring that goods and services are delivered on time and that the institution's financial interests are protected. A thorough understanding of public contracting principles and contract provisions is essential for success. Key responsibilities include:

Ensuring timely delivery of goods and services.
Protecting the financial interests of the institution.
Understanding public contracting principles.
Understanding the provisions of the contract.

Establishing a Solid Foundation

Maintaining a Complete Contract File

Keeping a complete contract file is critical. The file provides a basis for settling claims and disputes should they arise.

Orientation Conference

It may be helpful to hold an orientation conference with the contractor prior to starting any work. This is an opportunity to clarify the roles and responsibilities of both parties.

Monitoring Contract Performance

Monitoring the performance of a contractor ensures duties are performed in accordance with the contract. It allows the school or program to be aware of and address any developing concerns. The level of monitoring required depends on several factors:

Contract Size and Complexity: While small or simpler contracts may require little monitoring, larger contracts, especially those involving complex items or services, demand closer scrutiny.
Risk Assessment: Large dollar contracts may need little monitoring if the items or services purchased are not complex, and there is a low level of risk associated with the procurement.
Scope of Work: The scope of work should identify the services required including, but not limited to, specific deadlines for completion of tasks and a schedule for submittal of deliverables, required meetings, presentations or other activities.
Funding Sources: Different funding sources may have specific requirements for contract monitoring.
Payment Methodology: Consider the effect the contract payment methodology has on what should be monitored.

The amount of monitoring should be limited to achieve the desired result without unnecessarily increasing costs. A good monitoring program is designed to focus on the most important requirements. The contract’s requirements are deliverables to which the parties agree.

Managing Contract Changes

During the contract lifecycle, it may be necessary to make changes. These changes can be minor, or they can substantively affect the time, scope or cost of the contract.

Contract Modification: A contract modification involves changes that are minor enough that they fit within the original contract scope. These are changes within the scope of the contract and do not affect or alter the rights of involved parties.
Contract Amendment: An amendment involves changes that are significant enough that the contract, or parts of it, need to be replaced. These are contractual changes that affect the rights of both parties.
Constructive Change: If a contractor perceives that work beyond the scope of the contract was ordered, they may claim that the contract was constructively changed, and they may be entitled to additional compensation. Generally, a constructive change will require an amendment.

Contract Termination

There are circumstances under which a contract may need to be terminated.

Termination for Convenience: It is normally the school or program that makes a request to the Purchasing Office for termination. Termination for convenience allows the school or program to terminate any contract, in whole or in part, at any time, if it is determined that such termination is in the best interest of the school or program. The contractor shall be provided with written notice specifying when all or part of a contract is being terminated. The notice of termination shall give the date of termination. A termination notice should include wording similar to: “Pursuant to Section ___, Termination, this Contract is hereby terminated effective [date]. [Contractor name] is directed to immediately stop all work, terminate subcontracts, and place no further orders. The contractor will generally be paid for allowable costs incurred up to the termination.
Termination for Default: A contract may be terminated for default when the school or programs concludes that the contractor has failed to perform, make progress, or in any way breaches the contract. A school or program is not required to terminate a contract even though the circumstances permit such action. Agencies may determine that it is in their best interest to pursue other alternatives; however, alternative actions must be provided for in the contract. The school or program should consider whether the breach is a material breach or a non‐material breach, and consult with the Purchasing Office or legal counsel, regarding these matters. Termination for default should be used as last resort and not as punishment. Under a termination for default, the school or program may require re‐procurement costs from the defaulting contractor. If the school or program finds that it has a need to invoke termination for default, it must provide a written request to the Purchasing justifying the school or program’s reasons for the request. Prior to terminating a contract for default, a cure notice must be sent to the contractor. The format for a cure notice is follows: “[Contractor name] is notified that the state of Minnesota considers [specify failures] to be conditions that cause the contract to be in default. The cure notice should be developed in consultation with the Purchasing Office and legal counsel. If the contractor fails to cure the deficiencies identified in the cure notice, the contract may be terminated. A contract may not be terminated for default when the failure to perform is due to unforeseeable circumstances.

Dispute Resolution

The goal of any dispute resolution process is to address problems before they become worse or more complicated. Contract management and routine communication help avoid these problems. There are cases in which disputes cannot be resolved.

Contract Playbook

Create a contract playbook and promote its use. Contract management is often hampered by the lack of a centralized campus contracting program.

Read also: Key Trends in Education

A contract playbook, sometimes called a school contracting guide or college procurement policy, is a structured and centralized resource directing users through the process of negotiating, finalizing, and managing contracts. An advisory team creates and annually reviews the playbook to make any changes to your process or preferred contracting terms. Legal Counsel provides the legal layout and confirms the contracting guidelines follow all federal, state, and local laws and regulations. Use the playbook as a reference tool for legal and non-legal staff. This helps ensure efficient, consistent contract handling. Describe any legal concepts in language understandable to a wide audience. Make it simple for users to find and understand topics.

A contract is an exchange of promises the law will enforce. Contracts can be written or oral. When possible, commit contractual agreements to writing. This section also should describe how to respond to contracting proposals from external partners and provide guidelines for reviewing and revising a contract an external party submits. Create standardized templates for common scenarios such as purchase orders, facilities use agreements, professional services or consulting contracts, and simple copyright licenses.

It is important to:

Involve multiple departments in creating your school’s contract playbook.
Schedule workshops and training sessions to teach faculty, staff, and student leaders (if they’re allowed to execute contracts) how to use the playbook.

Avoiding Common Pitfalls

Implement oral and implied contracts: Avoid this.
Require one person to create all your institution’s contracting policies and procedures without input from other departments: Involve multiple departments in creating your school’s contract playbook.
Click “Agree” online without fully reading the fine print: Staff and students may not realize minor actions such as clicking “agree” and completing signatures can serve as a binding agreement.
Assume only large contracts must be reviewed: All contracts should be reviewed.

Leveraging Contract Management Software

Choosing the right contract management software for higher education means understanding which features will address the unique challenges of your institution. Below are the top features to look for when selecting a solution:

Automation of Contract Workflows: Automating contract creation, approval, and renewal processes can drastically reduce the administrative burden on staff.
Compliance Tracking and Reporting: Higher education institutions face strict regulations like data privacy laws. A contract management solution should provide real-time tracking and alerts to ensure continuous compliance.
Secure Document Storage: Contracts involving students, faculty, and vendors often contain sensitive information. A robust system should ensure data encryption and secure storage to protect these documents from unauthorised access.
Customisable Workflows: Different departments, such as admissions or human resources, have unique contract needs. A good platform allows for customisable workflows to meet the specific demands of each department within the institution.
Integration with Existing Systems: Universities rely on various systems such as Student Information Systems (SIS) and financial management tools. Your contract management software should integrate seamlessly with these systems to ensure data flows smoothly across platforms.

Contract Management Software Options

Lexagle: Lexagle sets itself apart by addressing the real, day-to-day challenges of contract management in higher education. Whether it's handling student agreements, faculty contracts, or vendor deals, Lexagle simplifies the entire process. It automates tedious tasks, ensures compliance, and reduces legal risks, seamlessly integrating with the systems universities already use.
- Key Features: Automated Contract Lifecycle Management, Custom Workflows for Educational Institutions, Real-Time Compliance Monitoring, Secure Document Storage.
Formstack: Formstack offers a practical solution for automating everyday contract tasks like student registration and document management in educational settings. Its focus on streamlining simple processes makes it an excellent choice for making digital contract workflows for schools quickly.
DocuWare: DocuWare's ability to keep universities compliant with legal and regulatory standards makes it a solid choice for those looking to prioritise risk management. It provides reliable document tracking and audit trails, which are essential for maintaining regulatory compliance.
Dock 365: Dock 365 is particularly strong when managing contracts related to vendors and faculty, with tools that streamline the approval process and contract tracking. It offers dependable features for universities primarily focused on faculty and vendor contract management.
Ironclad: Ironclad is a solid contract management solution, particularly for organisations with a legal focus. It offers features like contract visibility, automated workflows, and customisable templates that streamline the management of student agreement contracts and help reduce compliance risks.

Best Practices for Leveraging Contract Management Software

To get the most out of your contract management solution, consider the following best practices:

Train Your Staff: Ensure that all staff members involved in contract management understand how to use the software effectively. This will help reduce human error and maximise the benefits of automation.
Automate Wherever Possible: Automation reduces manual work and ensures that contracts are managed consistently, reducing risks in education contracts and the likelihood of missed deadlines or non-compliance.
Monitor Compliance: Regularly audit your contracts and processes to ensure your institution complies with legal and regulatory standards.

Optimizing Contract Management Processes

Contract management is a critical component of the procurement lifecycle across higher education and nonprofit industries. To effectively serve institutions, contract management must meet two major requirements: the operational demand for a rapid review and approval, and the sometimes-lengthy risk mitigation requirement that contract clauses align with organizational risk management and tactics. Frequently, contract management activities in the higher education and nonprofit industries do not meet these constraints on either the structural, procedural, or technology front.

An assessment of the contract management configuration can identify the specific challenges that hinder efficiency and compliance. Assessments are typically structured to evaluate three dimensions: people, processes, and technology. Identifying issues is the first step to mitigation so to ensure alignment with strategic goals and current business needs. Once the assessment is complete, summarized findings will inform the creation of an “implementation roadmap.” This roadmap prioritizes actions to ensure that improvements are appropriately sequenced to maximize the return on investment.

Contract management activities are tightly interwoven with other procurement functions, such as vendor management, strategic sourcing, and Accounts Payable (AP).

Streamlining with CLM Software

Automate contract lifecycle management (CLM) with best practices for contract management that can track each stage of the contract management process. CLM software tools can help you anticipate milestones and key dates with integrated real-time automated alerts for contractual obligations and more.

Contract Authoring: Implement a contract management system's native document editor and connectors with mission-critical word processing applications.
Contract Negotiations: Enjoy numbered versions and audit trails for changes made to a document. Leading CLM software can support automated contract assembly that can streamline the contract creation process with multiple stakeholders. As per contract management best practices, you can create compliant contracts that seamlessly merge with your organization's pre-approved data fields and clauses. You can merge various document versions and templates from your pre-approved language library. As such, you can confidently and swiftly compile new contracts with trackable oversight.
Maximize Contract Tracking: Maximizing contract tracking oversight with advanced CLM software tracking tools can provide you with comprehensive audit trails and performance metrics.
Electronic Signatures: Gather signatures quickly as per contract management software best practices with leading electronic signature software. It can enable signees to sign in the office or on the go. Signees simply need the proper electronic device - including mobile - and adequate internet access. Additionally, signees can leverage the use of digital signatures.
Risk Management: Manage and mitigate risks with robust AI and machine learning. It can help identify, anticipate, and minimize risk via a visually engaging risk assessment matrix. From there, it can learn risk-mitigating contract language for continued use. You can also assess if an entity complies with the Office of Foreign Asset Control's national sanctions lists.
Remote Contract Management: Achieve remote contract management success with a web-enabled contract management suite. You need to retain optimal oversight of pre-award and post-award contract management processes. You can leverage trackable contract status changes with time-zone agility.

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