This manual has been created to help you through the confusing world of insurance and indemnification requirements for writing contracts, bids and requests for proposals (RFPs). In Multnomah County, much of the development of contracts, bids and requests for proposals is done by County department staff, rather than Department of Support Services central support staff, so it is important that knowledge of key contract components be easily available to all contract/bid/RFP preparers.
When you prepare a contract, you are transferring the responsibility for providing the services and the funds with which to provide them to an entity or person outside of the County.
When you include indemnification provisions of the contract, you are also transferring the responsibility for any claims that might arise from providing those services to the contractor--the entity responsible for the acts that led to the claim. And when you ask for certain kinds of insurance, you are guaranteeing that the contractor has the resources to pay defense costs and pay for any claims that might be filed.
Purpose of this manual
The purpose of this manual is: (1) to define the kinds of insurance and indemnification clauses required for different types of County contracts, and (2) to explain the various requirements so you will have a better context for understanding questions that may arise. This manual is divided into seven sections:
- Introduction
- Risk Analysis
- Indemnification Requirements
- Insurance Requirements
- Review of Insurance Certificates
- Staff Responsibilities
- Glossary
- Appendices.
In using this contract manual, it's important to remember that the County contracts for services through a variety of mechanisms. These include:
- Contracts issued subsequent to a request for proposal (RFP) process.
- Contracts issued subsequent to a bid process.
- Personal/professional services contracts issued through an informal competitive process.
- Direct pay vouchers.
- Purchase orders and limited purchase orders to obtain trade-related services.
- Intergovernmental agreements.
- Memoranda of agreement or memoranda of understanding.
- Lease agreements.
- Facility or property use agreements.
Each of these "contracts" can give another party responsibility for acting on behalf of the County. Therefore, whoever in the County issues the "contract" must ensure that appropriate indemnification and insurance provisions are included in the agreement.
In some instances, all necessary language is included in the form and no additional provisions are needed (for example, a purchase order used to purchase goods). In others, additional steps must be taken to ensure that the County has properly transferred liability. For example, if a purchase order is used to obtain the services of people who will do work for the County (rather than to purchase goods), the standard terms are not sufficient to protect the County.
You, as the contract/bid/RFP preparer, are most knowledgeable about the services being obtained by the contract, and you can best analyze what's needed. This manual attempts to define what insurance and indemnification provisions are needed in most circumstances, but its primary purpose is to serve as a reference for you to determine what's needed for your specific situation.
This manual will walk you through the steps you will use to select the appropriate insurance and indemnification provisions. These steps are:
- Analyze the services or supplies being acquired to determine what risk the County might be exposed.
- Given the risk(s) identified, select the proper indemnification provisions to limit the County's exposure to loss and to reflect the respective responsibilities of the contractor/bidder and the County.
- Given the risks identified and the indemnification language selected, determine the insurance provisions that will protect both the contractor/bidder and the County in the event of loss.
- Incorporate the indemnification and insurance provisions in all appropriate procurement documents (for example, in the bid/RFP as well as the contract).
- Be sure you obtain proof of insurance (a certificate documenting that all required kinds and amounts of insurance coverage have been obtained) and a signed contract before you allow work to begin under the contract.
Where you can get help
The indemnification language and insurance requirements, as well as other contract boilerplate requirements, can be confusing to those without a legal or insurance background. We are not asking you to become experts. We are asking you to recognize the importance of these issues and to use this manual and your knowledge of the services being contracted for to develop a contract that protects the County's interests. Further, if you are uncertain about what your contract should include, please contact your Purchasing Section Senior Buyer or Contract Administration. Contact the Purchasing Section for questions regarding Class II contracts. Contact the Contract Administration Section for questions regarding Class I or IGA contracts or for information on the contract approval process. Please do not negotiate changes to required language with the contractor until you have checked with Purchasing.
In some instances, Purchasing may refer you to your assigned attorney in County Counsel's Office or to Risk Management for assistance with specific problems regarding contract language or insurance requirements. We'll try to answer your question as quickly as possible.
We welcome your response to this manual and your questions. As an RFP/bid and contract preparer, you play a key role in County program delivery and loss prevention. You know the program delivery part; now read on for your crash course in contract loss control!