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Strategic Business Operations FAQ's

Signature Authority

To ensure compliance with applicable law and university policy, Auburn University strictly limits who can sign contracts on behalf of the university. Regardless of the title (Contract, Agreement, Memorandum of Understanding, License, Lease, Order, Quote, etc.) or the method of acceptance (“wet-ink” signature, electronic signature, click-through, etc.) – any document that contains enforceable promises that could bind the university may be considered a legally enforceable contract, and such documents must be submitted to the appropriate signing authority for review and approval. Please review Signature Authority Policy for detailed information on who can sign/accept contracts on behalf of Auburn University.

Auburn as a State Government Entity

Auburn University exists as an instrumentality of the State of Alabama. Because it is both a state government entity and an educational institution, Auburn is often required by constitutional law, statute, rules, regulations, or policy – at both the state and federal level – to amend certain clauses that are commonly found in contracts. When contractual terms are found that would run counter to the university’s legal obligations or prohibitions, Auburn does not have the discretionary authority to ignore them and is required to negotiate with the contracting party to alter the terms. While the vast majority of companies – especially those that commonly work with government entities – understand the university’s position and will work in good faith to reach acceptable terms, if the contracting party refuses to compromise, Auburn will be barred from entering into the contract.

Governing law, jurisdiction, venue

Because Auburn is a state government entity, it is subject to the legal doctrine of “sovereign immunity,” through which the State of Alabama (and by extension, Auburn University) is immune (with limited exceptions) from civil and criminal lawsuits. Auburn’s sovereign immunity is derived from the 11th Amendment to the United States Constitution, as well as Article I, Section 14 of the Constitution of Alabama – which mandates that the “State of Alabama shall never be made a defendant in any court of law or equity.” Alabama law further states that sovereign immunity is a jurisdictional bar to lawsuits that cannot be waived and sets the Alabama Board of Adjustment as the sole forum to adjudicate most claims for damages against the State.

Many contracts have a “governing law” provision which determines the laws that apply to both the agreement and the relationship stemming from it. Because other states’ laws don’t convey or acknowledge the sovereign immunity rights of Auburn, and because Auburn must comply with provisions of Alabama law that are not recognized by other states, Auburn cannot subject itself to the governing law of another state. Many contracts also attempt to determine the jurisdiction (the courts that have power to hear a claim) and venue (the location of those courts). Again, because Alabama constitutional law clearly states that Auburn can’t be made a defendant in any court of law, the university can’t agree to subject itself to the jurisdiction or venue of another state.

When contracts contain provisions that would set the governing law, jurisdiction, or venue of a state other than Alabama, Auburn is required by law to modify those terms. Accepting such a provision would not only subject the university to the risk and expense of defending against a claim in another state, it could also expose the signor to personal liability for representing themselves as having the authority to accept a contractual term that violates constitutional law.

For more detail on the legal authority surrounding this topic, please see our Memorandum on Governing Law, Indemnification, and Arbitration.

Indemnification

An indemnification clause requires one party to compensate the other for harm or loss related to the contract. Such provisions often also require the party to defend and hold harmless (release from liability) the other party. Because Auburn is a state government entity, sovereign immunity prevents the university from accepting such contractual clauses. Any agreement to indemnify, defend, or hold harmless another party would, as a practical effect, require the university to step into the shoes of the other party and become a defendant in their stead, which is prohibited by Article 1, Section 93 of the Alabama Constitution. As such, any contractual provisions that would require Auburn to indemnify, defend, or hold harmless another party must be removed.

Auburn is unable to accept such requirements even where qualified “to the extent permitted by law.” By allowing such language, the university would be providing standing (the right of a party to bring a claim in court) for the other party to file an indemnification action and test the limit of the law. The university would then be forced to incur the time, expense, and risk of defending against the claim.

Accepting an indemnification provision could expose the contract signor to personal liability by representing themselves as having the authority to bind the university to a contractual term that violates constitutional law.

Arbitration

Arbitration is a form of alternative dispute resolution in which the parties to a contract agree to submit their complaints to an impartial third party (an arbitrator), who then makes a binding decision on the outcome of the dispute. Because Auburn is a state government entity, the Supreme Court of Alabama has held that a party cannot compel arbitration against a state university given the sovereign immunity conferred on the state agencies by the Alabama Constitution. As such, Auburn cannot accept contractual arbitration clauses.

State Property Rights

Because Auburn University is a state government entity, the sovereign immunity conveyed by the Alabama Constitution protects university property from lien, forfeiture, and levy provisions found in some contracts. In rare instances where Auburn does not own the property outright and is making installment payments, or where Auburn is leasing property and does not have an ownership interest, such provisions may be appropriate and acceptable. Auburn cannot allow any property owner the right of “self-help” – the ability to come onto Auburn’s campus without permission and remove property at the owner’s discretion.

Privacy

As an educational institution, Auburn University routinely receives and stores sensitive information, some of which is protected by laws such as the Family Educational Rights and Privacy Act (“FERPA”), the Health Insurance Portability and Accountability Act (“HIPAA”), and other laws pertaining the protection of Personally Identifiable Information (“PII”) and financial information. When a contractual engagement contemplates the sharing of such sensitive information, it’s imperative for the agreement require the contractor to sufficiently protect the information, notify the university in the event of a data breach, and remediate any damages that arise from exposure.

Confidentiality

Many contracts contain confidentiality clauses that attempt to prohibit Auburn from disclosing information about a business engagement. Because Auburn is a state government entity, it is subject to open records laws that require the university to disclose – upon request – documents produced for or received by the university, with limited exception. Notably, neither the existence of a contract nor (under most circumstances) pricing information contained within can be protected from disclosure. All confidentiality clauses must be drafted in a manner that allows Auburn to disclose information where required by Alabama law.

Exclusivity

When contracting with the university, business partners might seek to derive added value by securing the exclusive right to provide Auburn with a category of goods or services. However, the Alabama Supreme Court has held that state agencies cannot convey exclusivity to a private entity unless it is awarded as part of a competitive bid process. As such, unless the contract stems from a competitive bid run through Auburn’s Procurement & Business Services, the university cannot execute a contract that conveys exclusivity to another party.

Bid Requirements (Goods & Services, Public Works)

As a state government agency, Auburn University is required by law to seek competitive bids for qualifying purchases that exceed a set threshold. Contracts that do not comply with statutory bid requirements are void by operation of law.

For the purchase of goods or services of $75,000.00 or more, Alabama’s Title 41 Bid law requires Auburn to seek sealed competitive bids. For more specific information, please reference Spending Policy and Procurement & Business Services’ website.

Construction projects involving public funds and conducted on university property are governed by Alabama’s Title 39 Public Works Law. Projects of $100,000.00 or more are required to be competitively bid through Auburn University’s Facilities Management. For more information, please visit Facilities Management website.

Software and Information Technology

Information technology or software purchased with university funds or installed on university systems must comply with Auburn University’s Software & Information Technology Services Approval Policy and be approved by the Vendor Vetting Group, made up of campus stakeholders from the Office of Accessibility, the Information Security Office, the Division of Institutional Compliance & Privacy Office, the Office of Cash Management, and the Office of Information Technology. The Vetting Group (Vetting@auburn.edu) within the Office of Information Technology must be contacted prior to the creation and dissemination of any requisition or request for proposal (RFP) for software or information technology services.

Alabama Disclosure Statement (Vendor Disclosure Statement)

For each contracts in excess of $5,000.00, Alabama law requires Auburn to obtain a completed, notarized Alabama Disclosure Statement (sometimes called a “Vendor Disclosure Statement”). This document is a result of Alabama ethics law, and is utilized to make public potentially influential familial relationships between an employee of awarding state agency (here, Auburn University) and a private entity. The Alabama Attorney General has determined that, in order to comply with the legislative intent, a new Disclosure Statement is required for each contract. Auburn is audited for compliance by the State Examiner’s Office annually, and, where a Disclosure Statement is required, the university cannot execute an agreement without a completed disclosure statement in-hand.

An Alabama Disclosure Statement is not required for the following categories of contracts, regardless of cost:

  • State of Alabama contracts (Example: Contract T191)
  • Contracts with a government entity (including other public educational institutions
  • Auburn University Preferred Vendor Contracts (Example: Staples, Connection, Grainger, Ferguson)
  • Purchases underneath an existing Auburn University bid/RFP contract