The Devil Is In The Details: Contract Review Tips and Tricks

Contracts are an essential part of government business operations. When reviewing a contract, it is easy to gloss over the fine print when rushing to start a project. However, the devil is in the details. This blog will address contract review tips applicable to government agencies across the state.

Where to Start

When drafting or reviewing a contract, it is important to conduct an individualized risk assessment. Taking the time upfront to conduct a thorough contract review will greatly reduce an agency’s potential future liability.

Prior to reviewing a contract, it is important to confirm compliance with any applicable state and local procurement rules, such as competitive bidding requirements.

Contract Review Goals

One of the main goals of contract review is to ensure that the agency understands the contract terms before signing. Here are a few general items to consider:

• Does the contract adequately describe the scope of work, deliverables, deadlines, and payment terms?
• Is there vague or ambiguous language?
• How is the risk allocated or mitigated?
• What happens in the event of a breach of contract?
• Is there sufficient insurance coverage?
• What happens if there is a loss to property or bodily injury? Who is responsible?
• Is there a start and end date? For more information see MRSC’s blog: Does the Contract Need to End, or Can It Live Forever?
• What are the termination and renewal options?
• If contracting with an out-of-state business, which state law applies in the event of a dispute?

Taking the time to carefully review a contract is critical to reducing risk. While it is easy to go into autopilot mode when reviewing lengthy contracts, do not be tempted. Using a structured review process removes the guesswork and ensures that every contract is evaluated the same way.

Contract Review Checklist

As discussed during MRSC’s Fundamental of Contract Law, Review, and Management training (find the recording at the On-Demand Webinars page), we highly recommend using a contract review checklist.

MRSC prepared a sample contract review checklist that a public agency can use or modify to meet its needs. While the checklist is a helpful tool to assist in contract review, it is not a substitute for legal review.

Without a checklist and contract review process, it is easy to forget essential contract language that protects an agency from potential liability. Agencies that use a standardized contract review process are also able to identify ambiguous or unfair terms that may lead to future legal disputes.

By understanding the contract language and its legal implications, agencies can make informed decisions and provide greater liability protection.

Public Records Considerations

As a public agency, all proposed confidentiality provisions should be highly scrutinized due to the transparency requirements in the Public Records Act (PRA).

Agencies should consider addressing the following in their contracts:

• The agency is subject to the PRA, the contract itself is a public record, as well as any work produced for the agency under the contract.
• Identify what data is being shared. Does the contract include data breach notifications per RCW 19.255 and RCW 42.56.590?
• Watch out for data destruction provisions. Do they comply with applicable records retention policies?
• How will the parties handle a public records request if one is received? This may involve providing notice under RCW 42.56.540 and allowing the other party to seek an injunction in court.

For more information about the PRA, see MRSC’s Public Records Act Basics webpage.

Contract Review Teamwork

MRSC highly recommends discussing the contract terms and conditions with your agency attorney, risk manager, and/or risk pool. Additionally, make sure your contract management team is on the same page with respect to review timelines and expectations. This may involve bringing your legal team into the conversation earlier in the process.

Lastly, it is critical for the contracting parties to understand what is expected of them so no surpises arise. This type of advanced planning will greatly reduce future legal disputes.

Conclusion

MRSC hopes the contract review checklist simplifies the contract review process and—dare I say—make it more enjoyable (speaking as a self-proclaimed contract review nerd).

Stay tuned for future updates to MRSC’s website on contract review. Also, please sign up for MRSC’s weekly e-newsletter to stay updated on training opportunities relating to contracts and procurement.