Contracts and Agreements Policy

To assure adherence to federal (especially OMB 2 CFR, Part 200), State, health department regulations and District Board by-laws regarding purchases and contracts and to better incorporate contracts into program planning, the following are the steps to plan for, initiate, implement, evaluate, renew and report on professional services contracts. Contracting guidelines are outlined in 902 KAR 8:170 Sections 6 -7 and also in specific directives from Federal OMB 2 CFR, Part 200 and parts of KRS 424 and the CHFS. 

Note: These guidelines should be reviewed at the end of each year/contract period.  All program services contracts should be reviewed for renewal at a minimum every five (5) years as a part of the District Program Planning Process using the Service Needs Assessment form. The procedure will be part of the operations manual and updated according to policy.  The agency will NOT make unnecessary or duplicate purchases of goods or services.

Contracts are awarded for a term of one (1) fiscal year with the option of being renewed up to four (4) more years without being re-bid.  

After year five (5) of a renewable contract, the services contract must be re-bid except as follows:

• Financial audit services must be re-bid after year three (3.)

Volunteer and state price contracts are excluded from this requirement.  (However, state price contracts should still be evaluated per these policies at a minimum every five (5) years to assure their effectiveness and value.)

If based on the evaluation a contracted service is still needed and the provider is performing satisfactorily, the contracted service may be extended into a new fiscal year by completing a new fiscal year contract with the provider, subject to approval by the Kentucky Department for Public Health.

If the program owner is dissatisfied with the contractor at any time during the contract term, Accounting staff should be notified to terminate the contract if allowed per contract terms.  

Management and the Program Owner will work with the Accounting staff to negotiate compliance with the vendor or provide a 30-day notice of termination to the contractor.

Securing resources or assistance from outside entities is often a necessity during prolonged, unplanned public health events or emergency situations. NKY Health has numerous long-standing relationships with other entities that can help meet identified needs or gaps during response efforts. This includes local government partners, non-profits, and businesses. Many of these avenues for resources and assistance are built into the operational and emergency plans of the entities and NKY Health and would not require additional written agreements. 

In situations involving entities not already part of operational ties, written agreements (MOUs and MOAs) can be expedited to meet emergent needs. Contracts and agreements can be quickly drawn and implemented utilizing our standard contract template and provided to involved parties for signature and execution, including electronic signatures through email. NKY Health response leaders can expedite the internal process for review and approval by utilizing emergency operations procedures outlined in the Continuity of Operations Support Plan (COOP) of the department. Agreements, purchases, and other response needs are given priority through the approval process and quickly implemented.

Additionally, NKY Health’s Purchasing and Procurement policy includes the distinction where procurement by non-competitive solicitation may occur if “the public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation.” Seamless banking processes, updated web- and cloud-based financial software, electronic signatures, and an updated virtual private network (VPN) allow NKY Health to support an expedited purchasing and payment process.

The general process for administering a contract or MOA is:

1. A determination of whether the service can be and should be contracted.

2. A Request for Proposal (RFP) is prepared and issued (except for volunteer and state price contracts.)

3. A vendor is selected.  

4. A contract is prepared.

5. Invoices are processed and paid.

6. Contracts are evaluated.

7. Renewable contracts are renewed.

Note: Contract logs are maintained for reference to indicate status and can be checked at any time.

Using the Service Needs Assessment form, the Division Director works with the District Director of Health and the Program Owner to determine whether the service will  be contracted.  

This includes assuring that the service to be provided is consistent with the same program planning best practices that are used for internal program plans.  This includes:

• Identifying the target audience

• Providing evidence-based strategies

• Applying program evaluation methods

The Division Director should complete the RFP Template provided by the Formal Structures Committee and coordinate the RFP process through the Director of Administration and Accounting. The two directors estimate the contract price to determine which guideline must be followed.

Guidelines for sending out Requests for Proposals (RFP):

• When the contract is between $10,000-$39,999, the RFP must go out to at least three (3) potential providers.

• When the contract cost estimate is $40,000 or more, the RFP will be formally advertised in the newspaper(s) of record per KRS 424.110-424.150.  

• Proposals are to be received between seven (7) and twenty-one (21) days after the advertisement is published.  Advertised RFPs are also posted on NKY Health's web site.  

Volunteer and state price contracts are excluded from this requirement.

The Division Director in partnership with the Director of Administration and Accounting reviews the bids received and makes a selection based on the lowest and best proposal.

Service contracts directly related to the District Board of Health (and other related Boards and Committees), including financial audit and general legal counsel services, will be selected (approved), evaluated and managed by the District Board of Health.  

The General Legal Counsel service contract may be reviewed and evaluated (see Attorney Rating Sheet at end of policy) at any time by the Executive Committee, but shall be reviewed and evaluated not less than once every five years in consultation with the Finance & Audit Committee, to determine whether the contract should be extended or renewed or whether proposals for these services should be solicited. 

Special legal counsel services contracts directly related to the District Board of Health (and other related Boards and Committees), will be selected (approved), evaluated and managed by the District Board of Health Chair in consultation with general counsel and the District Director of Health.

After a vendor is selected:

1. The Division Director, with assistance from the Program Owner completes the Contract Request form provided by the Formal Structures Committee.

2. The Division Director emails the completed Contract Request form to Administration and Accounting staff along with the bids received.

3. Administration and Accounting staff work with the Program Owner to draft a contract for the vendor selected. 

4. The Contract Request form,  bids received and a draft of the contract is sent to the District Director of Health for review and approval.

5. Administration and Accounting staff ensure the contract is signed and archived.

After the contracted service has been performed:

1. The contractor provides an itemized payment invoice to the Program Owner for approval.

2. The Program Owner:

   • Verifies that all work being invoiced has been completed satisfactorily

   • Works with the vendor to address any outstanding invoicing issues

   • Tracks approved payments against contract funds (if an amendment is needed, contact Administration and Accounting)

   • Initials, writes "OK to Pay," and dates the invoice

   • Forwards the invoice to Accounting staff for payment

3. Accounting staff issues payment for the invoice (usually on the next normal check run.)

To be consistent with Program Planning guidelines, each contract should be evaluated at a minimum at the end of the contract term and at the end of the year as part of Program Service Evaluation.  

See "Step 5: Processing of Invoices" section above.

See the "Early Termination of Contracts" section above for information about how to handle an unsatisfactory evaluation. 

Annually during the budgeting session, the District Director of Health will provide a contract report to the District Board of Health’s Finance and Audit Committee.  

The report is to include, at a minimum, the following information for each services contract: 

• Provider name

• Appropriation amount

• Actual year-to-date expended

• Month/year of last bid

• Renewing contract (Yes or No)

• Re-bidding contract (Yes or No)

• Description of services

• Program owner (health dept. contact)

• Estimated appropriation for next fiscal year

5/14/2024:

• Added "Expedited Agreement Process" section.

• Updated policy contact

4/18/2023:

• Updated contract price ranges for RFP process.