(a) General requirements. The contract must contain terms and conditions consistent with DHS rules. The requisitioning unit is responsible for ensuring that the content of all contracts has been reviewed and found acceptable by the Contracts and Purchasing Unit. The Contracts and Purchasing Unit may give prior approval for an entire group of specified contracts for which the format has been previously approved. However, when the Contracts and Purchasing Unit has given prior approval for signing of a form contract, the requisitioning unit must furnish a copy of the contract with original signatures. In the case of provider contracts, and other frequently awarded contracts, the requisitioning unit is responsible for ensuring that the basic contract format and any departures from it are cleared by General Counsel and Contracts and Purchasing Unit staff. If any clauses are on separate documents, three originals are required with original signatures and notary seals, if appropriate. As the Department engages in many types of contracts, the requisitioning unit may consult the Contracts and Purchasing Unit for advice, but requirements generic to most professional services contracts are:

• (1) three original signed copies of the contract or agreement;
• (2) contract work plan, if contract amount exceeds $25,000;
• (3) Form ADM-87, Contract Requisition Justification, if contract amount exceeds $25,000;
• (4) Form ADM-2, Department of Human Services Requisition, indicating funding, coordination, and clearance with all affected units and divisions;
• (5) Form ADM-S-32, Sign-Off Slip, when documents require submission to the Director;
• (6) three original noncollusion affidavits which include the non-kickback clause and assurance that the contractor will not employ state employees that participated in the contract development;
• (7) advance acquisition approval document from federal grantor agency if required or if the contract supports a new program or project;
• (8) applicable clauses as listed in OAC 340:2-13-14.10; and
• (9) OSF Form 25, Professional and Personal Services Contract Exemption Request, if a purchasing freeze has been declared by the Governor or Director and acquisition is not exempt as a freeze exception.

(b) Coordination and clearance. Form ADM-2 is the vehicle used by the Contracts and Purchasing Unit to ensure that proper coordination and clearance of a professional service contract has occurred. Requisitioning units originating contracts, agreements, and grants are responsible for coordinating contractual documents with affected entities who have responsibilities related to the subject matter addressed. Contracts, agreements, or grants reaching the Contracts and Purchasing Unit without appropriate review are returned to the requisitioning unit for completion. Form ADM-2 becomes part of each official contract file. Form ADM-S-32 is required when any part of the contractual packet requires review or approval from the Director. The division administrator, the person coordinating contracts within that division, as well as all divisions affected by the proposed contract must indicate approval prior to submission of the contract packet to the Contracts and Purchasing Unit. Signature delegation is authorized by separate memorandum from the Director. Prior to specific written delegation, only the Director is authorized to obligate the Agency contractually.

(c) Use of Contracts and Purchasing Unit files and records. The Contracts and Purchasing Unit is the official repository for all original agreements, contracts, and grants except those for which repository is authorized by the Director. Contract files are maintained a minimum of three years. Therefore, divisions or requisitioning units must forward any agreement, contract or grant in their files to the Contracts and Purchasing Unit. A standardized format of the agreement is on file and any changes are coordinated with the Contracts and Purchasing Unit. Any correspondence affecting the contract must also be forwarded to the Contracts and Purchasing Unit. Contracts and Purchasing Unit staff provide copies of any documents desired from the files. The Contracts and Purchasing Unit central file contains:

• (1) official record copy of the contract;
• (2) amendments;
• (3) compliance audits or reviews;
• (4) historical vendor performance;
• (5) Form ADM-2; and
• (6) other related documents.

(d) Contract restrictions - former state employees. The Agency may not enter into a professional services contract with any person who has been employed by DHS within one year after the termination date of the individual's state employment unless specifically exempted by statute.

(e) Performance evaluation. An annual performance evaluation is required of the services provided under a professional service contract with emphasis on issues of poor performance. Unsatisfactory performance includes, but is not limited to, failure to comply with terms or conditions of the contract or lack of supporting documentation regarding reports, claims, and similar documents. An example of a problem that may be encountered is evidence of financial instability of the vendor such as the vendor's inability to pay incurred debts.

• (1) Annual evaluations address the deficiencies of the performance of the vendor during the contractual period. Evaluations are completed by the division or requisitioning unit responsible for initiating the contract within 90 days after the end of each contract year or the end of the term of the contract.
• (2) The designated contract monitor reviews vendor performance on a regular basis as appropriate to the individual contract. Pertinent issues are addressed as discovered, rather than at year end. The designated contract monitor documents any confirmed performance deficiencies in writing and forwards the written documentation with any extenuating circumstances cited, to the Contracts and Purchasing Unit for inclusion in the vendor's files and transmits them to DCS, if applicable.

(f) Report. If the work product of a contract is a report, two copies of the report are delivered to the Contracts and Purchasing Unit, which files a copy with the State Librarian and Archivist.

(g) Needs assessment justification. Prior to the contract process, the requisitioning unit must complete a needs assessment justification and develop the requirements and work plans to determine the appropriate procurement method.

(h) Contract revisions. Contracts must not be revised after printing. The use of correction fluid is prohibited in the contract or agreement. Any revisions must be initialed by all parties, with one line drawn through the original information, on all contract originals.

(i) Coordination with DCS. All contacts, either written or verbal, by DHS staff directed to DCS regarding contractual issues are coordinated via the Contracts and Purchasing Unit CPO.

(j) Payments against service contracts. Any payment request for contracted services is audited diligently by the program division to ensure that the claim strictly adheres to the terms and conditions of the contract. Claims are to correspond with the line item budgets submitted by the provider with the original contract. Any claim submitted for a cost reimbursement contract must include proper receipts. If a revision of the contract becomes necessary, a claim is not processed reflecting that revision prior to final approval of the revision by all affected entities, including DCS if applicable. A contract may not be executed for professional services providing for nonuniform payments throughout the duration of the contract if the services throughout the duration of the contract are similar and consistent without specific authorization and written justification by the Director of Central Purchasing Division, DCS. Payment for services pursuant to a contract are made only after services are rendered.

(k) Contract payment methods. Regardless of the method utilized to secure a contract, such as competitive bid, fixed rate, sole source or sole brand or inter-agency agreement, payment methods differ according to the particular requirements of an individual contract. A brief explanation of the various contract payment methods traditionally utilized are given in (1) - (3) of this subsection.

• (1) Cost-reimbursement payment. The cost-reimbursement payment method provides for payment to the contractor of reasonable, allocable, and allowable costs incurred in the performance of the contract, to the extent prescribed in the contract. A specific budget is ratified at contract execution, and any deviation from the budget requires DHS approval unless otherwise specified in the contract. Vendors must provide documentation that supports claims prior to approval and payment of claims. Maximum amount specified in contract award is for budgetary purposes only. Vendors receive reimbursement only for allowable costs incurred. Funds utilized to remit payment must be associated with the specific service period.
• (2) Fixed-rate payment. The fixed-rate payment method provides payment per unit of service as specified in the contract. Vendors normally provide documentation regarding clients served, hours performed, and other pertinent information, and payment is not contingent upon actual costs incurred by the individual vendor. All related expenses such as travel expenditures and per diem are inclusive in rate unless otherwise specified in the original contract. Funds utilized to remit payment must be associated with the specific service period.
• (3) Payment by deliverables. In the payment by deliverables method, payment is remitted upon satisfactory acceptance by DHS of individual phase, component, or percentage of total project by increment completed and approved by the DHS project manager. These contracts are usually competitively bid. Bidders quote price per phase, component, or total project and payment is limited to original bid quotation, regardless of actual expenses incurred by the vendor. Payments based upon completion of deliverables may be remitted from funds encumbered for contract when originally issued, if valid, and are not associated with any service period. Any services provided exclusive of the specific deliverables, if allowable per the contract terms, must reflect funding associated with the period in which services were provided, usually hourly increments.

(l) Material and equipment furnished contractually. It is unlawful to enter into a contract in which DHS furnishes material and equipment to be used by the vendor or provider in the performance of the contract if the contract allows the vendor or provider to acquire ownership of the material or equipment during or after the term of the contract other than through competitive bidding or a public sale procedure, except in inter-governmental agreements.