1 2006 Management Agreement Between the Commonwealth of

2006 Management Agreement Between the Commonwealth of Virginia and The College of

William and Mary in Virginia, as amended in 2009 and 2013

MANAGEMENT AGREEMENT

BY AND BETWEEN

THE COMMONWEALTH OF VIRGINIA

AND

THE COLLEGE OF WILLIAM AND MARY IN VIRGINIA

This MANAGEMENT AGREEMENT, executed this 15th day of November, 2005, by and

between the Commonwealth of Virginia (hereafter, the Commonwealth) and The College of

William and Mary in Virginia (hereafter, the College) provides as follows:

RECITALS

WHEREAS, the College has satisfied the conditions precedent set forth in subsections A and B

of § 23-38.97 of the Code of Virginia to become a public institution of higher education of the

Commonwealth governed by Subchapter 3 (§ 23-38.91 et seq.) of the Restructured Higher

Education Administrative and Financial Operations Act, Chapter 4.10 (§ 23-38.88 et seq.) of

Title 23 of the Code of Virginia (Subchapter 3 and the Act, respectively), as evidenced by:

1. Board of Visitors Approval. The minutes of a meeting of the Board of Visitors of the College

held on April 22, 2005, indicate that an absolute two-thirds or more of the members voted to

approve the resolution required by subdivision A 1 of § 23-38.97 of the Act;

2. Written Application to the Governor. The College has submitted to the Governor a written

Application, dated November 2, 2005, with copies to the Chairmen of the House Committee on

Appropriations, the House Committee on Education, the Senate Committee on Finance, and the

Senate Committee on Education and Health, expressing the sense of its Board of Visitors that the

College is qualified to be, and should be, governed by Subchapter 3 of the Act, and

substantiating that the College has fulfilled the requirements of paragraph 2 of subsection A of §

23-38.97 of the Act; and

3. Finding by the Governor. In accordance with subsection B of § 23-38.97 of the Act the

Governor has found that the College has fulfilled the requirements of subdivision A 2 of § 23-

38.97, and therefore has authorized Cabinet Secretaries to enter into this Management

Agreement on behalf of the Commonwealth with the College; and

WHEREAS, the College is therefore authorized to enter into this Management Agreement as

provided in subsection D of § 23-38.88 and Subchapter 3 of the Act.

AGREEMENT

NOW, THEREFORE, in accordance with the provisions of the Restructured Higher Education

Administrative and Financial Operations Act, Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the

Code of Virginia, and in consideration of the foregoing premises, the Commonwealth and the

College do now agree as follows:

ARTICLE 1. DEFINITIONS.

As used in this Agreement, the following terms have the following meanings, unless the context

requires otherwise:

“Act” means the Restructured Higher Education Administrative and Financial Operations

Act, Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the Code of Virginia.

“Agreement” means “Management Agreement.”

“Board of Visitors” or “Board” means the Rector and Board of Visitors of the College of

William and Mary in Virginia and the Virginia Institute of Marine Science.

“College” means the College of William and Mary in Virginia (State Agency 204) and

the Virginia Institute of Marine Science (State Agency 268).

“Covered Employee” means any person who is employed by the College on either a

salaried or wage basis.

“Covered Institution” means, on and after the effective date of its initial management

agreement with the Commonwealth, a public institution of higher education of the

Commonwealth of Virginia that has entered into a management agreement with the

Commonwealth to be governed by and in accordance with the provisions of subsection D of §

23-38.88 and Subchapter 3 of the Act.

“Enabling legislation” means those chapters, other than Chapter 4.10, of Title 23 of the

Code of Virginia, as amended, creating, continuing, or otherwise setting forth the powers,

purposes, and missions of the individual public institutions of higher education of the

Commonwealth.

“Management Agreement” means this agreement between the Commonwealth of

Virginia and the College as required by subsection D of § 23-38.88 and Subchapter 3 of the Act.

“Parties” means the parties to this Management Agreement, the Commonwealth of

Virginia and the College.

“Public institution of higher education” means those two-year and four-year institutions

enumerated in § 23-14 of the Code of Virginia.

ARTICLE 2. SCOPE OF MANAGEMENT AGREEMENT.

SECTION 2.1. Enhanced Authority Granted and Accompanying Accountability. Subchapter 3

of the Act provides that, upon the execution of, and as of the effective date for, this Management

Agreement, the College shall become a Covered Institution entitled to be granted by the

Commonwealth and to exercise the powers and authority provided in Subchapter 3 of the Act

that are expressly contained in this Management Agreement. In general, subject to its

management agreement with the Commonwealth, status as a Covered Institution governed by

Subchapter 3 of the Act and this Management Agreement is intended to replace (i) the post-

General Assembly authorization prior-approval system of reviews, approvals, policies and

procedures carried out and implemented by a variety of central State agencies with (ii) a post-

audit system of reviews and accountability under which a Covered Institution is fully responsible

and fully accountable for managing itself pursuant to Subchapter 3 of the Act and its

management agreement with the Commonwealth.

SECTION 2.1.1. Assessments and Accountability. The College and its implementation of the

enhanced authority granted by Subchapter 3 of the Act and this Management Agreement, and the

Board of Visitors polices attached hereto as Exhibits G through L, shall be subject to the reviews,

assessments, and audits (i) set forth in the Act that are to be conducted by the Auditor of Public

Accounts, the Joint Legislative Audit and Review Commission, and the State Council of Higher

Education for Virginia, or (ii) as may be conducted periodically by the Secretaries of Finance,

Administration, Education, or Technology, or by some combination of these four Secretaries, or

(iii) as otherwise may be required by law other than the Act.

SECTION 2.1.2. Express Grant of Powers and Authority. Subject to the specific conditions

and limitations contained in Article 4 (Institutional Management), Article 5 (Capital Projects;

Procurement; Property Generally), and Article 6 (Human Resources) of Subchapter 3 of the Act,

the Commonwealth and the College agree that the Commonwealth has granted to the College by

this Management agreement all the powers and authority contained in certain policies adopted by

the Board of Visitors of the College attached hereto as Exhibits G through L and governing (1)

the undertaking and implementation of capital projects, and other acquisition and disposition of

property (Exhibit G), (2) the leasing of property, including capital leases (Exhibit H), (3)

information technology (Exhibit I), (4) the procurement of goods, services, including certain

professional services, insurance, and construction (Exhibit J), (5) human resources (Exhibit K),

and (6) its system of financial management (Exhibit L), including, as provided in subsection B of

§ 23-38.104 of the Act, the sole authority to establish tuition, fees, room, board, and other

charges consistent with sum sufficient appropriation authority for non-general funds as provided

by the Governor and the General Assembly in the Commonwealth’s biennial appropriations

authorization. Subject to the specific conditions and limitations contained in Article 3 (Powers

and Authority Generally) of Subchapter 3 of the Act, in this Management Agreement, and in one

or more of the Board of Visitors policies attached hereto as Exhibits G through L, the

Commonwealth and the College agree that the Commonwealth has expressly granted to the

College all the powers and authority permitted by Article 3 (Powers and Authority Generally) of

Subchapter 3 of the Act.

The Board of Visitors of the College shall at all times by fully and ultimately accountable for the

proper fulfillment of the duties and responsibilities set forth in, and for the appropriate

implementation of, this Management Agreement and the policies adopted by it and attached as

Exhibits G through L. Consistent with this full and ultimate accountability, however, the Board

may, pursuant to its legally permissible procedures, specifically delegate the duties and

responsibilities set forth in this Management Agreement to its officers, committees, and

subcommittees, and, as set forth in the policies adopted by the Board and attached hereto as

Exhibits G through L, to a person or persons within the College.

SECTION 2.1.3. Reimbursement by the College of Certain Costs. By July 1 of each odd-

numbered year, the College shall inform the Secretary of Finance of any intent during the next

biennium to withdraw from any health or other group insurance or risk management program

made available to the College through any agency, body corporate, political subdivision,

authority, or other entity of the Commonwealth, and in which the College is then participating, to

enable the Commonwealth's actuaries to complete an adverse selection analysis of any such

decision and to determine the additional costs to the Commonwealth that would result from any

such withdrawal. If upon notice of such additional costs to the Commonwealth, the College

proceeds to withdraw from such health or other group insurance or risk management program,

the College shall, pursuant to subdivision D 2 c of § 23-38.88, reimburse the Commonwealth for

all such additional costs attributable to such withdrawal as determined by the Commonwealth's

actuaries.

SECTION 2.1.4. Potential Impact on Virginia College Savings Plan. As required by

subdivision D 2 c of § 23-38.88 of the Act, the College has given consideration to potential

future impacts of tuition increases on the Virginia College Savings Plan (§ 23-38.75 of the Code

of Virginia) and has discussed those potential impacts with the Executive Director and staff of

that Plan and with parties in the Administration who participated in the development of this

Management Agreement. The Executive Director of the Plan has provided to the College and

the Commonwealth the Plan’s assumptions underlying the contract pricing of the program.

SECTION 2.1.5. Justification for Deviations from the Virginia Public Procurement Act.

Pursuant to § 23-38.110 of the Act and subject to the provisions of this Management Agreement,

the College may be exempt from the provisions of the Virginia Public Procurement Act (VPPA),

Chapter 43 (§ 2.2-4300 et seq.) of Title 2.2 of the Code of Virginia. Any procurement policies or

rules that deviate from the VPPA must be uniform across all institutions governed by Subchapter

3 of the Act, and the Board of Visitors shall adopt and comply with procurement policies that are

based upon competitive principles and seek competition to the maximum practical degree. The

Policy Governing the Procurement of Goods, Services, Insurance, and Construction, and the

Disposition of Surplus Materials and the Rules Governing Procurement of Goods, Services,

Insurance, and Construction (the Procurement Rules) attached to that Policy as Attachment 1

constitute the policies and uniform deviations from the VPPA required by subsections A and B

of § 23-38.110 of the Act.

Subsection D of § 23-38.110 of the Act requires that the College identify the public, educational,

and operational interests served by any procurement rule or rules that deviate from those in the

VPPA. The adopted Board of Visitors policy on procurement and the Procurement Rules

provide the College with the autonomy to administer its procurement process while fully

adhering to the principle that competition should be sought to the maximum extent feasible. This

autonomy will better position the College to support the requirements of its growing teaching,

research and outreach missions. Greater autonomy in procurement will improve internal

capacity to respond quickly to emergent material and service issues and, therefore, enable the

College to be more efficient and effective in meeting the Commonwealth’s goals for institutions

of higher education. In some instances, costs will be reduced. Taken collectively, the College’s

procurement policies and rules that differ from those required by the VPPA will enhance

procurement “best practices” as they currently are being observed within the higher education

community nationally. Further, these changes will provide efficiencies to both the College and

public sector suppliers.

SECTION 2.1.6. Quantification of Cost Savings. Subsection C of § 23-38.104 of the Act

requires that a Covered Institution include in its management agreement with the Commonwealth

the quantification of cost savings realized as a result of the additional operational flexibility

provided pursuant to Subchapter 3 of the Act. Since this initial Management Agreement with the

Commonwealth has not yet been implemented by the College, the parties agree that the College

is not in a position to quantify any such cost savings at this time, although the College expects

that there will be cost savings resulting from the additional authority granted to the College

pursuant to Subchapter 3 of the Act and that such cost savings will be part of the determinations

made during the reviews, assessments, and audits to be conducted pursuant to Subchapter 3 of

the Act by the Auditor of Public Accounts, the Joint Legislative Audit and Review Commission,

and the State Council of Higher Education for Virginia, and as otherwise described in Section

2.1.1 above.

SECTION 2.1.7. Participation in State Programs. The Commonwealth intends that the College

shall continue to fully participate in, and receive funding support from the many and varied

programs established now or in the future by the Commonwealth to provide support for

Virginia’s public institutions of higher education and for Virginians attending such institutions,

including but not limited to: the state capital outlay and bond financing initiatives undertaken

from time to time by the Commonwealth; the Higher Education Equipment Trust Fund

established pursuant to (§ 23-30.24 et seq.) of the Code of Virginia; the Maintenance Reserve

Fund as provided in the Appropriation Act; the Eminent Scholars program as provided in the

Appropriation Act; the Commonwealth’s various student financial assistance programs; and

other statewide programs or initiatives that exist, or may be established, in support of the

Commonwealth’s higher education institutions, programs, or activities.

SECTION 2.1.8. Implied Authority. Pursuant to subdivision D 1 of § 23-38.88 of the Act, the

only implied authority granted to the College by this Management Agreement is that implied

authority that is actually necessary to carry out the expressed grant of financial or operational

authority contained in this Agreement or in the policies adopted by the College’s Board of

Visitors and attached hereto as Exhibits G through L.

SECTION 2.1.9. Exercise of Authority. The College and the Commonwealth acknowledge and

agree that the execution of this Management Agreement constitutes the conclusion of a process

that, as of the effective date of this Agreement, confers upon the College the enhanced authority

and operating flexibility described above, all of which is in furtherance of the purposes of

Subchapter 3 of the Act. Therefore, without any further conditions or requirements, the College

shall, on and after the effective date of this Management Agreement, be authorized to exercise

the authority conferred upon it by this Management Agreement, the policies adopted by its Board

of Visitors attached hereto as Exhibits G through L, and by Article 3 (Powers and Authority

Generally) of Subchapter 3 of the Act except to the extent that the powers and authority

contained in Article 3 of Subchapter 3 of the Act have been limited by this Management

Agreement or the Board of Visitors policies attached hereto as Exhibits G through L.

The College and the Commonwealth also acknowledge and agree that, pursuant to subsection A

of § 23-38.91 of the Act and consistent with the terms of this Management Agreement, the Board

of Visitors of the College shall assume full responsibility for management of the College, subject

to the requirements and conditions set forth in Subchapter 3 of the Act, the general requirements

for this Management Agreement as provided in § 23-38.88 of the Act, and this Management

Agreement. The Board of Visitors shall be fully accountable for (a) the management of the

College as provided in the Act, (b) meeting the requirements of §§ 2.2-5004, 23-9.2:3.02, and

23-9.6:1.01 of the Code of Virginia, and (c) meeting such other provisions as are set forth in this

Management Agreement.

SECTION 2.2. State Goals.

SECTION 2.2.1. Furthering State Goals. As required for all public institutions of higher

education of the Commonwealth by subsection B of § 23-38.88 of the Act, prior to August 1,

2005, the Board of Visitors of the College adopted the resolution setting forth its commitment to

the Governor and the General Assembly to meet the State goals specified in that subsection B.

In addition to the above commitments, the College commits to furthering these State goals by:

1. In addition to its six-year target of achieving $68 million in external research by 2011-12, the

College, including the Virginia Institute of Marine Science, commits to match from institutional

funds, other than general funds or tuition, on a dollar for dollar basis, any additional research

funds provided by the State in the Appropriation Act above the amount provided from

institutional funds for research in 2005-06.

2. In a concerted effort to provide educational opportunities to Virginia students attending

institutions in the Virginia Community College System (VCCS) and Richard Bland College, the

College commits to work with Virginia Polytechnic Institute and State University (Virginia

Tech) and the University of Virginia to establish a program under which these three institutions

will increase significantly the number of such students transferring to their institutions.

Specifically, pursuant to this program, the College, Virginia Tech and the University of Virginia

collectively commit to enroll as transfer students from VCCS institutions and Richard Bland

College (i) by the 2007-08 fiscal year, not less than approximately 300 new such transfer

students each year over the number enrolled in 2004-05, for a total of approximately 900 such

transfer students each year, and (ii) by the end of the decade, not less than approximately 650

new such transfer students each year over the number enrolled in 2004-05, for a total of

approximately 1,250 such transfer students each year. The three institutions have agreed that

they will mutually determine how to divide the responsibility for these additional transfer

students equitably among themselves.

3. As an institutional priority and obligation, the College commits to the Governor and General

Assembly to work meaningfully and visibly with an economically distressed region or local area

of the Commonwealth, not smaller in size than a city or county, which lags the Commonwealth

in education, income, employment, and other factors. The College commits to establish a formal

partnership with that area to develop jointly a specific action plan that builds on the College’s

programmatic strengths and uses the College’s faculty, staff and, where appropriate, student

expertise to stimulate economic development in the area to make the area more economically

viable, and to improve student achievement and teacher and administrator skill sets in a school,

schools, or the school system in that area. The College shall submit the action plan to the

Governor and General Assembly by no later than December 31, 2006, and shall report to the

Governor and General Assembly by September 1 of each year on its progress in implementing

the action plan during the prior fiscal year.

SECTION 2.2.2. Student Enrollment, Tuition, and Financial Aid. As required by § 23-9.2:3.02

of the Code of Virginia, the College, along with all other public institutions of higher education

of the Commonwealth, has developed and submitted to the State Council of Higher Education

for Virginia (SCHEV) by October 1, 2005, an institution-specific Six-Year Plan addressing the

College’s academic, financial, and enrollment plans for the six-year period of fiscal years 2006-

07 through 2011-12. Subsection A of § 23-9.2:3.02 requires the College to update this Six-Year

Plan by October 1 of each odd-numbered year. Subsection B of § 23-38.97 of the Act requires

that a management agreement address, among other issues, such matters as the College’s in-state

undergraduate student enrollment, its financial aid requirements and capabilities, and its tuition

policy for in-state undergraduate students. These matters are addressed below and in the

College’s Six-Year Plan submitted to SCHEV, and the parties therefore agree that the College’s

Six-Year Plan and the description below meet the requirement of subsection B of § 23-38.97 of

the Act.

Subsection B of § 23-38.104 of the Act requires the Board of Visitors of the College to include

in this Management Agreement the College’s commitment to provide need-based grant aid for

middle- and lower-income Virginia students in a manner that encourages student enrollment and

progression without respect to potential increases in tuition and fees. The College’s commitment

in this regard is clear.

The College of William and Mary, under the leadership of its new president, has set as a goal

increasing the economic and social diversity of the student body at the College. The College is

absolutely committed to assuring access to any qualified and admitted Virginian regardless of

family income. The primary initiative in this area is Gateway William and Mary, which shall be

substantially as described in the remainder of this Section 2.2.2, as may amended from time to

time by the Board of Visitors of the College and reported to the Secretaries of Finance and

Education and the Chairmen of the Senate Committee on Finance and the House Committee on

Appropriations.

At the present time, any needy Virginian at the College receives a combination of grants and

loans so that his or her indebtedness will not exceed one year’s cost of education. This is as

generous as any other public institution in the state or region. Nonetheless, this means that many

needy Virginians, including those with low family incomes, will graduate with more than

$16,000 in indebtedness. This burdensome level of debt may discourage students from lower

SES groups from applying to or accepting admission from the College. And, if they do attend,

their legitimate concern with respect to debt repayment may discourage them from some career

choices like K-12 education or from going on to graduate or professional school for fear of

adding even more to their personal indebtedness. Hence, over the period of the six-year plan, the

College of William and Mary is committed to seeking, from all sources – state-appropriated

scholarship funds, federal, and private support -- sufficient funds to assure that 1) we meet 100%

of financial need for in-state undergraduates and 2) any student whose family’s annual income is

less than $40,000 can spend four years at the College and graduate debt-free. The Gateway

William and Mary initiative is one of the highest priorities for our new president. In addition,

both through our goal to increase the numbers of VCCS graduates who transfer to the College

and aggressive efforts to recruit in-state students from lower SES groups, we hope to double the

number of students who would receive assistance through the Gateway initiative from 280

students to 560 students by the end of the six-year planning period.

As noted, we will continue our commitment to providing additional financial aid through grants

and loans to those Virginians whose families are not in the lower SES groups, but who still have

demonstrable need. Currently approximately 900 in-state undergraduate students receive need-

based aid. The College commits to meeting 100% of the need for these students consistent with

the federal definition of unmet needs over the six year planning period. In addition, as tuition

and fees increase over the period of the six-year plan, we will readjust the level of financial aid

for all students to assure that insufficiency of family resources will not be a barrier to attending

the College.

The Commonwealth and the College agree that this commitment meets the requirements of

subsection B of § 23-38.104 of the Act.

SECTION 2.3. Authority Granted to the Virginia Institute of Marine Science. The Virginia

Institute of Marine Science (hereafter, the Institute) shall receive the benefits of the additional

financial and operational authority granted by this Management Agreement as it and the policies

adopted by the Board of Visitors attached as Exhibits G through L are implemented by the

College on behalf of the Institute, but the Institute shall not receive any additional independent

financial or operational authority as a result of this Management Agreement or the attached

Board of Visitors policies beyond the independent financial and operational authority that it had

prior to the effective date of this Management Agreement or that it may be granted by law in the

future.

SECTION 2.4. Other Law. As provided in subsection B of § 23-38.91 of the Act, the College

shall be governed and administered in the manner provided not only in this Management

Agreement, but also as provided in the Appropriation Act then in effect and the College’s

Enabling Legislation.

SECTION 2.4.1. The Appropriation Act. The Commonwealth and the College agree that,

pursuant to the current terms of the Act and the terms of § 4-11.00 of the 2004-06 Appropriation

Act, if there is a conflict between the provisions of the Appropriation Act and the provisions of

Subchapter 3 of the Act, or this Management Agreement, or the Board of Visitors policies

attached to this Management Agreement as Exhibits G through L, the provisions of the

Appropriation Act shall control, and shall continue to control unless provided otherwise by law.

SECTION 2.4.2. The College’s Enabling Legislation. As provided in subsection C of § 23-

38.91 of the Act, in the event of a conflict between any provision of Subchapter 3 of this Act and

the College’s Enabling Legislation, the Enabling Legislation shall control.

SECTION 2.4.3. Title 2.2 of the Code of Virginia. As provided in subsection B of § 23-38.92

of the Act, except as specifically made inapplicable under Subchapter 3 of the Act and the

express terms of this Management Agreement, the provisions of Title 2.2 relating generally to

the operation, management, supervision, regulation, and control of public institutions of higher

education shall be applicable to the College as provided by the express terms of this

Management Agreement. As further provided in subsection C of § 23-38.92 of the Act, in the

event of conflict between any provision of Title 2.2 and any provision of Subchapter 3 of the Act

as expressed in this Management Agreement, the provisions of this Management Agreement

shall control.

SECTION 2.4.4. Educational Policies of the Commonwealth. As provided in subsection A of §

23-38.93 of the Act, for purposes of §§ 2.2-5004, 23-1.01, 23-1.1, 23-2, 23-2.1, 23-2.2:1, 23-3,

23-4.2, 23-4.3, 23-4.4, 23-7.1:02, 23-7.4, 23-7.4:1, 23-7.4:2, 23-7.4:3, 23-7.5, 23-8.2:1, 23-9.1,

23-9.2, 23-9.2:3, 23-9.2:3.02, 23-9.2:3.1 through 23-9.2:5, 23-9.6:1.01, and Chapter 4.9 (§ 23-

38.75 et seq.) of the Code of Virginia, the College shall remain a public institution of higher

education of the Commonwealth following the effective date of this Management Agreement,

and shall retain the authority granted and any obligations required by such provisions, unless and

until provided otherwise by law other than the Act. In addition, the College shall retain the

authority, and any obligations related to the exercise of such authority, that is granted to

institutions of higher education pursuant to Chapter 1.1 (§ 23-9.3 et seq.), Chapter 3 (§ 23-14 et

seq.), Chapter 3.2 (§ 23-30.23 et seq.), Chapter 3.3 (§ 23-30.39 et seq.), Chapter 4 (§ 23-31 et

seq.), Chapter 4.01 (§ 23-38.10:2 et seq.), Chapter 4.1 (§ 23-38.11 et seq.), Chapter 4.4 (§ 23-

38.45 et seq.), Chapter 4.4:1 (§ 23-38.53:1 et seq.), Chapter 4.4:2 (§ 23-38.53:4 et seq.), Chapter

4.4:3 (§ 23-38.53:11), Chapter 4.4:4 (§ 23-38.53:12 et seq.), Chapter 4.5 (§ 23-38.54 et seq.),

Chapter 4.7 (§ 23-38.70 et seq.), Chapter 4.8 (§ 23-38.72 et seq.), and Chapter 4.9 (§ 23-38.75 et

seq.), unless and until provided otherwise by law other than the Act.

SECTION 2.4.5. Public Access to Information. As provided in § 23-38.95 of the Act, the

College shall continue to be subject to § 2.2-4342 and to the provisions of the Virginia Freedom

of Information Act, Chapter 37 (§ 2.2-3700 et seq.) of Title 2.2 of the Code of Virginia, but shall

be entitled to conduct business pursuant to § 2.2-3709 if expressly named therein and, in all

cases, may conduct business as a “state public body” for purposes of subsection B of § 2.2-3708.

SECTION 2.4.6. Conflicts of Interests. As provided in § 23-38.96 of the Act, the provisions of

the State and Local Government Conflict of Interests Act, Chapter 32 (§ 2.2-3100 et seq.) that

are applicable to officers and employees of a state governmental agency shall continue to apply

to the members of the Board of Visitors of the College and to its Covered Employees.

SECTION 2.4.7. Other Provisions of the Code of Virginia. Other than as specified above, any

other powers and authorities granted to the College pursuant to any other sections of the Code of

Virginia, including other provisions of the Act, are not affected by this Management Agreement

or the Board policies attached hereto as Exhibits G through L.

ARTICLE 3. AMENDMENTS TO, AND RIGHT AND POWER TO VOID OR REVOKE,

MANAGEMENT AGREEMENT.

SECTION 3.1. Amendments. Any change to or deviation from this Management Agreement or

the Board of Visitors policies attached hereto as Exhibits G through L shall be reported to the

Secretaries of Finance, Administration, Education, and Technology and to the Chairmen of the

Senate Committee on Finance and the House Committee on Appropriations and shall be posted

on the College's website. The change or deviation shall become effective unless one of the above

persons notifies the College in writing within 60 days that the change or deviation is substantial

and material. Any substantial and material change or deviation shall require the execution by the

parties of an amendment to this Management Agreement or a new Management Agreement

pursuant to the provisions of subsection D of § 23-38.88 and may lead to the Governor declaring

this Management Agreement to be void pursuant to subdivision D 4 of § 23-38.88 of the Act.

SECTION 3.2. Right and Power to Void, Revoke, or Reinstate Management Agreement.

SECTION 3.2.1. Governor. Pursuant to subdivision D 4 of § 23-38.88, and § 23-38.98, of the

Act, if the Governor makes a written determination that the College is not in substantial

compliance with the terms of this Management Agreement or with the requirements of the Act in

general, (i) the Governor shall provide a copy of that written determination to the Rector of the

Board of Visitors of the College and to the members of the General Assembly, and (ii) the

College shall develop and implement a plan of corrective action, satisfactory to the Governor, for

purposes of coming into substantial compliance with the terms of this Management Agreement

and with the requirements of the Act, as soon as practicable, and shall provide a copy of such

corrective action plan to the members of the General Assembly. If after a reasonable period of

time after the corrective action plan has been implemented by the College, the Governor

determines that the institution is not yet in substantial compliance with this Management

Agreement or the requirements of the Act, the Governor may void this Management Agreement.

Upon the Governor voiding this Management Agreement, the College shall no longer be allowed

to exercise any restructured financial or operational authority pursuant to the provisions of

Subchapter 3 of the Act unless and until the College has entered into a subsequent management

agreement with the Secretary or Secretaries designated by the Governor or the voided

Management Agreement is reinstated by the General Assembly.

SECTION 3.2.2. General Assembly. As provided in subdivision D 4 of § 23-38.88 of the Act,

the General Assembly may reinstate a Management Agreement declared void by the Governor.

Pursuant to § 23-38.98 of the Act, the College's status as a Covered Institution governed by

Subchapter 3 of the Act may be revoked by an act of the General Assembly (i) if the College

fails to meet the requirements of Subchapter 3 of the Act, or (ii) if the College fails to meet the

requirements of this Management Agreement.

ARTICLE 4. GENERAL PROVISIONS.

SECTION 4.1. No Third-Party Beneficiary Status. Nothing in this Agreement, express or

implied, shall be construed as conferring any third-party beneficiary status on any person or

entity.

SECTION 4.2. Sovereign Immunity. Pursuant to subsection E of § 23-38.88 of the Act, the

College and the members of its Board of Visitors, officers, directors, employees, and agents shall

be entitled to the same sovereign immunity to which they would be entitled if the College were

not governed by the Act; provided that the Virginia Tort Claims Act, § 8.01-195.1 et seq. of the

Code of Virginia, and its limitations on recoveries shall remain applicable with respect to the

College.

SECTION 4.3. Term of Agreement. This Management Agreement shall expire at midnight on

June 30, 2010.

WHEREFORE, the foregoing Management Agreement has been executed as of this 15th day of

November, 2005, and shall become effective on the effective date of the legislation enacted into

law providing for the terms of such Agreement.

EXHIBIT G

MANAGEMENT AGREEMENT

BETWEEN

THE COMMONWEALTH OF VIRGINIA

AND

THE COLLEGE OF WILLIAM AND MARY IN VIRGINIA

PURSUANT TO

THE RESTRUCTURED HIGHER EDUCATION

FINANCIAL AND ADMINISTRATIVE OPERATIONS

ACT OF 2005

POLICY GOVERNING CAPITAL PROJECTS

THE RECTOR AND VISITORS OF

THE COLLEGE OF WILLIAM AND MARY IN VIRGINIA

POLICY GOVERNING CAPITAL PROJECTS

I. PREAMBLE.

The Restructured Higher Education Financial and Administrative Operations Act (the Act),

Chapter 4.10 of Title 23 of the Code of Virginia, provides that, upon becoming a Covered

Institution, The College of William and Mary in Virginia may be delegated the authority to

establish its own system for undertaking the implementation of its capital projects. In general,

status as a Covered Institution is designed to replace the post-authorization system of reviews,

approvals, policies and procedures carried out by a variety of central State agencies, and also the

traditional pre-authorization approval process for projects funded entirely with non-general funds

and without any proceeds from State Tax Supported Debt. The College's system for carrying out

its capital outlay process as a Covered Institution is to be governed by policies adopted by the

Board of Visitors. The following provisions of this Policy, together with the Policy Governing

the Procurement of Goods, Services, Insurance, and Construction, and the Disposition of Surplus

Materials adopted by the Board, and the Rules Governing Procurement of Goods, Services,

Insurance, and Construction, which is attached as Attachment 1 to that Policy, constitute the

adopted Board of Visitors policies regarding the College’s capital projects, whether funded by a

state general fund appropriation, State Tax Supported Debt, or funding from other sources.

This Policy is intended to encompass and implement the authority that may be granted to the

College pursuant to Subchapter 3 of the Act. Any other powers and authorities granted to the

College pursuant to the Appropriation Act, or any other sections of the Code of Virginia,

including other provisions of the Act and the College's Enabling Legislation, are not affected by

this Policy.

II. DEFINITIONS.

As used in this policy, the following terms shall have the following meanings, unless the context

requires otherwise:

“Act” means the Restructured Higher Education Financial and Administrative Operations

Act, Chapter 4.10 of Title 23 of the Code of Virginia.

“Board of Visitors” or “Board” means the Rector and Visitors ofTthe College of William

and Mary in Virginia.

“Capital Lease” means a lease that is defined as such within Generally Accepted

Accounting Principles pursuant to the pronouncement of the Financial Accounting Standards

Board.

“Capital Professional Services” means professional engineering, architecture, land

surveying and landscape architecture services related to capital projects.

“Capital project(s)” means the acquisition of any interest in land, including improvements

on the acquired land at the time of acquisition, new construction, improvements or renovations,

and Capital Leases.

“College” means The College of William and Mary in Virginia, (State Agency 204), and

the Virginia Institute of Marine Science, (State Agency 268).

“Covered Institution” means, on and after the Effective Date of its initial Management

Agreement, a public institution of higher education of the Commonwealth of Virginia that has

entered into a management agreement with the Commonwealth to be governed by the provisions

of Subchapter 3 of the Act.

“Enabling Legislation” means those chapters, other than Chapter 4.10, of Title 23 of the

Code of Virginia, as amended, creating, continuing, or otherwise setting forth the powers,

purposes, and missions of the individual public institutions of higher education of the

Commonwealth, and as provided in §§ 2.2-2817.2, 2.2-2905, and 51.1-126.3.

“Major Capital Project(s)” means the acquisition of any interest in land, including

improvements on the acquired land at the time of acquisition, new construction of 5,000 square

feet or greater or costing $1 million or more, improvements or renovations of $1 million or more,

and Capital Leases.

“State Tax Supported Debt” means bonds, notes or other obligations issued under Article

X, Section 9(a), 9(b), or 9(c), or 9(d), if the debit service payments are made or ultimately are to

be made from general government funds, as defined in the December 20, 2004 Report to the

Governor and General Assembly of the Debt Capacity Advisory Committee or as that definition

is amended from time to time.

III. SCOPE OF POLICY.

This Policy applies to the planning and budget development for capital projects, capital project

authorization, and the implementation of capital projects, whether funded by a general fund

appropriation of the General Assembly, proceeds from State Tax Supported Debt, or funding

from other sources.

This Policy provides guidance for 1) the process for developing one or more capital project

programs for the College, 2) authorization of new capital projects, 3) procurement of Capital

Professional Services and construction services, 4) design reviews and code approvals for capital

projects, 5) environmental impact requirements, 6) building demolitions, 7) building and land

acquisitions, 8) building and land dispositions, 9) project management systems, and 10) reporting

requirements.

IV. BOARD OF VISITORS ACCOUNTABILITY AND DELEGATION OF

AUTHORITY.

The Board of Visitors of the College shall at all times be fully and ultimately accountable for the

proper fulfillment of the duties and responsibilities set forth in, and for the appropriate

implementation of, this Policy. Consistent with this full and ultimate accountability, however,

the Board may, pursuant to its legally permissible procedures, specifically delegate either herein

or by separate Board resolution the duties and responsibilities set forth in this Policy to a person

or persons within the College, who, while continuing to be fully accountable for such duties and

responsibilities, may further delegate the implementation of those duties and responsibilities

pursuant to the College’s usual delegation policies and procedures.

V. CAPITAL PROGRAM.

The President shall adopt a system for developing one or more capital project programs that

defines or define the capital needs of the College for a given period of time consistent with the

College’s published Master Plan. This process may or may not mirror the Commonwealth’s

requirements for capital plans. The Board of Visitors shall approve the program for Major

Capital Projects. Major Capital Projects that are to be funded entirely or in part by a general

fund appropriation of the General Assembly or proceeds from State Tax Supported Debt shall

follow the Commonwealth’s requirements for capital plans. The Board may approve

amendments to the program for Major Capital Projects annually or more often if circumstances

warrant.

It shall be College policy that each capital project program shall meet the College’s mission and

institutional objectives, and be appropriately authorized by the College. Moreover, it shall be

College policy that each capital project shall be of a size and scope to provide for the defined

program needs, designed in accordance with all applicable building codes and handicapped

accessibility standards as well as the College’s design guidelines and standards, and costed to

reflect current costs and escalated to the mid-point of anticipated construction.

VI. AUTHORIZATION OF CAPITAL PROJECTS.

The Board of Visitors shall authorize the initiation of each Major Capital Project by approving

its size, scope, budget, and funding. The President, acting through his designee, shall adopt

procedures for approving the size, scope, budget and funding of all other capital projects. Major

Capital Projects that are to be funded entirely or in part by a general fund appropriation of the

General Assembly or proceeds from State Tax Supported Debt, shall require both Board of

Visitors approval and those pre-appropriation approvals of the State’s governmental agencies

then applicable, and shall follow the State’s process for capital budget requests.

It shall be the policy of the College that the implementation of capital projects shall be carried

out so that the capital project as completed is the capital project approved by the Board for Major

Capital Projects and according to the procedures adopted by the President, acting through his

designee, for all other capital projects. The President shall ensure strict adherence to this

requirement.

Accordingly, the budget, size and scope of a capital project shall not be materially changed

beyond the plans and justifications that were the basis for the capital project's approval, either

before or during construction, unless approved in advance as described above. Minor changes

shall be permissible if they are determined by the President, acting through his designee, to be

justified.

Major Capital Projects may be submitted for Board of Visitors authorization at any time but must

include a statement of urgency if not part of the approved Major Capital Project program.

VII. PROCUREMENT OF CAPITAL PROFESSIONAL SERVICES AND

CONSTRUCTION SERVICES.

It shall be the policy of the College that procurements shall result in the purchase of high quality

services and construction at reasonable prices and shall be consistent with the Policy Governing

the Procurement of Goods, Services, Insurance, and Construction, and the Disposition of Surplus

Materials adopted by the Board, and with the Rules Governing Procurement of Goods, Services,

Insurance, and Construction, which is attached as Attachment 1 to that Policy. Specifically, the

College is committed to:

Seeking competition to the maximum practical degree, taking into account the size of the

anticipated procurement, the term of the resulting contract and the likely extent of competition;

Conducting all procurements in a fair and impartial manner and avoiding any impropriety or the

appearance of any impropriety prohibited by State law or College policy;

Making procurement rules clear in advance of any competition;

Providing access to the College’s business to all qualified vendors, firms and contractors, with no

potential bidder or offeror excluded arbitrarily or capriciously, while allowing the flexibility to

engage in cooperative procurements and to meet special needs of the College;

Including in contracts of more than $10,000 the contractor’s agreement not to discriminate

against employees or applicants because of race, religion, color, sex, national origin, age,

disability or other basis prohibited by State law except where there is a bona fide occupational

qualification reasonably necessary to the contractor’s normal operations;

Providing for a non-discriminatory procurement process, and including appropriate and lawful

provisions to effectuate fair and reasonable consideration of women-owned, minority-owned and

small businesses and to promote and encourage a diversity of suppliers.

The President, acting through his designee, is authorized to develop implementing procedures for

the procurement of Capital Professional Services and construction services at the College. The

procedures shall implement this Policy and provide for:

A system of competitive negotiation for Capital Professional Services, including a procedure for

expedited procurement of Capital Professional Services under $50,000, pursuant to (i)

subdivisions 1, 2, and 3 a of the defined term "competitive negotiation" in Rule 4 of the Rules

Governing Procurement of Goods, Services, Insurance, and Construction, and (ii) § 4-5.06 of the

2004-2006 Appropriation Act;

A prequalification procedure for contractors or products;

A procedure for special construction contracting methods, including but not limited to design-

build and construction management contracts; and

A prompt payment procedure.

The College also may enter into cooperative arrangements with other private or public health or

educational institutions, healthcare provider alliances, purchasing organizations or state agencies

where, in the judgment of the College, the purposes of this Policy will be furthered.

VIII. DESIGN REVIEWS AND CODE APPROVALS.

The Board of Visitors shall review the design of all Major Capital Projects and shall provide

final Major Capital Project authorization based on the size, scope and cost estimate provided

with the design. Unless stipulated by the Board of Visitors at the design review, no further

design reviews shall be required. For all capital projects other than Major Capital Projects, the

President, acting through his designee, shall adopt procedures for design review and project

authorization based on the size, scope and cost estimate provided with the design. It shall be the

College’s policy that all capital projects shall be designed and constructed in accordance with

applicable Virginia Uniform Statewide Building Code (VUSBC) standards and the applicable

accessibility code.

The President shall designate a Building Official responsible for building code compliance at the

College, including the Virginia Institute of Marine Science, by either (i) hiring an individual to

be the College Building Official, or (ii) continuing to use the services of the Department of

General Services, Division of Engineering and Buildings, to perform the Building Official

function. If option (i) is selected, the individual hired as the College Building Official shall be a

full-time an employee of the College who has no other assigned duties or responsibilities at the

institution and who is not employed by any firm or business providing facility services to the

College, a registered professional architect or engineer, and certified by the Department of

Housing and Community Development to perform this Building Official function. The College

Building Official shall issue building permits for each capital project required by the VUSBC to

have a building permit, and shall determine the suitability for occupancy of, and shall issue

certifications for building occupancy for, all capital projects requiring such certification. Prior to

issuing any such certification, this individual shall ensure that the VUSBC and accessibility

requirements are met for that capital project and that such capital project has been inspected by

the State Fire Marshal or his designee as required. When serving as the College Building

Official, such individual shall organizationally report directly and exclusively to the Board of

Visitors. If the College hires its own College Building Official, it shall fulfill the code review

requirement by maintaining a review unit of licensed professional architects or engineers

supported by resources and staff who are certified by the Department of Housing and

Community Development in accordance with § 36-137 of the Code of Virginia for such purpose

and who shall review plans, specifications and documents for compliance with building codes

and standards and perform required inspections of work in progress and the completed capital

project. No individual licensed professional architect or engineer hired under the College's

personnel system as a member of the review unit or contracted with to perform these functions

shall also perform other building code-related design, construction, facilities-related project

management or facilities management functions for the College on the same capital project.

IX. ENVIRONMENTAL IMPACT REPORTS.

It shall be the policy of the College to assess the environmental, historic preservation, and

conservation impacts of all capital projects and to minimize and otherwise mitigate all adverse

impacts to the extent practicable. The College shall develop a procedure for the preparation and

approval of environmental impact reports for capital projects, in accordance with State

environmental, historic preservation, and conservation requirements generally applicable to

capital projects otherwise meeting the definition of Major Capital Projects but, pursuant to § 23-

38.109 C 1 of the Act, with a cost of $300,000 or more.

X. BUILDING DEMOLITIONS.

It shall be the policy of the College to consider the environmental and historical aspects of any

proposed demolitions. The Board of Visitors shall be responsible for approving demolition

requests. The College shall develop a procedure for the preparation and review of demolition

requests, including any necessary reviews by the Department of Historic Resources and the Art

and Architectural Review Board in accordance with State historic preservation requirements

generally applicable to capital projects in the Commonwealth. Further, for any property that was

acquired or constructed with funding from a general fund appropriation of the General Assembly

or from proceeds from State Tax Supported Debt, general laws applicable to State owned

property shall apply.

XI. BUILDING OR LAND ACQUISITIONS.

It is the policy of the College that capital projects involving building or land acquisition shall be

subjected to thorough inquiry and due diligence prior to closing on the acquisition of such real

property. The President, acting through his designee, shall ensure that the project management

system implemented pursuant to Section XIII below provides for a review and analysis of all

pertinent matters relating to the acquisition of buildings and land as any prudent purchaser would

perform to the end that any building or land acquired by the College shall be suitable for its

intended purpose, that the acquisition can be made without substantial risk of liability to the

College and that the cost of the real property to be acquired, together with any contemplated

development thereof, shall be such that compliance with the provisions of Section VI of this

Policy is achieved. In addition, the President, acting through his designee, shall ensure that,

where feasible and appropriate to do so, the following specific policies pertaining to the

acquisition of buildings or land for capital projects are carried out.

A. Environmental and Land Use Considerations.

It is the policy of the College to reasonably cooperate with each locality affected by the

acquisition. Such cooperation shall include but not be limited to furnishing any information that

the locality may reasonably request and reviewing any requests by the locality with regard to any

such acquisition. The College shall consider the zoning and comprehensive plan designation by

the locality of the building or land and surrounding parcels, as well as any designation by State

or federal agencies of historically or archeologically significant areas on the land. Nothing

herein shall be construed as requiring the College to comply with local zoning laws and

ordinances.

B. Infrastructure and Site Condition.

The President, acting through his designee, shall ensure that, in the case of capital projects

involving the acquisition of buildings or land, the project management systems implemented

under Section XIII below provide for a review of the following matters prior to acquisition of the

building or land: that any land can be developed for its intended purpose without extraordinary

cost; that an environmental engineer has been engaged by the College to provide an assessment

of any environmental conditions on the land; that there is adequate vehicular ingress and egress

to serve the contemplated use of the building or land; that utilities and other services to the land

are adequate or can reasonably be provided or have been provided in the case of building

acquisitions; and that the condition and grade of the soils have been examined to determine if

any conditions exist that would require extraordinary site work or foundation systems.

C. Title and Survey.

A survey shall be prepared for any real property acquired, and an examination of title to the real

property shall be conducted by a licensed attorney or, in the alternative, a commitment for title

insurance shall be procured from a title insurance company authorized to do business in the

Commonwealth. Based upon the survey and title examination or report, the President, acting

through his designee, shall conclude, prior to acquisition of the real property, that title thereto

will be conveyed to the College in fee simple, free and clear of all liens, encumbrances,

covenants, restrictions, easements or other matters that may have a significant adverse effect

upon the College's ability to own, occupy, convey or develop the real property.

D. Appraisal.

An appraisal shall be conducted of the real property to be acquired to determine its fair market

value and the consistency of the fair market value with the price agreed upon by the College.

XII. BUILDING OR LAND DISPOSITIONS.

The Board of Visitors shall approve the disposition of any building or land. Disposition of land

or buildings, the acquisition or construction of which was funded entirely or in part by a general

fund appropriation of the General Assembly or proceeds from State Tax Supported Debt, shall

require both Board of Visitors approval and other approvals in accordance with general law

applicable to State-owned property and with the College’s Enabling Legislation.

XIII. PROJECT MANAGEMENT SYSTEMS.

The President, acting through his designee, shall implement one or more systems for the

management of capital projects for the College. The systems may include the delegation of

project management authority to appropriate College officials, including a grant of authority to

such officials to engage in further delegation of authority as the President deems appropriate.

The project management systems for capital projects shall be designed to ensure that such

projects comply with the provisions of this Policy and other Board of Visitors policies applicable

to closely related subjects such as selection of architects or policies applicable to College

buildings and grounds.

The project management systems may include one or more reporting systems applicable to

capital projects whereby College officials responsible for the management of such projects

provide appropriate and timely reports to the President on the status of such projects during

construction.

XIV. REPORTING REQUIREMENTS.

In addition to complying with any internal reporting systems contained in the College’s project

management systems, as described in Section XIII above, the College shall comply with State

reporting requirements for those Major Capital Projects funded entirely or in part by a general

fund appropriation by the General Assembly or State Tax Supported Debt. Additionally, if any

capital project constructs improvements on land, or renovates property, that originally was

acquired or constructed in whole or in part with a general fund appropriation for that purpose or

proceeds from State Tax Supported Debt, and such improvements or renovations are undertaken

entirely with funds not appropriated by the General Assembly and, if the cost of such

improvements or renovations is reasonably expected to exceed $2 million, the decision to

undertake such improvements or renovations shall be communicated as required by § 23-38.109

C 3 of the Act. As a matter of routine, the President, acting through his designee, shall report to

the Department of General Services on the status of such capital projects at the initiation of the

project, prior to the commencement of construction, and at the time of acceptance of any such

capital project.

ATTACHMENT 1

Rules Governing Procurement of Goods, Services, Insurance, and Construction

by a Public Institution of Higher Education of the Commonwealth of Virginia

Governed by Subchapter 3 of the

Restructured Higher Education Financial and Administrative Operations Act,

Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the Code of Virginia

In accordance with the provisions of the Restructured Higher Education Financial and

Administrative Operations Act (the Act), Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the

Code of Virginia, and in particular § 23-38.110 of the Act, the governing body of a public

institution of higher education of the Commonwealth of Virginia that has entered into a

Management Agreement with the Commonwealth pursuant to Subchapter 3 of the Act, has

adopted the following Rules Governing Procurement of Goods, Services, Insurance, and

Construction to govern the procurement of goods, services, insurance, and construction by the

Institution, excluding the University of Virginia Medical Center:

§ 1. Purpose. –

The purpose of these Rules is to enunciate the public policies pertaining to procurement of good,

services, insurance, and construction by the Institution from nongovernmental sources, to include

governmental procurement that may or may not result in monetary consideration for either party.

These Rules shall apply whether the consideration is monetary or nonmonetary and regardless of

whether the Institution, the contractor, or some third party is providing the consideration.

§ 2. Scope of Procurement Authority. –

Subject to these Rules, and the Institution’s continued substantial compliance with the terms and

conditions of its Management Agreement with the Commonwealth pursuant to § 23-38.88(D)(4)

and the requirements of Chapter 4.10 of the Act, the Institution shall have and shall be authorized

to have and exercise all of the authority relating to procurement of goods, services, insurance,

and construction, including but not limited to capital outlay-related procurement and information

technology-related procurement, that Institutions are authorized to exercise pursuant to

Subchapter 3 of the Restructuring Act.

§ 3. Competition is the Priority. –

To the end that the Institution shall obtain high quality goods and services at reasonable cost, that

all procurement procedures be conducted in an open, fair and impartial manner with avoidance

of any impropriety or appearance of impropriety, that all qualified vendors have access to the

Institution’s business and that no offeror be arbitrarily or capriciously excluded, it is the intent of

the governing body of the Institution that competition be sought to the maximum feasible degree,

that procurement procedures involve openness and administrative efficiency, that individual

public bodies enjoy broad flexibility in fashioning details of such competition, that the rules

governing contract awards be made clear in advance of the competition, that specifications

reflect the procurement needs of the purchasing body rather than being drawn to favor a

particular vendor, and that the purchaser and vendor freely exchange information concerning

what is sought to be procured and what is offered. The Institution may consider best value

concepts when procuring goods and nonprofessional services, but not construction or

professional services. Professional services will be procured using a qualification-based

selection process. The criteria, factors, and basis for consideration of best value and the process

for the consideration of best value shall be as stated in the procurement solicitation.

§ 4. Definitions. –

As used in these Rules:

“Affiliate” means an individual or business that controls, is controlled by, or is under

common control with another individual or business. A person controls an entity if the person

owns, directly or indirectly, more than 10% of the voting securities of the entity. For the

purposes of this definition “voting security” means a security that (i) confers upon the holder the

right to vote for the election of members of the board of directors or similar governing body of

the business or (ii) is convertible into, or entitles the holder to receive, upon its exercise, a

security that confers such a right to vote. A general partnership interest shall be deemed to be a

voting security.

“Best value,” as predetermined in the solicitation, means the overall combination of

quality, price, and various elements of required services that in total are optimal relative to the

Institution’s needs.

“Business” means any type of corporation, partnership, limited liability company,

association, or sole proprietorship operated for profit.

“Competitive negotiation” is a method of contractor selection that includes the following

elements:

1. Issuance of a written Request for Proposal indicating in general terms that

which is sought to be procured, specifying the factors that will be used in evaluating the

proposal and containing or incorporating by reference the other applicable contractual

terms and conditions, including any unique capabilities or qualifications that will be

required of the contractor.

2. Public notice of the Request for Proposal at least 10 days prior to the date set

for receipt of proposals by publication in a newspaper or newspapers of general

circulation in the area in which the contract is to be performed so as to provide reasonable

notice to the maximum number of offerors that can be reasonably anticipated to submit

proposals in response to the particular request. Public notice also shall be published on

the Department of General Services’ central electronic procurement website and may be

published on other appropriate websites. In addition, proposals may be solicited directly

from potential contractors.

3. a. Procurement of professional services. The procurement of professional

services for capital projects shall be conducted using a qualification-based selection

process. The Institution shall engage in individual discussions with two or more offerors

deemed fully qualified, responsible and suitable on the basis of initial responses and with

emphasis on professional competence, to provide the required services. Repetitive

informal interviews shall be permissible. The offerors shall be encouraged to elaborate

on their qualifications and performance data or staff expertise pertinent to the proposed

project, as well as alternative concepts. The Request for Proposal shall not, however,

request that offerors furnish estimates of man-hours or cost for services. At the

discussion stage, the Institution may discuss nonbinding estimates of total project costs,

including, but not limited to, life-cycle costing, and where appropriate, nonbinding

estimates of price for services. Proprietary information from competing offerors shall not

be disclosed to the public or to competitors. At the conclusion of discussion, outlined in

this subdivision, on the basis of evaluation factors published in the Request for Proposal

and all information developed in the selection process to this point, the Institution shall

select in the order of preference two or more offerors whose professional qualifications

and proposed services are deemed most meritorious. Negotiations shall then be

conducted, beginning with the offeror ranked first. If a contract satisfactory and

advantageous to the Institution can be negotiated at a price considered fair and

reasonable, the award shall be made to that offeror. Otherwise, negotiations with the

offeror ranked first shall be formally terminated and negotiations conducted with the

offeror ranked second, and so on until such a contract can be negotiated at a fair and

reasonable price. Should the Institution determine in writing and in its sole discretion

that only one offeror is fully qualified, or that one offeror is clearly more highly qualified

and suitable than the others under consideration, a contract may be negotiated and

awarded to that offeror.

A contract for architectural or professional engineering services relating to construction

projects may be negotiated by the Institution, for multiple projects provided (i) the

projects require similar experience and expertise, and (ii) the nature of the projects is

clearly identified in the Request for Proposal. Under such contract, (a) the fair and

reasonable prices, as negotiated, shall be used in determining the cost of each project

performed, (b) the sum of all projects performed in one contract term shall be as set in the

Request for Proposal; and (c) the project fee of any single project shall not exceed the

term limit as set in the Request for Proposal. Any unused amounts from any contract

term may be carried forward. Competitive negotiations for such contracts may result in

awards to more than one offeror provided the Request for Proposal stated the potential for

a multi-vendor award.

Multiphase professional services contracts satisfactory and advantageous to the

Institution for environmental, location, design and inspection work regarding

construction of infrastructure projects may be negotiated and awarded based on

qualifications at a fair and reasonable price for the first phase only, when completion of

the earlier phases is necessary to provide information critical to the negotiation of a fair

and reasonable price for succeeding phases. Prior to the procurement of any such

contract, the Institution shall state the anticipated intended total scope of the project and

determine in writing that the nature of the work is such that the best interests of such

Institution require awarding the contract.

b. Procurement of other than professional services. Selection shall be made of

two or more offerors deemed to be fully qualified and best suited among those submitting

proposals, on the basis of the factors involved in the Request for Proposal, including price

if so stated in the Request for Proposal. Negotiations shall then be conducted with each of

the offerors so selected. Price shall be considered, but need not be the sole determining

factor. After negotiations have been conducted with each offeror so selected, the

Institution shall select the offeror which, in its opinion, has made the best proposal, and

shall award the contract to that offeror. When the terms and conditions of multiple

awards are so provided in the Request for Proposal, awards may be made to more than

one offeror. Should the Institution determine in writing and in its sole discretion that

only one offeror has made the best proposal, a contract may be negotiated and awarded to

that offeror.

“Competitive sealed bidding” is a method of contractor selection, other than for

professional services, which includes the following elements:

1. Issuance of a written Invitation to Bid containing or incorporating by reference

the specifications and contractual terms and conditions applicable to the procurement.

Unless the Institution has provided for prequalification of bidders, the Invitation to Bid

shall include a statement of any requisite qualifications of potential contractors. When it

is impractical to prepare initially a purchase description to support an award based on

prices, an Invitation to Bid may be issued requesting the submission of unpriced offers to

be followed by an Invitation to Bid limited to those bidders whose offers have been

qualified under the criteria set forth in the first solicitation.

2. Public notice of the Invitation to Bid at least 10 days prior to the date set for

receipt of bids by publication on the Department of General Services’ central electronic

procurement website. Public notice also may be published in a newspaper of general

circulation or on other appropriate websites, or both. In addition, bids may be solicited

directly from potential contractors. Any additional solicitations shall include businesses

selected from a list made available by the Department of Minority Business Enterprise.

3. Public opening and announcement of all bids received.

4. Evaluation of bids based upon the requirements set forth in the invitation,

which may include special qualifications of potential contractors, life-cycle costing, value

analysis, and any other criteria such as inspection, testing, quality, workmanship,

delivery, and suitability for a particular purpose, which are helpful in determining

acceptability.

5. Award to the lowest responsive and responsible bidder. When the terms and

conditions of multiple awards are so provided in the Invitation to Bid, awards may be

made to more than one bidder.

“Construction” means building, altering, repairing, improving or demolishing any

structure, building or highway, and any draining, dredging, excavation, grading or similar work

upon real property.

“Construction management contract” means a contract in which a party is retained by the

owner to coordinate and administer contracts for construction services for the benefit of the

owner, and may also include, if provided in the contract, the furnishing of construction services

to the owner.

“Covered Institution” or “Institution” means, on and after the effective date of the initial

management agreement with the Commonwealth of Virginia, a public institution of higher

education of the Commonwealth that has entered into a management agreement with the

Commonwealth to be governed by the provisions of Subchapter 3 of the Restructuring Act.

“Design-build contract” means a contract between the Institution and another party in

which the party contracting with the Institution agrees to both design and build the structure,

roadway or other item specified in the contract.

“Goods” means all material, equipment, supplies, and printing, including information

technology and telecommunications goods such as automated data processing hardware and

software.

“Informality” means a minor defect or variation of a bid or proposal from the exact

requirements of the Invitation to Bid, or the Request for Proposal, which does not affect the

price, quality, quantity or delivery schedule for the goods, services or construction being

procured.

“Multiphase professional services contract” means a contract for the providing of

professional services where the total scope of work of the second or subsequent phase of the

contract cannot be specified without the results of the first or prior phase of the contract.

“Nonprofessional services” means any services not specifically identified as professional

services in the definition of professional services and includes small construction projects valued

not over $1 million; provided that subdivision 3a of the definition of “competitive negotiation” in

this section shall still apply to professional services for such small construction projects.

“Potential bidder or offeror” for the purposes of §§ 50 and 54 of these Rules means a

person who, at the time the Institution negotiates and awards or proposes to award a contract, is

engaged in the sale or lease of goods, or the sale of services, insurance or construction, of the

type to be procured under the contract, and who at such time is eligible and qualified in all

respects to perform that contract, and who would have been eligible and qualified to submit a bid

or proposal had the contract been procured through competitive sealed bidding or competitive

negotiation.

“Professional services” means work performed by an independent contractor within the

scope of the practice of accounting, actuarial services, architecture, land surveying, landscape

architecture, law, dentistry, medicine, optometry, pharmacy or professional engineering.

“Public body” means any legislative, executive or judicial body, agency, office,

department, authority, post, commission, committee, institution, board or political subdivision

created by law to exercise some sovereign power or to perform some governmental duty, and

empowered by law to undertake the activities described in these Rules.

“Public contract” means an agreement between the Institution and a nongovernmental

source that is enforceable in a court of law.

“Responsible bidder” or “offeror” means a person who has the capability, in all respects,

to perform fully the contract requirements and the moral and business integrity and reliability

that will assure good faith performance, and who has been prequalified, if required.

“Responsive bidder” means a person who has submitted a bid that conforms in all

material respects to the Invitation to Bid.

“Restructuring Act” or “Act” means the Restructured Higher Education Financial and

Administrative Operations Act, Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the Code of

Virginia.

“Reverse auctioning” means a procurement method wherein bidders are invited to bid on

specified goods or nonprofessional services through real-time electronic bidding, with the award

being made to the lowest responsive and responsible bidder. During the bidding process,

bidders’ prices are revealed and bidders shall have the opportunity to modify their bid prices for

the duration of the time period established for bid opening.

“Rules” means these Rules Governing Procurement of Goods, Services, Insurance, and

Construction adopted by the governing body of the Covered Institution.

“Services” means any work performed by an independent contractor wherein the service

rendered does not consist primarily of acquisition of equipment or materials, or the rental of

equipment, materials and supplies.

“Sheltered workshop” means a work-oriented rehabilitative facility with a controlled

working environment and individual goals that utilizes work experience and related services for

assisting the handicapped person to progress toward normal living and a productive vocational

status.

§ 5. Methods of procurement. –

A. All public contracts with nongovernmental contractors for the purchase or lease of goods, or

for the purchase of services, insurance, or construction, shall be awarded after competitive sealed

bidding, or competitive negotiation as provided in this section, unless otherwise authorized by

law.

B. Professional services shall be procured by competitive negotiation. Qualification-based

selection shall be used for design services.

C. Goods, services, or insurance may be procured by competitive negotiation.

D. Construction may be procured only by competitive sealed bidding, except that competitive

negotiation may be used in the following instances upon a determination made in advance by the

Institution and set forth in writing that competitive sealed bidding is either not practicable or not

fiscally advantageous to the public, which writing shall document the basis for this

determination:

1. By the Institution on a fixed price design-build basis or construction management basis

under § 7;

2. By the Institution for the construction, alteration, repair, renovation or demolition of

buildings; or

3. By the Institution for the construction of highways and any draining, dredging,

excavation, grading or similar work upon real property.

E. Upon a determination in writing that there is only one source practicably available for that

which is to be procured, a contract may be negotiated and awarded to that source without

competitive sealed bidding or competitive negotiation. The writing shall document the basis for

this determination. The Institution shall issue a written notice stating that only one source was

determined to be practicably available, and identifying that which is being procured, the

contractor selected, and the date on which the contract was or will be awarded. This notice shall

be posted in a designated public area, which may be the Department of General Services’

website for the Commonwealth’s central electronic procurement system, or published in a

newspaper of general circulation on the day the Institution awards or announces its decision to

award the contract, whichever occurs first. Public notice shall also be published on the

Department of General Services' website for the Commonwealth’s central electronic

procurement system and may be published on other appropriate websites.

F. In case of emergency, a contract may be awarded without competitive sealed bidding or

competitive negotiation; however, such procurement shall be made with such competition as is

practicable under the circumstances. A written determination of the basis for the emergency and

for the selection of the particular contractor shall be included in the contract file. The Institution

shall issue a written notice stating that the contract is being awarded on an emergency basis, and

identifying that which is being procured, the contractor selected, and the date on which the

contract was or will be awarded. This notice shall be posted in a designated public area, which

may be the Department of General Services’ website for the Commonwealth’s central electronic

procurement system, or published in a newspaper of general circulation on the day the Institution

awards or announces its decision to award the contract, whichever occurs first, or as soon

thereafter as is practicable. Public notice may also be published on the Department of General

Services' website for the Commonwealth’s central electronic procurement system and other

appropriate websites.

G. The Institution may establish purchase procedures, if adopted in writing, not requiring

competitive sealed bids or competitive negotiation for single or term contracts for goods and

services other than professional services if the aggregate or the sum of all phases is not expected

to exceed $50,000; however, such small purchase procedures shall provide for competition

wherever practicable.

H. The Institution may establish purchase procedures, if adopted in writing, not requiring

competitive negotiation for single or term contracts for professional services if the aggregate or

the sum of all phases is not expected to exceed $50,000; however such small purchase

procedures shall provide for competition wherever practicable.

I. Upon a determination made in advance by the Institution and set forth in writing that the

purchase of goods, products or commodities from a public auction sale is in the best interests of

the public, such items may be purchased at the auction, including online public auctions. The

writing shall document the basis for this determination.

J. The purchase of goods or nonprofessional services, but not construction or professional

services, may be made by reverse auctioning.

§ 6. Cooperative procurement. –

A. In circumstances where the Institution determines and documents that statewide contracts for

goods and services, including information technology and telecommunications goods and

services, do not provide goods and services to the Institution that meet its business goals and

objectives, the Institution is authorized to participate in, sponsor, conduct, or administer a

cooperative procurement arrangement on behalf of or in conjunction with public bodies, public

or private health or educational institutions, other public or private organizations or entities,

including public-private partnerships, charitable organizations, health care provider alliances or

purchasing organizations or entities, or with public agencies or institutions or group purchasing

organizations of the several states, territories of the United States, or the District of Columbia,

for the purpose of combining requirements to effect cost savings or reduce administrative

expense in any acquisition of goods and services, other than professional services. The

Institution may purchase from any authority, department, agency, institution, city, county, town,

or other political subdivision of the Commonwealth's contract even if it did not participate in the

request for proposal or invitation to bid, if the request for proposal or invitation to bid specified

that the procurement was being conducted on behalf of other public bodies. In such instances,

deviation from the procurement procedures set forth in these Rules and the administrative

policies and procedures established to implement these Rules shall be permitted.

Notwithstanding all of the above, use of cooperative contracts shall conform to the business

requirements of the Commonwealth’s electronic procurement system, including the requirement

for payment of applicable fees. Nothing herein shall prohibit the payment by direct or indirect

means of any administrative fee that will allow for participation in any such arrangement.

B. In circumstances where statewide contracts for goods and services, including information

technology and telecommunications goods and services, do not provide goods and services to

meet the Institution’s business goals and objectives, and as authorized by the United States

Congress and consistent with applicable federal regulations, and provided the terms of the

contract permit such purchases:

1. The Institution may purchase goods and nonprofessional services, from a United States

General Services Administration contract or a contract awarded by any other agency of the

United States government; and

2. The Institution may purchase telecommunications and information technology goods

and nonprofessional services from a United States General Services Administration contract or a

contract awarded by any other agency of the United States government.

§ 7. Design-build or construction management contracts authorized. –

A. Notwithstanding any other provisions of law, the Institution may enter into contracts on a

fixed price design-build basis or construction management basis in accordance with the

provisions of this section.

B. Procurement of construction by the design-build or construction management method shall be

a two-step competitive negotiation process. In the first step, offerors shall be requested to submit

their qualifications. Based upon the information submitted and any other relevant information

which the Commonwealth may obtain, no more than five offerors deemed most suitable for the

project shall be selected by the Commonwealth and requested to submit proposals.

§ 8. Modification of the contract. –

A. A contract awarded by the Institution may include provisions for modification of the contract

during performance, but no fixed-price contract may be increased by more than 25% of the

amount of the contract or $50,000, whichever is greater, without the advance written approval of

the Institution’s president or his designee. In no event may the amount of any contract, without

adequate consideration, be increased for any purpose, including, but not limited to, relief of an

offeror from the consequences of an error in its bid or offer.

B. The Institution may extend the term of an existing contract for services to allow completion of

any work undertaken but not completed during the original term of the contract.

C. Nothing in this section shall prevent the Institution from placing greater restrictions on

contract modifications.

§ 9. Discrimination prohibited; participation of small, women- and minority-owned

business. –

A. In the solicitation or awarding of contracts, the Institution shall not discriminate against a

bidder or offeror because of race, religion, color, sex, national origin, age, disability, or any other

basis prohibited by state law relating to discrimination in employment. Whenever solicitations

are made, the Institution shall include businesses selected from a list made available by the

Department of Minority Business Enterprise.

B. The Institution shall establish programs consistent with this section to facilitate the

participation of small businesses and businesses owned by women and minorities in procurement

transactions. The programs established shall be in writing and shall include cooperation with the

Department of Minority Business Enterprise, the United States Small Business Administration,

and other public or private agencies. The Institution shall submit annual progress reports on

minority business procurement to the Department of Minority Business Enterprise.

C. Whenever there exists (i) a rational basis for small business enhancement or (ii) a persuasive

analysis that documents a statistically significant disparity between the availability and

utilization of women- and minority-owned businesses, the Governor is by law authorized and

encouraged to require the Institution to implement appropriate enhancement or remedial

measures consistent with prevailing law.

D. In the solicitation or awarding of contracts, the Institution shall not discriminate against a

bidder or offeror because the bidder or offeror employs ex-offenders unless it has made a written

determination that employing ex-offenders on the specific contract is not in its best interest.

§ 10. Employment discrimination by contractor prohibited; required contract provisions. –

The Institution shall include in every contract of more than $10,000 the following provisions:

1. During the performance of this contract, the contractor agrees as follows:

a. The contractor will not discriminate against any employee or applicant for

employment because of race, religion, color, sex, national origin, age, disability, or other

basis prohibited by state law relating to discrimination in employment, except where

there is a bona fide occupational qualification reasonably necessary to the normal

operation of the contractor. The contractor agrees to post in conspicuous places,

available to employees and applicants for employment, notices setting forth the

provisions of this nondiscrimination clause.

b. The contractor, in all solicitations or advertisements for employees placed by or

on behalf of the contractor, will state that such contractor is an equal opportunity

employer.

c. Notices, advertisements and solicitations placed in accordance with federal law,

rule or regulation shall be deemed sufficient for the purpose of meeting the requirements

of this section.

2. The contractor will include the provisions of the foregoing paragraphs a, b and c in

every subcontract or purchase order of over $10,000, so that the provisions will be binding upon

each subcontractor or vendor.

§ 11. Drug-free workplace to be maintained by contractor; required contract provisions. –

The Institution shall include in every contract over $10,000 the following provisions:

During the performance of this contract, the contractor agrees to (i) provide a drug-free

workplace for the contractor's employees; (ii) post in conspicuous places, available to employees

and applicants for employment, a statement notifying employees that the unlawful manufacture,

sale, distribution, dispensation, possession, or use of a controlled substance or marijuana is

prohibited in the contractor's workplace and specifying the actions that will be taken against

employees for violations of such prohibition; (iii) state in all solicitations or advertisements for

employees placed by or on behalf of the contractor that the contractor maintains a drug-free

workplace; and (iv) include the provisions of the foregoing clauses in every subcontract or

purchase order of over $10,000, so that the provisions will be binding upon each subcontractor or

vendor.

For the purposes of this section, "drug-free workplace" means a site for the ”performance of

work done in connection with a specific contract awarded to a contractor in accordance with

these Rules, the employees of whom are prohibited from engaging in the unlawful manufacture,

sale, distribution, dispensation, possession or use of any controlled substance or marijuana

during the performance of the contract.

§ 12. Use of brand names. –

Unless otherwise provided in the Invitation to Bid, the name of a certain brand, make or

manufacturer shall not restrict bidders to the specific brand, make or manufacturer named and

shall be deemed to convey the general style, type, character, and quality of the article desired.

Any article that the Institution in its sole discretion determines to be the equal of that specified,

considering quality, workmanship, economy of operation, and suitability for the purpose

intended, shall be accepted.

§ 13. Comments concerning specifications. –

The Institution shall establish procedures whereby comments concerning specifications or other

provisions in Invitations to Bid or Requests for Proposal can be received and considered prior to

the time set for receipt of bids or proposals or award of the contract.

§ 14. Prequalification generally; prequalification for construction. –

A. Prospective contractors may be prequalified for particular types of supplies, services,

insurance or construction, and consideration of bids or proposals limited to prequalified

contractors. Any prequalification procedure shall be established in writing and sufficiently in

advance of its implementation to allow potential contractors a fair opportunity to complete the

process.

B. Any prequalification of prospective contractors for construction by the Institution shall be

pursuant to a prequalification process for construction projects adopted by the Institution. The

process shall be consistent with the provisions of this section.

The application form used in such process shall set forth the criteria upon which the

qualifications of prospective contractors will be evaluated. The application form shall request of

prospective contractors only such information as is appropriate for an objective evaluation of all

prospective contractors pursuant to such criteria. The form shall allow the prospective contractor

seeking prequalification to request, by checking the appropriate box, that all information

voluntarily submitted by the contractor pursuant to this subsection shall be considered a trade

secret or proprietary information subject to the provisions of subsection D of § 34 of these Rules.

In all instances in which the Institution requires prequalification of potential contractors for

construction projects, advance notice shall be given of the deadline for the submission of

prequalification applications. The deadline for submission shall be sufficiently in advance of the

date set for the submission of bids for such construction so as to allow the procedures set forth in

this subsection to be accomplished.

At least 30 days prior to the date established for submission of bids or proposals under the

procurement of the contract for which the prequalification applies, the Institution shall advise in

writing each contractor who submitted an application whether that contractor has been

prequalified. In the event that a contractor is denied prequalification, the written notification to

the contractor shall state the reasons for the denial of prequalification and the factual basis of

such reasons.

A decision by the Institution denying prequalification under the provisions of this subsection

shall be final and conclusive unless the contractor appeals the decision as provided in § 54 of

these Rules.

C. The Institution may deny prequalification to any contractor only if the Institution finds one of

the following:

1. The contractor does not have sufficient financial ability to perform the contract that

would result from such procurement. If a bond is required to ensure performance of a contract,

evidence that the contractor can acquire a surety bond from a corporation included on the United

States Treasury list of acceptable surety corporations in the amount and type required by the

Institution shall be sufficient to establish the financial ability of the contractor to perform the

contract resulting from such procurement;

2. The contractor does not have appropriate experience to perform the construction

project in question;

3. The contractor or any officer, director or owner thereof has had judgments entered

against him within the past 10 years for the breach of contracts for governmental or

nongovernmental construction, including, but not limited to, design-build or construction

management;

4. The contractor has been in substantial noncompliance with the terms and conditions of

prior construction contracts with the Institution without good cause. If the Institution has not

contracted with a contractor in any prior construction contracts, the Institution may deny

prequalification if the contractor has been in substantial noncompliance with the terms and

conditions of comparable construction contracts with another public body without good cause.

The Institution may not utilize this provision to deny prequalification unless the facts underlying

such substantial noncompliance were documented in writing in the prior construction project file

and such information relating thereto given to the contractor at that time, with the opportunity to

respond;

5. The contractor or any officer, director, owner, project manager, procurement manager

or chief financial official thereof has been convicted within the past 10 years of a crime related to

governmental or nongovernmental construction or contracting, including, but not limited to, a

violation of (i) Article 6 (§ 2.2-4367 et seq.) of Chapter 43 of Title 2.2 of the Code of Virginia,

(ii) the Virginia Governmental Frauds Act (§ 18.2-498.1 et seq.), (iii) Chapter 4.2 (§ 59.1-68.6 et

seq.) of Title 59.1, or (iv) any substantially similar law of the United States or another state;

6. The contractor or any officer, director or owner thereof is currently debarred pursuant

to an established debarment procedure from bidding or contracting by any public body, agency

of another state or agency of the federal government; and

7. The contractor failed to provide to the Institution in a timely manner any information

requested by the Institution relevant to subdivisions 1 through 6 of this subsection.

§ 15. Negotiation with lowest responsible bidder. –

Unless canceled or rejected, a responsive bid from the lowest responsible bidder shall be

accepted as submitted, except that if the bid from the lowest responsible bidder exceeds available

funds, the Institution may negotiate with the apparent low bidder to obtain a contract price within

available funds. However, the negotiation may be undertaken only under conditions and

procedures described in writing and approved by the Institution prior to issuance of the Invitation

to Bid and summarized therein.

§ 16. Cancellation, rejection of bids; waiver of informalities. –

A. An Invitation to Bid, a Request for Proposal, any other solicitation, or any and all bids or

proposals, may be canceled or rejected. The reasons for cancellation or rejection shall be made

part of the contract file. The Institution shall not cancel or reject an Invitation to Bid, a Request

for Proposal, any other solicitation, bid or proposal pursuant to this section solely to avoid

awarding a contract to a particular responsive and responsible bidder or offeror.

B. The Institution may waive informalities in bids.

§ 17. Exclusion of insurance bids prohibited. –

Notwithstanding any other provision of law, no insurer licensed to transact the business of

insurance in the Commonwealth or approved to issue surplus lines insurance in the

Commonwealth shall be excluded from presenting an insurance bid proposal to the Institution in

response to a request for proposal or an invitation to bid. Nothing in this section shall preclude

the Institution from debarring a prospective insurer pursuant to § 18.

§ 18. Debarment. –

Prospective contractors may be debarred from contracting for particular types of supplies,

services, insurance or construction, for specified periods of time. Any debarment procedure shall

be established in writing by the Institution. Any debarment procedure may provide for debarment

on the basis of a contractor’s unsatisfactory performance for the Institution.

§ 19. Purchase programs for recycled goods; Institution responsibilities. –

A. The Institution may implement a purchase program for recycled goods and may coordinate its

efforts so as to achieve the goals and objectives set forth in §§ 10.1-1425.6, 10.1-1425.7, and

10.1-1425.8 of the Code of Virginia and §§ 20 and 22 of these Rules.

B. The Department of Environmental Quality, with advice from the Virginia Recycling Markets

Development Council, shall advise the Institution concerning the designation of recycled goods.

§ 20. Preference for Virginia products with recycled content and for Virginia firms. –

A. In the case of a tie bid, preference shall be given to goods produced in Virginia, goods or

services or construction provided by Virginia persons, firms or corporations; otherwise the tie

shall be decided by lot.

B. Whenever any bidder is a resident of any other state and such state under its laws allows a

resident contractor of that state a preference, a like preference may be allowed by the Institution

to the lowest responsive and responsible bidder who is a resident of Virginia.

C. Notwithstanding the provisions of subsections A and B, in the case of a tie bid in instances

where goods are being offered, and existing price preferences have already been taken into

account, preference shall be given to the bidder whose goods contain the greatest amount of

recycled content.

§ 21. Preference for Virginia coal used in the Institution. –

In determining the award of any contract for coal to be purchased for use in the Institution with

state funds, the Institution shall procure using competitive sealed bidding and shall award to the

lowest responsive and responsible bidder offering coal mined in Virginia so long as its bid price

is not more than 4% greater than the bid price of the low responsive and responsible bidder

offering coal mined elsewhere.

§ 22. Preference for recycled paper and paper products used by the Institution. –

A. In determining the award of any contract for paper and paper products to be purchased for use

by the Institution, it shall competitively procure recycled paper and paper products of a quality

suitable for the purpose intended, so long as the price is not more than 10% greater than the price

of the low responsive and responsible bidder or offeror offering a product that does not qualify

under subsection B.

B. For purposes of this section, recycled paper and paper products means any paper or paper

products meeting the EPA Recommended Content Standards as defined in 40 C.F.R. Part 247.

§ 23. Withdrawal of bid due to error. –

A. A bidder for a public construction contract, other than a contract for construction or

maintenance of public highways, may withdraw his bid from consideration if the price bid was

substantially lower than the other bids due solely to a mistake in the bid, provided the bid was

submitted in good faith, and the mistake was a clerical mistake as opposed to a judgment

mistake, and was actually due to an unintentional arithmetic error or an unintentional omission of

a quantity of work, labor or material made directly in the compilation of a bid, which

unintentional arithmetic error or unintentional omission can be clearly shown by objective

evidence drawn from inspection of original work papers, documents and materials used in the

preparation of the bid sought to be withdrawn.

If a bid contains both clerical and judgment mistakes, a bidder may withdraw his bid from

consideration if the price bid would have been substantially lower than the other bids due solely

to the clerical mistake, that was an unintentional arithmetic error or an unintentional omission of

a quantity of work, labor or material made directly in the compilation of a bid that shall be

clearly shown by objective evidence drawn from inspection of original work papers, documents

and materials used in the preparation of the bid sought to be withdrawn.

One of the following procedures for withdrawal of a bid shall be selected by the Institution and

stated in the advertisement for bids: (i) the bidder shall give notice in writing of his claim of right

to withdraw his bid within two business days after the conclusion of the bid opening procedure

and shall submit original work papers with such notice; or (ii) the bidder shall submit to the

Institution or designated official his original work papers, documents and materials used in the

preparation of the bid within one day after the date fixed for submission of bids. The work

papers shall be delivered by the bidder in person or by registered mail at or prior to the time

fixed for the opening of bids. In either instance, the work papers, documents and materials may

be considered as trade secrets or proprietary information subject to the conditions of subsection F

of § 34 of these Rules. The bids shall be opened one day following the time fixed by the

Institution for the submission of bids. Thereafter, the bidder shall have two hours after the

opening of bids within which to claim in writing any mistake as defined herein and withdraw his

bid. The contract shall not be awarded by the Institution until the two-hour period has elapsed.

The mistake shall be proved only from the original work papers, documents and materials

delivered as required herein.

B. The Institution may establish procedures for the withdrawal of bids for other than construction

contracts.

C. No bid shall be withdrawn under this section when the result would be the awarding of the

contract on another bid of the same bidder or of another bidder in which the ownership of the

withdrawing bidder is more than 5%.

D. If a bid is withdrawn in accordance with this section, the lowest remaining bid shall be

deemed to be the low bid.

E. No bidder who is permitted to withdraw a bid shall, for compensation, supply any material or

labor to or perform any subcontract or other work agreement for the person or firm to whom the

contract is awarded or otherwise benefit, directly or indirectly, from the performance of the

project for which the withdrawn bid was submitted.

F. If the Institution denies the withdrawal of a bid under the provisions of this section, it shall

notify the bidder in writing stating the reasons for its decision and award the contract to such

bidder at the bid price, provided such bidder is a responsible and responsive bidder.

§ 24. Contract Pricing Arrangements. –

A. Public contracts may be awarded on a fixed price or cost reimbursement basis, or on any other

basis that is not prohibited by these Rules.

B. Except in case of emergency affecting the public health, safety or welfare, no public contract

shall be awarded on the basis of cost plus a percentage of cost.

C. A policy or contract of insurance or prepaid coverage having a premium computed on the

basis of claims paid or incurred, plus the insurance carrier’s administrative costs and retention

stated in whole or part as a percentage of such claims, shall not be prohibited by this section.

§ 25. Workers' compensation requirements for construction contractors and

subcontractors. –

A. No contractor shall perform any work on a construction project of the Institution unless he (i)

has obtained, and continues to maintain for the duration of the work, workers' compensation

coverage required pursuant to the provisions of Chapter 8 (§ 65.2-800 et seq.) of Title 65.2 of the

Code of Virginia, and (ii) provides prior to the award of contract, on a form furnished by the

Institution, evidence of such coverage.

B. The Department of General Services shall provide the form to the Institution. Failure of the

Institution to provide the form prior to the award of contract shall waive the requirements of

clause (ii) of subsection A.

C. No subcontractor shall perform any work on a construction project of the Institution unless he

has obtained, and continues to maintain for the duration of such work, workers' compensation

coverage required pursuant to the provisions of Chapter 8 (§ 65.2-800 et seq.) of Title 65.2 of the

Code of Virginia.

§ 26. Retainage on construction contracts. –

A. In any contract issued by the Institution for construction that provides for progress payments

in installments based upon an estimated percentage of completion, the contractor shall be paid at

least 95% of the earned sum when payment is due, with no more than 5% being retained to

ensure faithful performance of the contract. All amounts withheld may be included in the final

payment.

B. Any subcontract for a public project that provides for similar progress payments shall be

subject to the provisions of this section.

§ 27. Public construction contract provisions barring damages for unreasonable delays

declared void. –

A. Any provision contained in any public construction contract of the Institution that purports to

waive, release, or extinguish the rights of a contractor to recover costs or damages for

unreasonable delay in performing such contract, either on his behalf or on behalf of his

subcontractor if and to the extent the delay is caused by acts or omissions of the Institution, its

agents or employees and due to causes within their control shall be void and unenforceable as

against public policy.

B. Subsection A shall not be construed to render void any provision of a public construction

contract awarded by the Institution that:

1. Allows the recovery of that portion of delay costs caused by the acts or omissions of

the contractor, or its subcontractors, agents or employees;

2. Requires notice of any delay by the party claiming the delay;

3. Provides for liquidated damages for delay; or

4. Provides for arbitration or any other procedure designed to settle contract disputes.

C. A contractor making a claim against the Institution for costs or damages due to the alleged

delaying of the contractor in the performance of its work under any public construction contract

of the Institution shall be liable to the Institution and shall pay it for a percentage of all costs

incurred by the Institution in investigating, analyzing, negotiating, litigating and arbitrating the

claim, which percentage shall be equal to the percentage of the contractor's total delay claim that

is determined through litigation or arbitration to be false or to have no basis in law or in fact.

D. If the Institution denies a contractor's claim for costs or damages due to the alleged delaying

of the contractor in the performance of work under any public construction contract for the

Institution, it shall be liable to and shall pay such contractor a percentage of all costs incurred by

the contractor to investigate, analyze, negotiate, litigate and arbitrate the claim. The percentage

paid by the Institution shall be equal to the percentage of the contractor's total delay claim for

which the Institution's denial is determined through litigation or arbitration to have been made in

bad faith.

§ 28. Bid bonds. –

A. Except in cases of emergency, all bids or proposals for construction contracts in excess of $1

million shall be accompanied by a bid bond from a surety company selected by the bidder that is

authorized to do business in Virginia, as a guarantee that if the contract is awarded to the bidder,

he will enter into the contract for the work mentioned in the bid. The amount of the bid bond

shall not exceed 5% of the amount bid.

B. No forfeiture under a bid bond shall exceed the lesser of (i) the difference between the bid for

which the bond was written and the next low bid, or (ii) the face amount of the bid bond.

C. Nothing in this section shall preclude the Institution from requiring bid bonds to accompany

bids or proposals for construction contracts anticipated to be less than $1 million.

§ 29. Performance and payment bonds. –

A. Upon the award by the Institution of any (i) public construction contract exceeding $1 million

awarded to any prime contractor or (ii) public construction contract exceeding $1 million

awarded to any prime contractor requiring the performance of labor or the furnishing of materials

for buildings, structures or other improvements to real property owned by the Institution, the

contractor shall furnish to the Institution the following bonds:

1. Except for transportation-related projects, a performance bond in the sum of the

contract amount conditioned upon the faithful performance of the contract in strict conformity

with the plans, specifications and conditions of the contract. For transportation-related projects,

such bond shall be in a form and amount satisfactory to the Institution.

2. A payment bond in the sum of the contract amount. The bond shall be for the

protection of claimants who have and fulfill contracts to supply labor or materials to the prime

contractor to whom the contract was awarded, or to any subcontractors, in furtherance of the

work provided for in the contract, and shall be conditioned upon the prompt payment for all

materials furnished or labor supplied or performed in the furtherance of the work.

"Labor or materials" shall include public utility services and reasonable rentals of

equipment, but only for periods when the equipment rented is actually used at the site.

B. Each of the bonds shall be executed by one or more surety companies selected by the

contractor that are authorized to do business in Virginia.

C. The bonds shall be payable to the Commonwealth of Virginia naming also the

Institution.

D. Each of the bonds shall be filed with the Institution, or a designated office or official

thereof.

E. Nothing in this section shall preclude the Institution from requiring payment or

performance bonds for construction contracts below $1 million.

F. Nothing in this section shall preclude the contractor from requiring each subcontractor

to furnish a payment bond with surety thereon in the sum of the full amount of the contract with

such subcontractor conditioned upon the payment to all persons who have and fulfill contracts

that are directly with the subcontractor for performing labor and furnishing materials in the

prosecution of the work provided for in the subcontract.

§ 30. Alternative forms of security. –

A. In lieu of a bid, payment, or performance bond, a bidder may furnish a certified check or cash

escrow in the face amount required for the bond.

B. If approved by the Institution’s General Counsel or his equivalent, a bidder may furnish to the

Institution a personal bond, property bond, or bank or savings institution's letter of credit on

certain designated funds in the face amount required for the bid, payment or performance bond.

Approval shall be granted only upon a determination that the alternative form of security

proffered affords protection to the Institution equivalent to a corporate surety's bond.

§ 31. Bonds on other than construction contracts. –

The Institution may require bid, payment, or performance bonds for contracts for goods or

services if provided in the Invitation to Bid or Request for Proposal.

§ 32. Action on performance bond. –

No action against the surety on a performance bond shall be brought by the Institution unless

brought within one year after (i) completion of the contract, including the expiration of all

warranties and guarantees, or (ii) discovery of the defect or breach of warranty that gave rise to

the action.

§ 33. Actions on payment bonds; waiver of right to sue. –

A. Subject to the provisions of subsection B, any claimant who has performed labor or furnished

material in accordance with the contract documents in furtherance of the work provided in any

contract for which a payment bond has been given, and who has not been paid in full before the

expiration of 90 days after the day on which the claimant performed the last of the labor or

furnished the last of the materials for which he claims payment, may bring an action on the

payment bond to recover any amount due him for the labor or material. The obligee named in

the bond need not be named a party to the action.

B. Any claimant who has a direct contractual relationship with any subcontractor but who has no

contractual relationship, express or implied, with the contractor, may bring an action on the

contractor's payment bond only if he has given written notice to the contractor within 180 days

from the day on which the claimant performed the last of the labor or furnished the last of the

materials for which he claims payment, stating with substantial accuracy the amount claimed and

the name of the person for whom the work was performed or to whom the material was

furnished. Notice to the contractor shall be served by registered or certified mail, postage

prepaid, in an envelope addressed to such contractor at any place where his office is regularly

maintained for the transaction of business. Claims for sums withheld as retainages with respect

to labor performed or materials furnished, shall not be subject to the time limitations stated in

this subsection.

C. Any action on a payment bond shall be brought within one year after the day on which the

person bringing such action last performed labor or last furnished or supplied materials.

D. Any waiver of the right to sue on the payment bond required by this section shall be void

unless it is in writing, signed by the person whose right is waived, and executed after such person

has performed labor or furnished material in accordance with the contract documents.

§ 34. Public inspection of certain records. –

A. Except as provided in this section, all proceedings, records, contracts and other public records

relating to procurement transactions shall be open to the inspection of any citizen, or any

interested person, firm or corporation, in accordance with the Virginia Freedom of Information

Act (§ 2.2-3700 et seq.).

B. Cost estimates relating to a proposed procurement transaction prepared by or for the

Institution shall not be open to public inspection.

C. Any competitive sealed bidding bidder, upon request, shall be afforded the opportunity to

inspect bid records within a reasonable time after the opening of all bids but prior to award,

except in the event that the Institution decides not to accept any of the bids and to reopen the

contract. Otherwise, bid records shall be open to public inspection only after award of the

contract.

D. Any competitive negotiation offeror, upon request, shall be afforded the opportunity to

inspect proposal records within a reasonable time after the evaluation and negotiations of

proposals are completed but prior to award, except in the event that the Institution decides not to

accept any of the proposals and to reopen the contract. Otherwise, proposal records shall be

open to public inspection only after award of the contract.

E. Any inspection of procurement transaction records under this section shall be subject to

reasonable restrictions to ensure the security and integrity of the records.

F. Trade secrets or proprietary information submitted by a bidder, offeror or contractor in

connection with a procurement transaction or prequalification application submitted pursuant to

subsection B of § 14 shall not be subject to the Virginia Freedom of Information Act (§ 2.2-3700

et seq.); however, the bidder, offeror or contractor shall (i) invoke the protections of this section

prior to or upon submission of the data or other materials, (ii) identify the data or other materials

to be protected, and (iii) state the reasons why protection is necessary.

§ 35. Exemption for certain transactions. –

A. The provisions of these Rules shall not apply to:

1. The selection of services related to the management and investment of the Institution’s

endowment funds, endowment income, or gifts pursuant to § 23-76.1. However, selection of

these services shall be governed by the Uniform Management of Institutional Funds Act (§ 55-

268.1 et seq.) as required by § 23-76.1.

2. The purchase of items for resale at retail bookstores and similar retail outlets operated

by the Institution. However, such purchase procedures shall provide for competition where

practicable.

3. Procurement of any construction or planning and design services for construction by

the Institution when (i) the planning, design or construction is $50,000 or less or (ii) the

Institution is obligated to conform to procurement procedures that are established by federal

statutes or regulations, whether or not those federal procedures are in conformance with the

provisions of these Rules.

4. The University of Virginia Medical Center.

5. The purchase of goods and services by the Institution when such purchases are made

under a remedial plan established by the Governor pursuant to subsection C of § 9 of these

Rules.

B. Where a procurement transaction involves the expenditure of federal assistance or contract

funds, the receipt of which is conditioned upon compliance with mandatory requirements in

federal laws or regulations not in conformance with the provisions of these Rules, the Institution

may comply with such federal requirements, notwithstanding the provisions of these Rules, only

upon the written determination of the Institution’s President or his designee that acceptance of

the grant or contract funds under the applicable conditions is in the public interest. Such

determination shall state the specific provision of these Rules in conflict with the conditions of

the grant or contract.

§ 36. Permitted contracts with certain religious organizations; purpose; limitations. –

A. The Opportunity Reconciliation Act of 1996, P.L. 104-193, authorizes public bodies to enter

into contracts with faith-based organizations for the purposes described in this section on the

same basis as any other nongovernmental source without impairing the religious character of

such organization, and without diminishing the religious freedom of the beneficiaries of

assistance provided under this section.

B. For the purposes of this section, "faith-based organization" means a religious organization that

is or applies to be a contractor to provide goods or services for programs funded by the block

grant provided pursuant to the Personal Responsibility and Work Opportunity Reconciliation Act

of 1996, P.L. 104-193.

C. The Institution, in procuring goods or services, or in making disbursements pursuant to this

section, shall not (i) discriminate against a faith-based organization on the basis of the

organization's religious character or (ii) impose conditions that (a) restrict the religious character

of the faith-based organization, except as provided in subsection F, or (b) impair, diminish, or

discourage the exercise of religious freedom by the recipients of such goods, services, or

disbursements.

D. The Institution shall ensure that all invitations to bid, requests for proposals, contracts, and

purchase orders prominently display a nondiscrimination statement indicating that it does not

discriminate against faith-based organizations.

E. A faith-based organization contracting with the Institution (i) shall not discriminate against

any recipient of goods, services, or disbursements made pursuant to a contract authorized by this

section on the basis of the recipient's religion, religious belief, refusal to participate in a religious

practice, or on the basis of race, age, color, gender or national origin and (ii) shall be subject to

the same rules as other organizations that contract with public bodies to account for the use of

the funds provided; however, if the faith-based organization segregates public funds into separate

accounts, only the accounts and programs funded with public funds shall be subject to audit by

the Institution. Nothing in clause (ii) shall be construed to supercede supersede or otherwise

override any other applicable state law.

F. Consistent with the Personal Responsibility and Work Opportunity Reconciliation Act of

1996, P.L. 104-193, funds provided for expenditure pursuant to contracts with public bodies

shall not be spent for sectarian worship, instruction, or proselytizing; however, this prohibition

shall not apply to expenditures pursuant to contracts, if any, for the services of chaplains.

G. Nothing in this section shall be construed as barring or prohibiting a faith-based organization

from any opportunity to make a bid or proposal or contract on the grounds that the faith-based

organization has exercised the right, as expressed in 42 U.S.C. (§ 2000e-1 et seq.), to employ

persons of a particular religion.

H. If an individual, who applies for or receives goods, services, or disbursements provided

pursuant to a contract between the Institution and a faith-based organization, objects to the

religious character of the faith-based organization from which the individual receives or would

receive the goods, services, or disbursements, the Institution shall offer the individual, within a

reasonable period of time after the date of his objection, access to equivalent goods, services, or

disbursements from an alternative provider.

The Institution shall provide to each individual who applies for or receives goods, services, or

disbursements provided pursuant to a contract between the Institution and a faith-based

organization a notice in bold face type that states: "Neither the Institution's selection of a

charitable or faith-based provider of services nor the expenditure of funds under this contract is

an endorsement of the provider's charitable or religious character, practices, or expression. No

provider of services may discriminate against you on the basis of religion, a religious belief, or

your refusal to actively participate in a religious practice. If you object to a particular provider

because of its religious character, you may request assignment to a different provider. If you

believe that your rights have been violated, please discuss the complaint with your provider or

notify the appropriate person as indicated in this form."

§ 37. Exemptions from competition for certain transactions. –

The Institution may enter into contracts without competition, as that term is described in

subsections A through J of § 5 (Methods of procurement) of these Rules, for:

1. The purchase of goods or services that are produced or performed by or related to:

a. Persons, or in schools or workshops, under the supervision of the Virginia

Department for the Blind and Vision Impaired;

b. Nonprofit sheltered workshops or other nonprofit organizations that offer

transitional or supported employment services serving the handicapped;

c. Private educational institutions; or

d. Other public educational institutions.

2. Speakers and performing artists;

3. Memberships and Association dues;

4. Sponsored research grant sub-awards and contract sub-awards, not to include the

purchase of goods or services by the Institution;

5. Group travel in foreign countries;

6. Conference facilities and services;

7. Participation in intercollegiate athletic tournaments and events including team travel

and lodging, registration and tournament fees;

8. Royalties; or

9. The purchase of legal services, provided that the Office of the Attorney General has

been consulted, or expert witnesses or other services associated with litigation or regulatory

proceedings; or

10. Maintenance contract renewals for scientific research equipment and software,

provided that the Institution has posted the renewal to eVA and documented that there was only

one response or less and such documentation includes a statement signed by the buyer indicating

that no firm other than the original manufacturer/developer offers the service.

§ 38. Exemptions from competitive sealed bidding and competitive negotiation for certain

transactions; limitations. –

The Institution may enter into contracts for insurance or electric utility service without

competitive sealed bidding or competitive negotiation if purchased through an association of

which the Institution is a member if the association was formed and is maintained for the purpose

of promoting the interest and welfare of and developing close relationships with similar public

bodies, provided such association has procured the insurance or electric utility services by use of

competitive principles and provided that the Institution has made a determination in advance

after reasonable notice to the public and set forth in writing that competitive sealed bidding and

competitive negotiation are not fiscally advantageous to the public. The writing shall document

the basis for this determination.

§ 39. Definitions. –

As used in §§ 39 through 46, unless the context requires a different meaning:

"Contractor" means the entity that has a direct contract with the Institution.

"Debtor" means any individual, business, or group having a delinquent debt or account

with any state agency that obligation has not been satisfied or set aside by court order or

discharged in bankruptcy.

"Payment date" means either (i) the date on which payment is due under the terms of a

contract for provision of goods or services; or (ii) if such date has not been established by

contract, (a) 30 days after receipt of a proper invoice by the Institution or its agent or (b) 30 days

after receipt of the goods or services by the Institution.

"Subcontractor" means any entity that has a contract to supply labor or materials to the

contractor to whom the contract was awarded or to any subcontractor in the performance of the

work provided for in such contract.

§ 40. Exemptions. –

The provisions of §§ 39 through 46 shall not apply to the late payment provisions contained in

any public utility tariffs prescribed by the State Corporation Commission.

§ 41. Retainage to remain valid. –

Notwithstanding the provisions of §§ 39 through 46, the provisions of § 26 relating to retainage

shall remain valid.

§ 42. Prompt payment of bills by the Institution. –

A. The Institution shall promptly pay for the completely delivered goods or services by the

required payment date.

Payment shall be deemed to have been made when offset proceedings have been instituted, as

authorized under the Virginia Debt Collection Act (§ 2.2-4800 et seq.) of the Code of Virginia.

B. Separate payment dates may be specified for contracts under which goods or services are

provided in a series of partial deliveries or executions to the extent that such contract provides

for separate payment for such partial delivery or execution.

§ 43. Defect or impropriety in the invoice or goods and/or services received. –

In instances where there is a defect or impropriety in an invoice or in the goods or services

received, the Institution shall notify the supplier of the defect or impropriety, if the defect or

impropriety would prevent payment by the payment date. The notice shall be sent within 15

days after receipt of the invoice or the goods or services.

§ 44. Date of postmark deemed to be date payment is made. –

In those cases where payment is made by mail, the date of postmark shall be deemed to be the

date payment is made for purposes of these Rules.

§ 45. Payment clauses to be included in contracts. –

Any contract awarded by the Institution shall include:

1. A payment clause that obligates the contractor to take one of the two following actions

within seven days after receipt of amounts paid to the contractor by the Institution for work

performed by the subcontractor under that contract:

a. Pay the subcontractor for the proportionate share of the total payment received

from the Institution attributable to the work performed by the subcontractor under that

contract; or

b. Notify the Institution and subcontractor, in writing, of his intention to withhold

all or a part of the subcontractor's payment with the reason for nonpayment.

2. A payment clause that requires (i) individual contractors to provide their social security

numbers and (ii) proprietorships, partnerships, and corporations to provide their federal employer

identification numbers.

3. An interest clause that obligates the contractor to pay interest to the subcontractor on

all amounts owed by the contractor that remain unpaid after seven days following receipt by the

contractor of payment from the Institution for work performed by the subcontractor under that

contract, except for amounts withheld as allowed in subdivision 1.

4. An interest rate clause stating, "Unless otherwise provided under the terms of this

contract, interest shall accrue at the rate of 1% per month."

Any such contract awarded shall further require the contractor to include in each of its

subcontracts a provision requiring each subcontractor to include or otherwise be subject to the

same payment and interest requirements with respect to each lower-tier subcontractor.

A contractor's obligation to pay an interest charge to a subcontractor pursuant to the

payment clause in this section shall not be construed to be an obligation of the Institution. A

contract modification shall not be made for the purpose of providing reimbursement for the

interest charge. A cost reimbursement claim shall not include any amount for reimbursement for

the interest charge.

§ 46. Interest penalty; exceptions. –

A. Interest shall accrue, at the rate determined pursuant to subsection B, on all amounts owed by

the Institution to a vendor that remain unpaid after seven days following the payment date.

However, nothing in this section shall affect any contract providing for a different rate of

interest, or for the payment of interest in a different manner.

B. The rate of interest charged the Institution pursuant to subsection A shall be the base rate on

corporate loans (prime rate) at large United States money center commercial banks as reported

daily in the publication entitled The Wall Street Journal. Whenever a split prime rate is

published, the lower of the two rates shall be used. However, in no event shall the rate of interest

charged exceed the rate of interest established pursuant to § 58.1-1812 of the Code of Virginia.

C. Notwithstanding subsection A, no interest penalty shall be charged when payment is delayed

because of disagreement between the Institution and a vendor regarding the quantity, quality or

time of delivery of goods or services or the accuracy of any invoice received for the goods or

services. The exception from the interest penalty provided by this subsection shall apply only to

that portion of a delayed payment that is actually the subject of the disagreement and shall apply

only for the duration of the disagreement.

D. This section shall not apply to § 26 pertaining to retainage on construction contracts, during

the period of time prior to the date the final payment is due. Nothing contained herein shall

prevent a contractor from receiving interest on such funds under an approved escrow agreement.

E. Notwithstanding subsection A, no interest penalty shall be paid to any debtor on any payment,

or portion thereof, withheld pursuant to the Comptroller's Debt Setoff Program, as authorized by

the Virginia Debt Collection Act (§ 2.2-4800 et seq.) of the Code of Virginia), commencing with

the date the payment is withheld. If, as a result of an error, a payment or portion thereof is

withheld, and it is determined that at the time of setoff no debt was owed to the Commonwealth,

then interest shall accrue at the rate determined pursuant to subsection B on amounts withheld

that remain unpaid after seven days following the payment date.

§ 47. Ineligibility. –

A. Any bidder, offeror or contractor refused permission to participate, or disqualified from

participation, in public contracts to be issued by the Institution shall be notified in writing. Prior

to the issuance of a written determination of disqualification or ineligibility, the Institution shall

(i) notify the bidder in writing of the results of the evaluation, (ii) disclose the factual support for

the determination, and (iii) allow the bidder an opportunity to inspect any documents that relate

to the determination, if so requested by the bidder within five business days after receipt of the

notice.

Within 10 business days after receipt of the notice, the bidder may submit rebuttal information

challenging the evaluation. The Institution shall issue its written determination of

disqualification or ineligibility based on all information in the possession of the Institution,

including any rebuttal information, within five business days of the date the Institution received

such rebuttal information.

If the evaluation reveals that the bidder, offeror or contractor should be allowed permission to

participate in the public contract, the Institution shall cancel the proposed disqualification action.

If the evaluation reveals that the bidder should be refused permission to participate, or

disqualified from participation, in the public contract, the Institution shall so notify the bidder,

offeror or contractor. The notice shall state the basis for the determination, which shall be final

unless the bidder appeals the decision within 10 days after receipt of the notice by invoking

administrative procedures meeting the standards of § 55 of these Rules, if available, or in the

alternative by instituting legal action as provided in § 54.

B. If, upon appeal, it is determined that the action taken was arbitrary or capricious, or not in

accordance with the Constitution of Virginia, applicable state law or regulations, the sole relief

shall be restoration of eligibility.

§ 48. Appeal of denial of withdrawal of bid. –

A. A decision denying withdrawal of bid under the provisions of § 23 of these Rules shall be

final and conclusive unless the bidder appeals the decision within 10 days after receipt of the

decision by invoking administrative procedures meeting the standards of § 55, if available, or in

the alternative by instituting legal action as provided in § 54.

B. If no bid bond was posted, a bidder refused withdrawal of a bid under the provisions of § 23,

prior to appealing, shall deliver to the Institution a certified check or cash bond in the amount of

the difference between the bid sought to be withdrawn and the next low bid. Such security shall

be released only upon a final determination that the bidder was entitled to withdraw the bid.

C. If, upon appeal, it is determined that the decision refusing withdrawal of the bid was not (i) an

honest exercise of discretion, but rather was arbitrary or capricious or (ii) in accordance with the

Constitution of Virginia, applicable state law or regulation, or the terms or conditions of the

Invitation to Bid, the sole relief shall be withdrawal of the bid.

§ 49. Determination of nonresponsibility. –

A. Following public opening and announcement of bids received on an Invitation to Bid, the

Institution shall evaluate the bids in accordance with element 4 of the definition of "Competitive

sealed bidding" in § 4 of these Rules. At the same time, the Institution shall determine whether

the apparent low bidder is responsible. If the Institution so determines, then it may proceed with

an award in accordance with element 5 of the definition of "Competitive sealed bidding" in § 4.

If the Institution determines that the apparent low bidder is not responsible, it shall proceed as

follows:

1. Prior to the issuance of a written determination of nonresponsibility, the Institution

shall (i) notify the apparent low bidder in writing of the results of the evaluation, (ii) disclose the

factual support for the determination, and (iii) allow the apparent low bidder an opportunity to

inspect any documents that relate to the determination, if so requested by the bidder within five

business days after receipt of the notice.

2. Within 10 business days after receipt of the notice, the bidder may submit rebuttal

information challenging the evaluation. The Institution shall issue its written determination of

responsibility based on all information in the possession of the Institution, including any rebuttal

information, within five business days of the date the Institution received the rebuttal

information. At the same time, the Institution shall notify, with return receipt requested, the

bidder in writing of its determination.

3. Such notice shall state the basis for the determination, which shall be final unless the

bidder appeals the decision within 10 days after receipt of the notice by invoking administrative

procedures meeting the standards of § 55 of these Rules, if available, or in the alternative by

instituting legal action as provided in § 54.

The provisions of this subsection shall not apply to procurements involving the prequalification

of bidders and the rights of any potential bidders under such prequalification to appeal a decision

that such bidders are not responsible.

B. If, upon appeal pursuant to § 54 or 55 of these Rules, it is determined that the decision of the

Institution was not (i) an honest exercise of discretion, but rather was arbitrary or capricious or

(ii) in accordance with the Constitution of Virginia, applicable state law or regulation, or the

terms or conditions of the Invitation to Bid, and the award of the contract in question has not

been made, the sole relief shall be a finding that the bidder is a responsible bidder for the

contract in question or directed award as provided in subsection A of § 54, or both.

If it is determined that the decision of the Institution was not an honest exercise of discretion, but

rather was arbitrary or capricious or not in accordance with the Constitution of Virginia,

applicable state law or regulation, or the terms or conditions of the Invitation to Bid, and an

award of the contract has been made, the relief shall be as set forth in subsection B of § 54 of

these Rules.

C. A bidder contesting a determination that he is not a responsible bidder for a particular contract

shall proceed under this section, and may not protest the award or proposed award under the

provisions of § 50 of these Rules.

D. Nothing contained in this section shall be construed to require the Institution, when procuring

by competitive negotiation, to furnish a statement of the reasons why a particular proposal was

not deemed to be the most advantageous.

§ 50. Protest of award or decision to award. –

A. Any bidder or offeror, who desires to protest the award or decision to award a contract shall

submit the protest in writing to the Institution, or an official designated by the Institution, no later

than 10 days after the award or the announcement of the decision to award, whichever occurs

first. Public notice of the award or the announcement of the decision to award shall be given by

the Institution in the manner prescribed in the terms or conditions of the Invitation to Bid or

Request for Proposal. Any potential bidder or offeror on a contract negotiated on a sole source or

emergency basis who desires to protest the award or decision to award such contract shall submit

the protest in the same manner no later than 10 days after posting or publication of the notice of

such contract as provided in § 5 of these Rules. However, if the protest of any actual or potential

bidder or offeror depends in whole or in part upon information contained in public records

pertaining to the procurement transaction that are subject to inspection under § 34 of these Rules,

then the time within which the protest shall be submitted shall expire 10 days after those records

are available for inspection by such bidder or offeror under § 34, or at such later time as provided

in this section. No protest shall lie for a claim that the selected bidder or offeror is not a

responsible bidder or offeror. The written protest shall include the basis for the protest and the

relief sought. The Institution or designated official shall issue a decision in writing within 10

days stating the reasons for the action taken. This decision shall be final unless the bidder or

offeror appeals within 10 days of receipt of the written decision by invoking administrative

procedures meeting the standards of § 55 of these Rules, if available, or in the alternative by

instituting legal action as provided in § 54. Nothing in this subsection shall be construed to

permit a bidder to challenge the validity of the terms or conditions of the Invitation to Bid or

Request for Proposal. The use of Alternative Dispute Resolution (ADR) shall constitute an

administrative appeal procedure meeting the standards of § 55 of these Rules.

B. If prior to an award it is determined that the decision to award is arbitrary or capricious, then

the sole relief shall be a finding to that effect. The Institution shall cancel the proposed award or

revise it to comply with the law. If, after an award, it is determined that an award of a contract

was arbitrary or capricious, then the sole relief shall be as hereinafter provided.

Where the award has been made but performance has not begun, the performance of the contract

may be enjoined. Where the award has been made and performance has begun, the Institution

may declare the contract void upon a finding that this action is in the best interest of the public.

Where a contract is declared void, the performing contractor shall be compensated for the cost of

performance up to the time of such declaration. In no event shall the performing contractor be

entitled to lost profits.

C. Where the Institution, an official designated by it, or an appeals board determines, after a

hearing held following reasonable notice to all bidders, that there is probable cause to believe

that a decision to award was based on fraud or corruption or on an act in violation of these Rules,

the Institution, designated official or appeals board may enjoin the award of the contract to a

particular bidder.

§ 51. Effect of appeal upon contract. –

Pending final determination of a protest or appeal, the validity of a contract awarded and

accepted in good faith in accordance with these Rules shall not be affected by the fact that a

protest or appeal has been filed.

§ 52. Stay of award during protest. –

An award need not be delayed for the period allowed a bidder or offeror to protest, but in the

event of a timely protest as provided in § 50 of these Rules, or the filing of a timely legal action

as provided in § 54, no further action to award the contract shall be taken unless there is a written

determination that proceeding without delay is necessary to protect the public interest or unless

the bid or offer would expire.

§ 53. Contractual disputes. –

A. Contractual claims, whether for money or other relief, shall be submitted in writing no later

than 60 days after final payment. However, written notice of the contractor's intention to file a

claim shall be given at the time of the occurrence or beginning of the work upon which the claim

is based. Nothing herein shall preclude a contract from requiring submission of an invoice for

final payment within a certain time after completion and acceptance of the work or acceptance of

the goods. Pendency of claims shall not delay payment of amounts agreed due in the final

payment.

B. The Institution shall include in its contracts a procedure for consideration of contractual

claims. Such procedure, which may be contained in the contract or may be specifically

incorporated into the contract by reference and made available to the contractor, shall establish a

time limit for a final decision in writing by the Institution. If the Institution has established

administrative procedures meeting the standards of § 55 of these Rules, such procedures shall be

contained in the contract or specifically incorporated in the contract by reference and made

available to the contractor. The Institution may require the submission of contractual claims

pursuant to any contract to Alternative Dispute Resolution (ADR) as an administrative

procedure.

C. A contractor may not invoke administrative procedures meeting the standards of § 55 of these

Rules, if available, or institute legal action as provided in § 54, prior to receipt of the Institution's

decision on the claim, unless the Institution fails to render such decision within the time specified

in the contract.

D. The decision of the Institution shall be final and conclusive unless the contractor appeals

within six months of the date of the final decision on the claim by the Institution by invoking

administrative procedures meeting the standards of § 55 of these Rules, if available, or in the

alternative by instituting legal action as provided in § 54.

§ 54. Legal actions. –

A. A bidder or offeror, actual or prospective, who is refused permission or disqualified from

participation in bidding or competitive negotiation, or who is determined not to be a responsible

bidder or offeror for a particular contract, may bring an action in the appropriate circuit court

challenging that decision, which shall be reversed only if the petitioner establishes that the

decision was not (i) an honest exercise of discretion, but rather was arbitrary or capricious; (ii) in

accordance with the Constitution of Virginia, applicable state law or regulation, or the terms or

conditions of the Invitation to Bid; or (iii) in the case of denial of prequalification, based upon

the criteria for denial of prequalification set forth in subsection B of § 14 of these Rules. In the

event the apparent low bidder, having been previously determined by the Institution to be not

responsible in accordance with § 4, is found by the court to be a responsible bidder, the court

may direct the Institution to award the contract to such bidder in accordance with the

requirements of this section and the Invitation to Bid.

B. A bidder denied withdrawal of a bid under § 23 of these Rules may bring an action in the

appropriate circuit court challenging that decision, which shall be reversed only if the bidder

establishes that the decision of the Institution was not (i) an honest exercise of discretion, but

rather was arbitrary or capricious or (ii) in accordance with the Constitution of Virginia,

applicable state law or regulation, or the terms or conditions of the Invitation to Bid.

C. A bidder, offeror or contractor, or a potential bidder or offeror on a contract negotiated on a

sole source or emergency basis in the manner provided in § 5 of these Rules, whose protest of an

award or decision to award under § 50 of these Rules is denied, may bring an action in the

appropriate circuit court challenging a proposed award or the award of a contract, which shall be

reversed only if the petitioner establishes that the proposed award or the award is not (i) an

honest exercise of discretion, but rather is arbitrary or capricious or (ii) in accordance with the

Constitution of Virginia, applicable state law or regulation, or the terms and conditions of the

Invitation to Bid or Request for Proposal.

D. If injunctive relief is granted, the court, upon request of the Institution, shall require the

posting of reasonable security to protect the Institution.

E. A contractor may bring an action involving a contract dispute with the Institution in the

appropriate circuit court. Notwithstanding any other provision of law, the Comptroller shall not

be named as a defendant in any action brought pursuant to these Rules or § 33.1-387 of the Code

of Virginia, except for disputes involving contracts of the Office of the Comptroller or the

Department of Accounts.

F. A bidder, offeror or contractor need not utilize administrative procedures meeting the

standards of § 55 of these Rules, if available, but if those procedures are invoked by the bidder,

offeror or contractor, the procedures shall be exhausted prior to instituting legal action

concerning the same procurement transaction unless the Institution agrees otherwise.

G. Nothing herein shall be construed to prevent the Institution from instituting legal action

against a contractor.

§ 55. Administrative appeals procedure. –

A. The Institution may establish an administrative procedure for hearing (i) protests of a decision

to award or an award, (ii) appeals from refusals to allow withdrawal of bids, (iii) appeals from

disqualifications and determinations of nonresponsibility, and (iv) appeals from decisions on

disputes arising during the performance of a contract, or (v) any of these. Such administrative

procedure may include the use of Alternative Dispute Resolution (ADR) or shall provide for a

hearing before a disinterested person or panel, the opportunity to present pertinent information

and the issuance of a written decision containing findings of fact. The disinterested person or

panel shall not be an employee of the governmental entity against whom the claim has been

filed. The findings of fact shall be final and conclusive and shall not be set aside unless the same

are (a) fraudulent, arbitrary or capricious; (b) so grossly erroneous as to imply bad faith; or (c) in

the case of denial of prequalification, the findings were not based upon the criteria for denial of

prequalification set forth in subsection B of § 14 of these Rules. No determination on an issue of

law shall be final if appropriate legal action is instituted in a timely manner. The Institution may

seek advice and input from the Alternative Dispute Resolution Council in establishing an

Alternative Dispute Resolution (ADR) procedure.

B. Any party to the administrative procedure, including the Institution, shall be entitled to

institute judicial review if such action is brought within 30 days of receipt of the written

decision.

§ 56. Alternative dispute resolution. –

The Institution may enter into agreements to submit disputes arising from contracts entered into

pursuant to these Rules to arbitration and utilize mediation and other alternative dispute

resolution procedures. However, such procedures shall be nonbinding and subject to § 2.2-514 of

the Code of Virginia, as applicable.

§ 57. Ethics in public contracting. –

The Institution and its governing body, officers and employees shall be governed by the Ethics in

Public Contracting provisions of the Virginia Public Procurement Act, Article 6 (§ 2.2-4367 et

seq.) of Chapter 43 of Title 2.2 of the Code of Virginia.

EXHIBIT H

MANAGEMENT AGREEMENT

BETWEEN

THE COMMONWEALTH OF VIRGINIA

AND

THE COLLEGE OF WILLIAM AND MARY IN VIRGINIA

PURSUANT TO

THE RESTRUCTURED HIGHER EDUCATION

FINANCIAL AND ADMINISTRATIVE OPERATIONS

ACT OF 2005

POLICY GOVERNING

LEASES OF REAL PROPERTY

THE RECTOR AND VISITORS OF

THE COLLEGE OF WILLIAM AND MARY IN VIRGINIA

POLICY GOVERNING LEASES OF REAL PROPERTY

I. PREAMBLE.

In 1996 the Board of Visitors adopted a Policy Statement Governing Exercise of Autonomy in

Leases of Property for certain leases entered into by the College of William and Mary in

Virginia, which was amended in 2003 as the Policy Statement Governing Exercise of Autonomy

in Operating and Capital Leases of Property. The Restructured Higher Education Financial and

Administrative Operations Act (the Act), Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the

Code of Virginia, provides that, upon becoming a Covered Institution, the College may have the

authority to establish its own system for the leasing of real property. The College’s system for

implementing this authority is to be governed by policies adopted by the Board of Visitors. The

following provisions of this Policy constitute the adopted Board of Visitors policies regarding

Leases of real property entered into by the College.

This Policy is intended to cover the authority that may be granted to the College pursuant to

Subchapter 3 of the Act. Any other powers and authorities granted to the College pursuant to the

Appropriation Act, or any other sections of the Code of Virginia, including other provisions of

the Act and the College's Enabling Legislation, as defined in § 23-38.89 of the Act, are not

affected by this Policy.

II. DEFINITIONS.

The following words and terms, when used in this Policy, shall have the following meaning

unless the context clearly indicates otherwise:

“Act” means the Restructured Higher Education Financial and Administrative Operations

Act, Chapter 4.10 (§ 23-38.88 et seq.) of Title 23 of the Code of Virginia.

“Board of Visitors” means the Rector and Visitors of the College of William and Mary in

Virginia.

“Capital Lease” means a lease that is defined as such within Generally Accepted

Accounting Principles pursuant to the pronouncement of the Financial Accounting Standards

Board.

“College” means the College of William and Mary in Virginia, (State Agency 204), and

the Virginia Institute of Marine Science, (State Agency 268).

“Covered Institution” means a public institution of higher education of the

Commonwealth of Virginia that has entered into a Management Agreement with the

Commonwealth to be governed by Subchapter 3 of the Act.

“Expense Lease” means an Operating Lease of real property under the control of another

entity to the College.

“Income Lease” means an Operating Lease of real property under the control of the

College to another entity.

“Lease” or “Leases” means any type of lease involving real property.

“Operating Lease” means any lease involving real property, or improvements thereon,

that is not a Capital Lease.

III. SCOPE OF POLICY.

This Policy provides guidance for the implementation of all College Leases.