23Define Procurement Contracts Configuration

This chapter contains the following:

Define Contract Terms Library Configuration

Contract Terms Library Setups: How They Work Together

This topic provides a brief overview of setups for the Contract Terms Library.

The following figure outlines the main setups for the Contract Terms Library which are described in the sections of this topic. The setups on the left are accomplished using tasks from the Setup and Maintenance work area. To set up most of the Contract Terms Library features, including clauses and contract terms templates, you must navigate to the Terms Library work area. Dashed boxes highlight features that are available only in procurement contracts.

This figure outlines Contract Terms Library setups.

Setups in Oracle Fusion Functional Setup Manager

Different Oracle Fusion Functional Setup Manager tasks enable or affect Contract Terms Library features. These setups include:

  • Setting Up Contract Types to Work with the Contract Terms Library

    Contract types specify properties of different contracts including the type of permitted contract lines, party roles, contract validation checks, and the contract acceptance and signature requirements. For the Contract Terms Library, you can use the Manage Contract Types task to:

    • Enable contract terms authoring

      You must enable contract terms authoring for a contract type to use any of the library features for contracts of that type.

    • Specify the Oracle BI Publisher layout template that will be used to format the printed contract terms for contracts of this type.

  • Defining Clause Types

    If you want to categorize the clauses in the library, select the Manage Contract Clause Types task to set up clause types.

  • Configuring Business Units for Contracts

    The use of most of the Contract Terms Library content is restricted to the business unit where you create it. This includes clauses, contract terms templates, and Contract Expert business rules. Using either the Specify Customer Contract Management Business Function Properties or the Specify Supplier Contract Management Business Function Properties tasks, you can:

    • Enable content adoption between business units and automatic approvals for content

    • Specify the Contract Terms Library administrator, the employee who will receive approvals and other notifications regarding library content.

    • Enable the Contract Expert feature for the business unit.

  • Creating Contract Layout Templates

    Using Oracle BI Publisher, you can set up layout templates that determine the formatting of clauses, contract terms template previews, the contract deviations report, and the contract itself.

    Download the sample layout templates provided with your application from the Oracle BI Publisher library. You can copy and edit the sample layout templates and upload them.

    Note: For an example on how to use XML to build your own layouts, see the topic Setting Up Enterprise Contracts - Part 2.
  • Creating Contract Terms Value Sets

    Select the Manage Contract Terms Value Sets task to set up value sets for use in contract terms variables and Contract Expert questions.

  • Specifying the Location of the File Used for Clause Import

    You can import legacy clauses into the Contract Terms Library, either from a file or from an interface table using Oracle Fusion Enterprise Scheduler processes.

    If you are importing clauses from a file, then you must specify the location of the file by setting the profile option Specify Contract Clause Import XML File Location by selecting the Manage Clause and Template Management Profiles task.

Contract Terms Library Work Area Setups

The Contract Terms Library is built using the tasks within the Terms Library work area:

  • Creating Clauses

    Create standard clauses for use during contract terms authoring, including alternate clauses, clauses included by reference, and provision clauses. By specifying different clause properties, you can modify clause behavior. For example, you can make clauses mandatory in contracts or protect them from editing by contract authors.

  • Creating Variables

    You can use variables in the Contract Terms Library to represent information within individual clauses and for use within Contract Expert rule conditions. Your application comes with predefined variables, called system variables. You can create additional variables, called user variables, with or without programming.

  • Creating Numbering Schemes

    You can set up additional clause and section numbering for contract terms. You can select which numbering scheme you want to use with each contract terms template.

  • Creating Contract Terms Templates

    Create contract terms templates to insert boilerplate terms and conditions into contracts during contract authoring. Contract authors can apply the templates manually, or the application can apply the templates automatically using default rules you set up.

  • Creating Contract Expert Business Rules

    Set up business rules that ensure compliance of contracts with corporate standards.

    Contract Expert helps you to set up business rules that can:

    • Apply the appropriate contract terms template to a contract

      For example, apply the contract terms template Software License and Service Agreement if the contract is authored in the North America Operations business unit and the contract amount exceeds one million dollars.

    • Insert additional clauses into specific predetermined locations in the contract

      For example, add an audit clause if an audit is required.

    • Report contract deviations from corporate policies

      For example, report a contract worth one million dollars or more that includes payment terms greater than 90 days.

    You can base Contract Expert rule conditions on the values of variables in the contract, the presence of other clauses, or you can set up questions that contract authors must answer during authoring.

    For example, you can ask authors a series of questions about the nature of the materials being shipped to customers and insert additional liability clauses based on their answers.

    If you are setting up business rules with numeric conditions (for instance, insert a special payment terms clause if the contract amount exceeds $1 million) then you must set up constants to hold the numeric values. You cannot enter the numeric values directly.

  • Contract Deliverables

    Contract deliverables track both contractual and non-contractual commitments that must be completed as part of negotiations, purchasing, and enterprise contracts between businesses and suppliers or customers based on contract intent. These deliverables can be used in purchasing and sourcing documents that include contract terms and in enterprise contracts.

  • Importing Clauses

    You can import clauses from legacy applications by running Oracle Fusion Enterprise Scheduler (ESS) processes from the Terms Library work area by selecting the Import Clauses task or from the Setup Manager by selecting the Manage Processes task.

  • Setting Up and Maintaining the Index for Clause Text Searches Using the Keyword Field

    By selecting the Manage Processes task in the Terms Library work area, you can also run the ESS processes required to set up and maintain the text index required for searches of clauses and contract terms templates using the Keyword field.

Contract Terms Library Clauses: Explained

You can create different types of clauses for different uses and use clause properties to specify if a clause is protected from edits by contract authors, if it is mandatory, and if it is related to or incompatible with other clauses. A clause you create in the Contract Terms Library is available for use within the business unit where you create it after it is approved.

The types of clauses you can create include:

  • Standard clauses

  • Clauses included by reference

  • Provision clauses for contracts with a buy intent

Using different clause properties you can:

  • Make a clause mandatory in a contract.

  • Protect it from edits by contract authors.

  • Specify that a clause can be selected by contract authors as an alternate of another clause.

  • Specify that the clause cannot be in the same document as another clause.

  • Make a clause created in a global business unit available for use in other business units.

Creating Standard Clauses

Any clause you create in the library becomes a standard clause that can be used in the business unit where you create it after it is approved. Unless you specify that the clause is protected, contract authors can edit the clause in a specific contract. Any edits they make are highlighted in a clause deviations report when the contract is approved. Similarly, contract authors can delete the clause from a contract, unless you specify the clause is mandatory.

Including Clauses by Reference

For clauses, such as Federal Acquisition Regulation (FAR), you can print the clause reference in the contract instead of the clause text itself. During contract creation, you enter the reference on the Instructions tab of the clause edit page and select the Include by Reference option.

Creating Provision Clauses for Contracts with a Buy Intent

For contracts with a buy intent, you can create provision clauses, clauses that are included in contract negotiations but are removed after the contract is signed. Provision clauses are used primarily in Federal Government contracting.

Altering Clause Behavior with Clause Properties

Using different clause properties, you can alter the behavior of a clause, You can:

  • Make a clause mandatory.

    A mandatory clause is highlighted by a special icon during contract terms authoring and cannot be deleted by contract authors without a special privilege. You can make a clause mandatory for a particular contract terms template by selecting the Make Mandatory action after you have added the clause to the template. A clause is also become mandatory if it is added by a Contract Expert rule and you have selected the Expert Clauses Mandatory option in the template.

  • Protect it from edits by contract authors.

    A protected clause is highlighted by a special icon during contract terms authoring and cannot be edited by contract authors without a special privilege. You can protect any clause by selecting the protected option during clause creation or editing.

  • Specify that a clause can be selected by contract authors as an alternate of another clause.

    You can specify clauses to be alternates of each other on the Relationships tab of the create and edit clause pages. When editing contract terms, contract authors are alerted by an icon that a particular clause includes alternates and can select an alternate to replace the original clause.

  • Specify that the clause cannot be in the same document as another clause

    You can use the Relationship tab to specify a clause you are creating is incompatible with another clause in the library. The application highlights incompatible clauses added by contract authors in the contract deviations report and during contract validation.

  • Make a clause available for use in other business units.

    Clauses you create in the library are normally available only within the same business unit where you create them. If you create the clause in the business unit that is specified as global during business unit setup, then you can make the clause available for adoption in other business units by selecting the Global option during clause creation or edit. This option appears only in the one business unit specified as global.

Contract Terms Templates: How They Work

You can create contract terms templates in the Contract Terms Library to insert appropriate terms and conditions into contracts during contract authoring. You can apply the templates manually while authoring contracts or the application can apply the templates automatically using defaulting rules you set up.

Contract terms templates:

  • Contain sections and clauses from the Contract Terms Library.

  • Are created in the Contract Terms Library separately. You cannot create them directly from an existing contract.

  • Are specific to one business unit.

  • Apply to enterprise contracts of the contract types you specify in the template.

  • Are specific to either sell-intent or buy-intent contracts.

  • Can default contract terms directly on purchase orders and sourcing documents, and on enterprise contracts. For these documents, contact terms templates can also include contract deliverables which can be used to track the completion of contractual tasks in the contract.

In addition, for a contract terms template you can:

  • Set up Contract Expert rules to recommend additional clauses for contracts that use the template and insert these clauses in specified locations in the contract if marked as conditional.

  • Associate a layout template for previewing the template.

  • Specify a contract terms numbering scheme for the template.

  • Set up template selection rules to default the template into a contract automatically.

The following figure illustrates the different aspects of contract terms templates, such as section and clauses, contract terms deliverables, layout template, numbering scheme and so on.

Different aspects of contract terms templates.

Adding Sections

You can add sections that you have created in the library or create sections that are specific to the template itself.

Adding Clauses

You can add clauses in one of two ways:

  • Add a clause from the Contract Terms Library directly into a section in the template.

    You can create the clause in the library from the template if the library does not have what you need.

  • Create Contract Expert rules to add clauses to the contract terms in a contract depending on the specifics of the contract.

For example, you may want to add a boilerplate jurisdiction clause directly into the template, but use a Contract Expert rule to insert the appropriate liability clause. This way a contract that calls for the shipment of hazardous materials will get a liability clause that's different from a contract that does not include any, for example.

The properties that you set up in the clause apply automatically. If you set up a clause as mandatory, you will not be able to delete the clause after it is inserted by the template unless you have the special Override Contract Terms and Conditions Controls privilege. If you set up a clause with alternates, then you can substitute any of the alternate clauses in the contract.

Note: You are not required to add any sections or clauses to a template directly. You can use Contract Expert rules exclusively, if appropriate.

Enabling Contract Expert on the Template

To use Contract Expert in a contract where the template is applied, select the Enable option in the Contract Expert region of the Create Terms Template or Edit Terms Template pages. When Contract Expert rules enabled for the template suggest additional clauses, these additional clauses are presented for your review before they are inserted in the default section specified in each clause. Depending on privileges, you can choose which clauses to insert and which to omit. If you make Contract Expert suggestions mandatory for the template, then you can reject the recommendations only if you have the special Override Contract Terms and Conditions Controls privilege.

You can also place recommended clauses for insertion n their predetermined locations, if the clauses are marked as conditional clauses and their locations are defined in the terms template associated with the contract.

Adding Contract Deliverables to Purchase Orders, Sourcing Documents, and Enterprise Contracts

For Oracle Fusion Purchasing purchase orders, Oracle Fusion Sourcing documents, and enterprise contracts, you can track compliance of tasks that the contract parties have agreed to execute as part of the agreement by adding contract deliverables.

You can use deliverables to record the status of the tasks, keep everyone notified of past and future deadlines, and as a repository of the deliverable documents themselves. For example, vendors agreeing to supply a monthly report can log in to their sourcing portal and attach the report or ask for an extension. If they fail to respond by the specified deadline, the deliverable can trigger an automatic notification that the deliverable is overdue.

Assigning a Layout Template for Previewing the Contract Terms Template

You must assign a layout template for the contract terms template so you can preview the template content, when you need to make a template selection, for example. The layout template, which you select on the General tab while editing the contract terms template, specifies what gets displayed in the preview, including the fields displayed, graphics such as a company logo, page numbering, headers and footers, and boilerplate text. This layout template is not used for printing the contract.

If you marked Contract Expert recommended clauses as conditional on the terms template, then these are displayed in gray font in the print preview to distinguish them from regular clauses.

The layout template is an RTF file stored in the Enterprise Contracts folder in the Business Intelligence Presentation Catalog. A sample layout template is provided with your application. You can copy the sample template and edit it to create your own as described in a related topic.

Specifying a Numbering Scheme

You can associate a numbering scheme to the template that will automatically number sections and clauses in the contract. Several predefined numbering schemes are available with your application, and you can create additional numbering schemes of your own.

Making the Template the Contract Default

You can have a contract terms template apply automatically in all contracts based on:

  • Contract type

  • Contract Expert rules that select the template based on the specific information in the contract itself

If you enabled the feature Enable Contract Terms in Fusion Procurement for Procurement Contracts during implementation, then you can also apply templates to procurement documents based on document type.

The following document types become available:

  • Auction

  • Bid

  • Blanket Purchase Agreement

  • Contract Purchase Agreement

  • Standard Purchase Order

  • RFI

  • RFI Response

  • RFQ

  • Sourcing Quote

While editing the contract terms template, you specify a template to be the default for a contract type or document type in the Document Types region. You can set up only one template as the default for each contract type or document type. You set up the Contract Expert template selection rules separately as described in a related topic. You can have multiple rules recommend the same template.

Here is how the default values you enter in the Document Types region and the Contract Expert template selection rules interact to select and apply a template during contract authoring:

  • Contract Expert template selection rules always take priority. If the rules specify a single template for a contract, then it gets applied regardless of the default you entered in the Document Type region.

  • If the Contract Expert rules recommend different templates, then the application uses the default from the Document Type region as a tiebreaker.

  • If no Contract Expert selection rule applies and you specified a default, then the application uses the default.

  • If you did not set up any rule or default for a contact type or document type, then you must select the template from a list while authoring.

Contract Expert Rules: How They Work

You can set up Contract Expert rules to apply contract terms templates automatically to contracts, to suggest additional clauses for insertion during contract terms authoring, and to identify any contract deviations from company policy.

Each rule comprises conditions that must be met and the rule results. You can base rule conditions on:

  • The presence of another clause already in the contract

  • The value of a system variable or a user variable

  • Questions that the contract author must answer

Different Contract Expert rule types support different condition types, as illustrated in the following figure.

  • Clause selection rules, which can default individual clauses and sections into a contract, can be based on clauses, questions, and variables.

  • Template selection rules, which identify the default contract terms template for the contract, can be based on variables only.

  • Policy deviation rules, which identify contract deviations from company policies, use questions and variables only.

The following figure illustrates the Clause Selection, Template Selection, and Policy Deviation Contract Expert rules.

Three types of Contract Expert rules.

Key rule properties include:

  • All rules can use multiple conditions linked together with either the AND or OR logical operators.

  • All rules: clause selection, policy deviation, or template selection cannot start with a numeric prefix.

  • The values of non-numeric conditions are supplied by value sets.

  • The values for numeric conditions are supplied by constants.

  • Rule types that permit the inclusion of questions can trigger follow-up questions, permitting you to chain rules together.

  • Rules are restricted to the specific business unit and the contract intent where you create them.

  • Rules do not get copied when you copy a global contract terms template to another business unit.

  • Conditions support both logical and numeric operators:

    • IS

    • IS NOT

    • IN (allows the selection of multiple values)

    • NOT IN (allows the selection of multiple values)

    • >=: (greater than or equal to)

    • <=: (less than or equal to)

    • =: (equal to)

    • > (greater than)

    • < (less than)

Clause Selection Rules

Clause selection rules permit you to insert one or more clauses and sections into a contract.

The following table describes the rule properties.

Rule Property Details

Rule outcomes

The rule can:

  • Recommend one or more clauses for insertion into the contract

    Contract authors can review the Contract Expert recommendations before the clauses get inserted into the contract. By setting the Expert Clauses Mandatory option when creating a contract terms template, you can specify if you want the clause insertion to be mandatory or if the authors can ignore the recommendations.

    If you make the insertion mandatory, then only contract authors with the Override Contract Terms and Conditions Controls privilege, a special privilege that allows deleting mandatory clauses from the contract, can reject the recommendations. Similarly, if the recommended clauses are standard clauses, then the authors must have the Author Additional Standard Contract Terms and Conditions privilege to reject the recommendations. This privilege allows the deletion of standard clauses from the contract.

    If you marked recommended clauses as conditional and specified the location of these clauses in the terms template, then Contract Expert inserts the clause in the contract in the location that you specified. If the location of an Expert suggested clause isn't specified in the terms template, Contract Expert inserts each clause in the section specified as the default for the clause in the Contract Terms Library. If no default section is specified in the clause, then Contract Expert inserts the clause into the default section specified in the contract terms template. Contract Expert automatically inserts the default section if it doesn't already exist in the contract.

  • Ask follow-up questions

    You can ask follow-up questions by adding them in the Additional Questions region of the Results tab. Any additional question that you add must be part of another rule. Adding the follow-up question chains the rules together.

When the rule is evaluated

The rule is evaluated every time that a user runs Contract Expert.

Users receive a warning message during contract validation if they fail to run Contract Expert.

Conditions

Conditions can be based on:

  • clauses

  • questions

  • variables

    You can use both predefined system variables and user variables. Both types of user variables are supported: those that require entry by contract authors and those where the values are supplied by a Java procedure.

Where it applies

The rule applies only within the business unit and for the intent that you specify. You can have the rule apply to one of the following:

  • Specific contract terms templates

  • All contract terms templates for the business unit

Contract Terms Template Selection Rules

Contract terms template selection rules permit you to automatically apply a contract terms template to a contract.

The following table describes the rule properties.

Rule Property Details

Rule outcomes

The application automatically applies a contract terms template to a contract. Or, if the author removed the contract terms using the Actions menu, the template displays the template name as the default when applying a new template.

When the rule is evaluated

The application evaluates the rule whenever the author navigates to the Contract Terms tab as long as no contract terms template is applied. If a contract terms template is applied to the contract, the template selection rules are not executed again, even if changes to the contract would result in a different rule outcome.

The rule is also evaluated to determine if the contract contains the recommended template whenever the contract author:

  • Runs the clause deviations report

  • Validates the contract terms or the contract

In both cases, the rule generates a warning if the author applied a different template from that recommended by the rule.

Conditions

Variables only

You can use predefined system variables and those user-defined variables where the values are supplied by a Java procedure.

Where it applies

The rule applies only within the business unit and for the intent specified in the rule.

Contract Expert doesn't apply a contract terms template if the contract terms template default rules you set up recommend multiple terms templates for a single contract. Instead, Contract Expert applies the contract terms template specified as the default for the business document type during contract terms template setup. If no document type default is specified, then the application displays the Add Contract Terms button and permits authors to select a template of their own choice. The choices are restricted to the templates specified for the contract type.

The following figure describes choosing a contract terms template for application to a contract.

Choosing a contract terms template for application to
a contract.

Policy Deviation Rules

Policy deviation rules identify deviations from company policies on the contract deviations report. This report is run by the contract author before submitting a contract for approval.

The following table lists the rule properties.

Rule Property Details

Rule results

The rule displays a deviation in the contract deviations report.

The rule name becomes the deviation.

When the rule is evaluated

The rule is evaluated whenever the user:

  • Runs the contract deviations report

  • Validates the contract terms or the contract

Conditions

Conditions can be based on:

  • Questions

  • Variables

    Both predefined system variables and those user-defined variables where the values are supplied by a Java procedure.

Where it applies

The rule applies only for the contract terms templates within the business unit and for the intent that you specify.

You can build rule conditions out of both questions and variables. In the contract deviation report, your entry in the Rule Name field becomes the deviation name and your entry in the rule Description field becomes the deviation description.

The following figure illustrates the policy deviation rule setup.

Contract Expert policy deviations rule.

Policy deviation rules list policy deviations in the contract deviations report, along with any clause deviations that are identified automatically by the application. Contract authors can run the report before submitting the contract for approval and enter comments to explain the deviation to the approver. The report is rerun automatically when the author submits the contract for approval and a copy of the report is attached to the approval notification.

Activating and Validating Rules

After you set up a rule, you must activate it using the Activate Rule action. Rules do not require approval before activation, but the contract terms templates that they apply to do.

Note: To activate a rule, you must assign it to at least one contract terms template. The template doesn't have to be approved at the time that you make the assignment, but it does have to be approved before the rule can be used.

Activating a rule triggers an automatic validation process. You must correct all errors before the rule gets activated.