Review of High-Risk Solicitations and Contracts (2024)

As of July 1, 2019, the General Assembly added a provision to the Virginia Public Procurement Act requiring review of solicitations and contracts defined as high risk. By statute, a "high risk” contract is defined as one of the following:

  1. A contract which is anticipated to cost in excess of $10 million over its initial term, or
  2. A contract which is anticipated to cost in excess of $5 million over the its initial term of the contract and meets at least one of the following criteria:
  • the goods, services, insurance, or construction that is the subject of the contract is being procured by two or more state public bodies; or
  • the anticipated term of the initial contract, excluding renewals, is greater than five years; or
  • the state public body procuring the goods, services, insurance, or construction has not procured similar goods, services, insurance, or construction within the last five years.

There are two points in the procurement process when a review by the Office must be requested: prior to issuance of the solicitation for a high-risk contract, the solicitation must be submitted for review; and prior to award of a high-risk contract, the proposed contract must be submitted for review. Additionally, for high-risk contracts awarded prior to July 1, 2019, if the contract has two or more remaining renewal provisions, the contract must be submitted for renew prior to exercising a renewal.

To request a review, complete the required form (available here). The completed form, along with all documents comprising the solicitation or contract, should be emailed to your assigned agency counsel at the Office, with a copy to This email address is being protected from spambots. You need JavaScript enabled to view it..

The high-risk contracting statute allows the Office 30 business days to complete the review. The 30-day review period will begin once OAG has received the completed submission and review form and all documents necessary to complete the review. We will make every effort to complete reviews as quickly as is practicable. Agencies should consider this when planning their timelines. Note that where agencies are also required to obtain a review by DGS or VITA, that request should be sent separately to the applicable reviewing agency.

Review of High-Risk Solicitations and Contracts (2024)

FAQs

What are high risk contracts? ›

In the dynamic landscape of business, organizations often find themselves engaging in high-risk contracts that can significantly impact their operations, financial health, and reputation. These contracts may involve complex projects, substantial financial commitments or ventures into uncharted territories.

What is the purpose of the contract review process? ›

A contract review ensures that all terms are fair, enforceable, and properly documented; it clarifies what happens if either party breaks the conditions laid out in the contract.

What type of contract is riskiest for the contractor why? ›

Fixed price contracts carry more risk to contractors than owners. They minimize the owner's (or GC's in contract with a subcontractor) construction cost risk and obligate the contractor to perform their work for a fixed dollar amount.

Which contract type should be used by the owner on a high risk project? ›

Cost Reimbursable Contracts

Here's where you'd use a cost-reimbursable contract. A cost-reimbursable contract—also known as a cost disbursable contract—is used when the project scope is uncertain, or the project is high risk.

How long should a contract review take? ›

The contract review process is typically initiated four to eight weeks before planned execution to account for contract complexity and potential delays. If multi-party negotiations over contract language is anticipated, the review process could easily take twice as long.

What is a contract compliance review? ›

A contract compliance review helps to ensure that both parties are adhering to the terms of the agreement. There are several benefits to conducting a contract compliance review. First, it can help identify areas where the company may be at risk.

What are the risks of contract review? ›

For contracts, the four most common risk categories include financial, legal, security, and brand. In many cases, your contract risks are closely related to each other and often have a domino effect. A brand risk may trigger a financial risk, or a security risk may trigger a legal risk.

Why do lawyers review contracts? ›

Because the content and format of many contracts must adhere to certain guidelines in order to be legally enforceable, a lawyer for contract review will ensure that your document is: Acceptable in court. Free from potential pitfalls. Is legal.

Who is ultimately responsible for contract administration? ›

The bulk of contract administration (overseeing performance) responsibility should be with the entity that is closest to where the contract is executed, because it is there that the opportunity exists for early detection of any breach of contract or substandard performance of goods received or services rendered.

Which contract is highest risk? ›

There is a cost risk associated with each contract type. Cost Plus (CP) contracts are most risky for the buyers and Fixed Price (FP) contracts are most risky for the sellers.

What are the risk categories for contracts? ›

For contracts, the four most common risk categories include financial, legal, security, and brand. In many cases, your contract risks are closely related to each other and often have a domino effect. A brand risk may trigger a financial risk, or a security risk may trigger a legal risk.

What is the definition of a risk contract? ›

A risk contract is broadly any contract which results in any party assuming insurance or business risk. Normally this means, in health care, that if either the employer, health plan or provider assumes risk, it is agreeing to cover the expense of increased utilization beyond the projected costs or payment provided.

What does a full risk contract mean? ›

Full-risk capitation arrangements involve shared financial risk among all participants and place providers at risk not only for their own financial performance, but also for the performance of other providers in the network.

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