Transcript

Host: Hello, and welcome to Prevention and Protection, the United Educators Risk Management Podcast. Today, Ashley McGowan, Assistant Director of Risk Management at Louisiana State University, and Melanie Bennett, Senior Risk Management Counsel at United Educators, will discuss reviewing contracts and waivers. A reminder to listeners that you can find other UE podcasts, as well as UE risk management resources, on our website, www.ue.org. Our podcasts are also available on Apple Podcasts and Spotify. Now, here’s Melanie.

Melanie Bennett: Thank you. Ashley, welcome and thanks for joining me today.

Ashley McGowan: Good morning. Thank you for having me, Melanie. I’m excited to be here.

Bennett: To start our conversation today, contracts and waivers are such an important ongoing everyday issue on every higher education institution’s campus. Do you have a single contract and waiver review process, or does it vary by department?

McGowan: The question’s twofold. We do have a single process in that it’s managed by our Office of Procurement. And they have oversight of contract review for the entire university, and they pull in the units at the university as needed. We do have a varying process in that there are some instances where some units come directly to, let’s say, Risk Management or OGC without initially going through Procurement, but everything’s always routed through one centralized place, so yes, we have a singular review process.

Bennett: And have you always used the same review process, or have you done any changes since you started in your contracting work at LSU?

McGowan: When I initially started in 2015, there was no centralized review process at the university. So that’s something that’s definitely changed over the course of the past five to six years where we’ve started to have a centralized office, one meeting point where all the contracts will be initiated. One of the other things that we’ve done is that we’ve identified all the important offices that would need to be a part of the review process, and we’ve all kind of formed a relationship and agreed to collaborate on the contracts. And so, we’re also able to notify other departments and also the university community on the units that should be reviewing their contracts.

So, it’s changed drastically. It went from there not being any centralized process or communication amongst each unit that reviews, to us now all knowing who’s a part of the process and communicating across all areas of the university. It’s no longer siloed. So that’s probably one of the biggest changes, that it went from a siloed process to a more unified approach.

Bennett: Now that you have the new process that’s more streamlined, have you found that there are any changes to the contract process? Is anything working better?

McGowan: Now that we’re using a more unified, comprehensive approach to reviewing the contracts at the university level, we’re able to identify each risk in the unit that manages that particular risk. It’s allowing us to be more proactive in preventing and mitigating losses and accidents on campus. It allows us to have better contractual language to protect the university in the event of a loss or an accident. And then also it’s helping us with vetting reputable contractors, vendors, and suppliers for the university, because if people aren’t able to meet the terms of our agreements, specifically when we talk about the risk transfer language, such as insurance and indemnification, it’s normally indicative of the company’s financial backing — or in terms of just their ability to be a reputable contractor for the university.

And also, it’s allowing us to be more collaborative. The one thing that I’ll say is that when I first started at the university, it was a more siloed approach, where each unit kind of reviewed their area without really discussing it and really identifying how those areas are connected. Now, we’re all working together to make sure that each area is protected and all of the language is solid on every front. It’s been great.

Bennett: What steps do you take in the contract review process to help transfer risk?

McGowan: The first way that we transfer risk at the university level is our insurance policies, right, where we’re able to transfer the risk of a loss over to an insurance policy. But in terms of our contracts, when working with contractors, suppliers, vendors, so on and so forth, we try to make sure that they have sufficient insurance terms. We also make sure that there’s indemnification/hold harmless language within all of our agreements.

One of the other things that we’re able to do, again, is that when reviewing the contract, we can identify any sort of risk that exists or any sort of potential risk to the university. And then also contact the unit to ensure that they’re educated and aware of the risk, that it exists within the contract, and then try to help them to come up with a recommendation or some sort of mitigation strategy to mitigate any potential of that risk having an adverse impact on the university.

So there’s several things that we do from analyzing the risk, identifying the risk, empowering the risk manager at the university. We try to make sure that the insurance language is solid and that it covers anything that could have happened as a result of the relationship with this particular contractor, vendor, supplier.

And then we make sure that there’s an ironclad indemnification/hold harmless language to make sure that we’re protected from any potential risks that have been transferred over to the contractor, vendor, or the supplier.

Bennett: You mentioned educating staff on some of the risk transfer options. How do you train staff and faculty to use the broader contract review process, and have you run into challenges getting people to use the process?

McGowan: In terms of the actual review process, the Office of Procurement oversees that process, and so they do a good job of hosting. They have certifications for certain areas, and so a lot of the individuals on our campus that perform the services that fall within the contract review component of the university, so like our Procurement Department, our business managers, those individuals, they can take a certification through our Procurement Department that helps them to kind of understand what the process is at the university.

The Office of Risk Management and the Office of General Counsel has done comprehensive, or collaborated on, presentations in the past to talk to people who oversee or that are responsible for initiating or representing the university for contractual relationships. So we do trainings, we provide materials to the individuals on campus, and it’s mainly just a two to threefold approach between all of the departments that have responsibility to review. We all educate within our particular realm, and then sometimes we come together and we collaborate and we train on each aspect of the contract.

But typically, we are just reviewing mainly on whatever is within our purview. So the majority of my presentations that I have with reviewers isn’t necessarily on the actual process and what it looks like from start to finish, but it’s mainly about what Risk Management’s role is in the process, and kind of what to expect once they reach that particular step. But every individual unit that’s involved has some form of training, and the Procurement Department puts on annual trainings and some monthly, quarterly.

In fact, just last week, I presented at a forum that they were having where I presented on insurance and risk management and the importance. And so, that’s just another example of us collaborating for the purposes of educating our internal stakeholders on what to expect from a contractual review process and standpoint at the university.

Bennett: Do you use some type of technology or software solution to help with your contract review process?

McGowan: Each unit, again, it’s done a bit differently, but as for the Risk Management department, I only utilize Smartsheet software, and it’s not even a contractual review software product. It’s not intended for that purpose, but it does allow me to track my review. It allows me to track my responses to the unit so that I can kind of know what sort of problems we’re seeing on a regular basis, the type of questions that I’m getting, and it helps me to know where I need to educate the most.

So I utilize Smartsheet, and that’s solely for the purposes of tracking my review and the number of contracts. And also, it provides a web form where people can submit contracts and agreements directly to the Office of Risk Management. But in terms of external software that’s being utilized at the university level, Risk Management isn’t necessarily utilizing any contract review software.

Bennett: And my last question for you today, have you used any external contracting resources that you particularly recommend to other schools?

McGowan: I can talk about two really helpful resources that I utilize.

One of the resources that I used was the UE training on contracts and agreements. It was super helpful in just helping me to reinforce my foundation when it comes to contracts and agreements at a higher education institution.

The second document, or I guess training or resource, that I utilized was from URMIA, and what they have is the third-party contractor guidelines. That document was super helpful in me just understanding what goes into the contractual risk transfer process, knowing what’s a best practice at other higher education institutions. And I’m often able to reference that as a tool to persuade other departments to say, “Hey, these are common terms that are recommended by the University Risk Management and Insurance Association, which is a national organization, so this is best practices all across the country.” And so it definitely helps me gain buy-in.

We also, at LSU, we had the benefit of partnering with our broker at one point. They served as kind of risk management consultants with us, and they worked with us on a project that’s called RAFT. It’s called Risk in Agreements and Financial Transactions, and it was a project that we worked on for a while where we went through the common risks at the university, and then we came up with terms that fit LSU. So having a good partner in our broker has always been a great resource as well in terms of enhancing our contract review process at the university.

Bennett: And that’s it for today’s podcast. Thank you, Ashley, for joining me today.

McGowan: All right, Melanie, thank you for having me.

Host: From United Educators Insurance, this is the Prevention and Protection Podcast. For additional episodes and other risk management resources, please visit our website at www.ue.org.