EFFECTIVE: September 9, 2013
REFERENCE: C.R.S. 23-5-106; BP 8-170
APPROVED: September 9, 2013
/ Nancy J. McCallin /
Nancy J. McCallin, Ph.D.
This procedure applies to all contracts entered into by the System Office or a state system community college.
Board Policy (BP) 8-170 prohibits a community college and the System Office to enter into contracts containing indemnification or hold harmless provisions except under limited circumstances as identified in BP 8-170, and then only when the contract is approved in compliance with System President Procedure (SP-8-170). This Procedure sets forth the requirements for approval. It applies to all contracts, whether denominated as an agreement, memorandum of understanding, intergovernmental agreement or some other title. It does not modify or amend delegations of authority to approve and execute binding legal instruments. Any contract to indemnify or hold harmless presents economic risks that must be carefully evaluated. A contract to indemnify or hold harmless that fails to comport with BP 8-170 and this Procedure, is not permitted by law or policy.
The System Office and a community college may contract to indemnify and hold harmless a contractor when the contract meets criteria 1, 2, 3, 4, and 5 (“Approved Categorical Contract”) below:
No contract that contains an indemnification or hold harmless provision shall be authorized or binding unless approved in accordance with this Procedure. Contracts already reviewed under this Procedure shall be maintained on the “PC Commons drive” or other similar location for reference. Requests for authorization to enter into a contract that includes any form or an indemnification or hold harmless provisions will be made using the “Request for Authorization to Indemnify” form (“Request”) in Appendix A. Any employee who agrees to an indemnification or hold harmless provision that is not authorized and approved in accordance with this Procedure shall be personally responsible for any liability or damages arising from the contract to indemnify or hold harmless.
The System Office and each community college shall designate a person to coordinate the indemnification approval process (“Contract Designee”). The Contract Designee may be the System Vice President for Finance & Administration or College Chief Financial Officer (CFO) or another person with contracting background and shall be responsible to screen the request and obtain all information necessary to prepare the Request for submission to the System Office for review. The steps to complete the Request are as follows:
The Contract Designee shall determine the Contract Category.
The Contract Designee shall develop, in consultation with the requesting end-user, a summary of the project.
The Contract Designee shall identify, in consultation with the requesting end-user, the anticipated benefit to the System Office or community college.
The Contract Designee shall identify, in consultation with the requesting end-user, the technological and programmatic risks to third parties associated with the project and the manner in which those risks will be minimized (“Risk Assessment”).
The Contract Designee shall identify attempts to remove the indemnification or hold harmless provisions or limit liability to an amount not to exceed $200,000 or the amount received under a revenue contract, whichever is less.
The System Vice President for Finance & Administration for System contracts or the college CFO for college contracts, in consultation with System Office Legal Affairs, shall make a written assessment of whether the amount of potential liability under the indemnification or hold harmless provision does not exceed $200,000 or the amount to be received under a revenue contract, whichever is less (“Liability Cap Assessment”).
The System Vice President for Finance & Administration or the college CFO, in consultation with System Office Legal Affairs, shall make a written assessment of the source of funds available to cover potential liability attributable to the indemnification or hold harmless clause (“Liability Coverage Assessment”).
Information Technology (“IT”) related contracts require System Vice President of Information Technology, Chief Information Officer approval. This approval indicates agreement with the Risk Assessment and Liability Cap Assessment from an IT perspective only. It is not an indication that System IT will provide technical support for the project, goods or services.
System Office Legal Affairs or a designated reviewing attorney shall make a written determination as to whether the indemnification or hold harmless provision is considered standard in the industry, or, if no standard exists, is reasonable and non-negotiable, and the contract is otherwise consistent with BP 8-170.
The System Vice President for Finance and Administration, in consultation with System Office Legal Affairs, shall approve the Request only upon a determination that the Risk Assessment, Liability Cap Assessment and the Liability Coverage Assessment are fair and reasonable.
The System President for System contracts or College President for college contracts, shall approve the Request only upon a determination that the contract meets the requirement to be characterized as an Approved Categorical Contract and appropriately advances college or System interests in light of the totality of the circumstances.
If a contract does not satisfy the requirements to be an Approved Categorical Contract, as set forth above, such contract may not be entered unless the System President makes a prior written determination that the contract serves a valid public purpose and that any risks to the System Office or college that may arise from entering into the contract are sufficiently limited and outweighed by the benefits of the contract so as to warrant approval on behalf of the State Board. For college contracts, only the college president may seek such approval.
The System President may choose to submit any contract within the scope of the System President’s approval authority to the State Board for its consideration at its next regularly scheduled meeting.
The System Office reserves the right to change any provision or requirement of this Procedure at any time and the change shall become effective immediately.
Dept. Name and Contact:
Total Dollar Amount over life of the Contact:
Contract Designee (Name, Contact Information):
Routing Instructions: Contract Designee is responsible to provide the information requested in steps 1 – 7 prior to submitting this form to the System Office for approval required in steps 8, 9 and 10. Step 11 requires College President or System President approval. [Insert Special Instructions from College]
For software or hardware agreements, these assessments should involve System Office Information Technology Dept.
Comments: (Please indicate any additional actions required to minimize risks identified above)
Potential liability is reasonably likely to be covered by:
If potential liability is to be covered from college of System Office reserves, the signature below is confirmation that the projected reserves for the life of the contract are sufficient to cover the value assigned to the potential liability
All Information Technology related contracts must be approved by the System Vice President of Information Technology, Chief Information Officer
Title: System Vice President of Information Technology, Chief Information Officer
Please note: This approval indicated agreement with the Risk Assessment and Liability Cap Assessment from an IT perspective only. If the System Office or college receives System IT approval to indemnify, this approval does not mean System IT will provide technical support for the project, good or services.
Department: System Office Legal Affairs
System Vice President for Finance & Administration, in consultation with System Office Legal Affairs.
Title: System Vice President for Finance & Administration