Let’s Make a Deal! Cautionary Notes for Public School Vendor Contracts
By Attorney Sean A. Fields, Co-Chair of CGA's School Law Group
School Law Snapshot
The Big Picture . . .
During the 1970’s, a television game show called Let’s Make a Deal entertained viewers by playing on the unknown. The host would present an audience member with a choice framed in the following manner. “I have a $50 bill that I can give you right at this moment or...you can have what is behind Door #3.” Viewers were entertained by the possibility that the prize behind Door #3 could be a new sports car or a goat. While the unknown outcome of a choice made on daytime television was campy entertainment, unknown outcomes for public school entities subject to vendor service contracts are no laughing matter.
Before entering into a service contract with a vendor a school district (“district”) or career technical school (“career-tech”) should consider the following:
Be skeptical about vendor claims regarding reduced costs, service, and legal requirements specific to Pennsylvania.
Exercise caution when a vendor is applying pressure to enter into a contract within a short deadline.
Carefully review standard contract or “boilerplate” language that might be detrimental to the district or career-tech.
The Close Up . . .
In Pennsylvania, Section 508 of the School Code requires a majority vote of all of the members of a school board to approve contracts of any kind, including contracts for the purchase of fuel or any supplies, where the amount involved exceeds $100. Even vendor service contracts that are not subject to the competitive bidding requirements required by the School Code for the purchase of supplies or construction can introduce a myriad of legal issues. Therefore, school leaders responsible for vendor contracts should take a measured approach to such contracts.
School leaders should view vendor claims about services and costs with a healthy dose of skepticism. Because public schools are responsible for tax payer funds, a vendor proposal with a lower price can have the effect of distracting school leaders from focusing on the specific terms of the contract including legal remedies available to parties in the event of a breach of contract. This healthy skepticism should include not putting too much stock in the vendor’s assurance that the vendor understands the legal issues unique to Pennsylvania public schools. Because many vendors conduct business in multiple states, one should never take such assurances at face value.
Avoid Playing “Beat the Clock”
Another frequent tactic for vendors is to require a school entity to ratify a contract within a short timeframe. The vendor might also include a deadline in order to take advantage of a discounted price forcing the district or career-tech into a game of “Beat The Clock.” This could be problematic for at least two reasons. The first is that many vendor contracts will require the approval of a board. The length of time between board meetings can make the ratification of a contract difficult to shoehorn into a short deadline. Such deadlines may also compromise the ability to have the contract properly reviewed by an attorney, clarify ambiguous contract terms, and negotiate changes before the contract is ratified.
Beware of “Boilerplate”
One of the reasons that it is important to have a thorough review of vendor service contracts is that many vendors have developed contract templates with “boilerplate language” that appears in all of the vendor’s proposed contracts. Such language is usually drafted by the vendor’s attorney for the benefit of the vendor and could limit the ability of a district or career-tech to seek specific legal remedies. For example, a district in Southcentral Pennsylvania might want to think twice before entering into an agreement that provides all legal disputes will be resolved by an arbitrator in California.
Not unlike any other contract involving a significant amount of money, public school vendor service contracts should be carefully scrutinized by the business office and an attorney. Exercising such caution will help limit the possibility of that unwanted surprise behind “Door #3.”