Material & Disbursement Services (MSD)
POLICY 44
Effective Date: 11/23/2003
Last Modified Date: 05/26/2004
Maintenance Service Contract
For some types of equipment, such as specialized scientific apparatus, it is often most economical to arrange for a service or maintenance contract with the manufacturer or service agency. The costs of service on this equipment must be borne by the using department and usually involve a service call charge, labor, and parts charges each time repair or maintenance is required. While parts and supplies are usually not covered in the service contract, the savings on service calls and labor charges can make the lump sum payment for a service contract very reasonable. Maintenance service contracts can also be established for computer software and electronic online data subscriptions. The initial purchase of software often requires the establishment of a software license, which usually includes a written agreement.
Purchase Requisitions and Renewals
To initiate a service or maintenance contract, submit a Purchase Requisition to Purchasing Services. Expendable parts are not usually covered under a maintenance agreement; submit a separate Purchase Requisition to Purchasing for charges not covered by a contract.
To continue an established maintenance service contract to subsequent years, submit a new requisition to Purchasing 60 days before the expiration of an existing contract. On the renewal requisition, clearly state the existing Purchase Order number established for the original agreement. When the written agreement is included with the requisition, it must be signed by the department before it is sent to Purchasing.
Contract Term
Maintenance service contracts may be established for a period of 12 months or less. Contracts may be renewed at the end of an initial contract period.
Purchasing Authority
All contracts are subject to the University's applicable delegation limit of $500,000. Any agreements exceeding that amount must be routed to the State Division of Purchase and Contract for approval.
Competition
Usually, maintenance service for equipment or software is purchased from the original manufacturer or supplier. If the user wants to contract for maintenance or service from a vendor other than the original manufacturer or supplier, competition for the service is required, unless the case for single-source acquisition is made in writing and approved by the appropriate purchasing authority.
Service Requests
Once equipment is covered by a maintenance contract, service may be requested by the using department directly from the manufacturer or service agency.
Additional Information
See also:
MSD Policy 7, Single-Source or Brand-Specific Purchases
MSD Procedure 23, Service Contracts
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