11.  CONTRACTS

a.  General Provisions

i.  State universities may enter into contracts to acquire products or services normally requiring the expenditure of funds, including leases of real property as described in chapter II, section E “Facilities” of this Policy Manual, with any party or parties including any agency of the United States or any state or any subdivision of any state or with any person, partnership or corporation if the purpose of such contract is related to the operation, function or mission of the state university.  (K.S.A. 76-721)  The Board’s President and Chief Executive Officer must be notified in writing of any contract which requires expendi¬tures or transfers by the state university of an amount greater than one million dollars ($1,000,000), excluding contracts directly related to a capital improvement project.

ii.  All contracts between the state universities and other state agencies shall be subject to the provisions of K.S.A. 75 3711b.  (K.S.A. 76 721).

iii.  Any contract with a corporation whose operations are substantially controlled by a state university shall provide that the books and records of such corporation shall be public records and shall require an annual audit by an independent certified public accountant to be furnished to the Board of Regents and filed with the state agency in charge of post auditing state expenditures.

iv.  Only the chief executive officer of the state university, or a specifically authorized designee of the chief executive officer of the state university, shall ¬exe¬cute contracts on behalf of a state university.  All delegations of authority made pursuant to this provision shall be filed with the General Counsel of the Board of Regents at least annually.

v.  All contracts shall be in the name of the state university.  Individual schools, divisions and departments shall not enter into contracts.

b.  Contracts with Other State Agencies, Indirect Cost Reimbursement

i.  When contracts are negotiated with state agencies for projects to be performed by university personnel, generally in and with university facilities, and when the funds used by the state agency for the project derive directly from its state appropriation from general revenue, the university will forego reimbursement for the entire indirect costs computed at its current audited rates.  It is required in such cases that (i) the state agency certify in writing that the funds for the project derive directly and completely from its state appropriation from general revenue, and (ii) the contract state explicitly the university contribution of the indirect costs, with specified current audited rates, estimated base and estimated amount of the contribution.

ii.  When contracts are negotiated with state agencies for projects to be performed by university personnel, generally in and with university facilities, and when the funds used by the state agency for the purpose derive from federal or other non state allocations to the State, the university will normally expect to be reimbursed for its related indirect costs at its current audited rates.  When the terms of the allocation to the State do not provide full reimbursement of all indirect costs of the work for which the allocation was made, reimbursement of university ¬indi¬rect costs related to the project will be negotiated downward.  In general, the distribution of available but less than full indirect cost reimbursement funds between the state agency and the university shall be in proportion to the state agency's audited administrative cost rate and the university's audited indirect costs rate; if the state agency's rate is not available, it may be approximated by the university's research administration indirect cost rate component.  In all such cases where the university agrees to receive reimbursement at less than its full audited rate, the proposal, and whenever possible the contract, shall contain statements indicating (i) the justification for the reduction, in terms of this policy, and (ii) the amount of the university's unreimbursed indirect costs specified as a university contribution to the project.

iii.  When the funds to be used by the state agency derive from agency fee income (not interpreted as to include federal funds by formula, program or project), and the state agency certifies in writing that in setting the fees in question it has ignored the reimbursement for indirect costs of the university necessary for the conduct of the project being negotiated, the indirect costs of the project will be contributed by the university under the same terms as when the state agency funds derive from its state appropriation from general revenue.  (In these circumstances the state agency is to be encouraged in the future to take into account in setting its fees the real indirect costs of contracting entities such as the university in order that proper, business like reimbursements may be made.)

iv.  In no case of a contract with a state agency will the university (i) require indirect cost reimbursement when the funds received by the state agency for financing the project provide no part allocable for indirect costs, or (ii) contribute the entire indirect costs of a project when the funds received by the state agency for financing the project do include a part allocable for indirect costs.

v.  When state agencies submit or forward proposals for federal or other non state funded programs or projects that will require the services of the university, it is expected that prior consultations will take place with university representatives, and that the proposal as forwarded will contain an identifiable component describing the university's anticipated participation, complete with staffing plan, facilities commitments, and a proposed budget estimating both direct and indirect costs for the university's portion of the program or project.  To the maximum legal extent possible under the laws and regulations of the prospective sponsor, full reimbursement shall be sought for the indirect costs of the state agency and of the university.

vi.  This policy governs all contracts and similar agreements between state agencies and the university (individual schools, divisions and departments are not authorized to execute such instruments).