Contracted Services, Including Consultants,                 UPPS No. 03.04.01

Speakers, and Other Services                                           Issue No. 5

Effective Date: 01/06/2016

Review: August 1 E4Y

Sr. Reviewer: Assoc. Vice President for Financial Services

 

 

01.       POLICY STATEMENTS

 

01.01  This policy describes the procedures to follow when using a contractor to provide contracted services to Texas State University.

 

01.02  Due to changes in state law implemented by SB 20 in the 84th Legislative Session, all requests, contracts, and bids should be submitted to Procurement and Strategic Sourcing for compliance review prior to services beginning. All contracts should follow university, federal and state laws.

 

01.03  Contracted services obtained from another state agency are procured consistent with UPPS No. 03.04.07, Interagency or Interlocal Cooperation Contracts or Agreements.

 

01.04  The Texas State University System (TSUS) associate general counsel must approve in advance contracts prepared by outside entities. These contracts should not commit the university to undesirable obligations and should conform to Texas law.

 

01.05  The Office of Procurement and Strategic Sourcing reports contracts using appropriated funds with a “cumulative fee” that is equal to, or greater than, $14,000 to the Legislative Budget Board according to the Board’s requirements.

 

01.06  It is in violation of state and federal laws to hire someone as an independent contractor who would otherwise be hired as an employee of the university. Before hiring the services of a contractor, the director of Payroll and Tax Compliance, the assistant director of Procurement and Strategic Sourcing, and the account manager must determine whether the contractor will be an independent contractor or university employee (see Section 03.).

 

02.       DEFINITIONS

 

02.01  Personal Academic Services – entertainment, performing arts services, speakers, and guest lecturers.

 

02.02  Independent Contractors – sole proprietors, partnerships, or corporations that perform services for the university and provide services to the general public. Subcontractors under a sponsored program are included in this category.

 

02.03  Professional Services – as defined by Texas Government Code, Chapter 2254, Subchapter A, are within the scope of the practice, as defined by state law, of accounting; architecture; landscape architecture; land surveying; medicine; optometry; professional engineering; real estate appraising; or professional nursing; or are provided in connection with the professional employment or practice of a person who is licensed or registered as a certified public accountant; an architect; a landscape architect; a land surveyor; a physician, including a surgeon; an optometrist; a professional engineer; a state certified or state licensed real estate appraiser; or a registered nurse.

02.04  Consulting Services – as defined by Texas Government Code 2254, Subchapter B, include the service of studying or advising a state agency under a contract that does not involve the traditional relationship of employer and employee. A consultant is generally one who provides services to a university department to develop or review curriculum or policy, or provides a similar service to the entire university. Only a primary contracting official (as defined in Section 02. of UPPS No. 03.04.02, Contracting Authority) may sign a contract for consulting services, regardless of the amount involved.

02.05  Cumulative Fee – the amount expected to be paid in total by Texas State to the contractor for performance of the contracted work during the fiscal year. Contracts shall not be subdivided or broken down into a series of smaller value contracts to avoid the increased scrutiny, required approvals, or notification, posting, solicitation, or reporting requirements needed to process and execute larger value contracts.

02.06  Payment Voucher – a document that is prepared to request payment from a university account. Payment vouchers must either contain sufficient information to support the business purpose and required approvals or sufficient information must be attached to the payment voucher. 

03.       PROCEDURE FOR DETERMINATION OF CONTRACTOR VS. EMPLOYEE

 

03.01  UPPS No. 04.04.08, Determining Contract Labor and Independent Contractor Status, establishes policy for correct classification of an individual to be hired by the university to perform services as an independent contractor. Before hiring an individual as an independent contractor, the account manager must complete the Independent Contractor Determination form FS-06 located on the Procurement and Strategic Sourcing Web page.

 

03.02  The account manager will submit this form to the assistant director of Procurement and Strategic Sourcing as documentation that the individual is correctly classified as a contractor. If the account manager’s determination is accepted, the Independent Contractor Determination form FS-06 is filed along with a copy of the payment voucher in the Procurement and Strategic Sourcing office. The original payment voucher is sent to Accounts Payable for payment after all approvals have been obtained.

 

03.03  If, as a result of completing the Independent Contractor Determination form FS-06, the assistant director of Procurement and Strategic Sourcing and the account manager determine that the individual should be classified as an employee, the account manager will begin the employment process for the individual in accordance with UPPS No. 04.04.03, Staff Employment.

 

03.04  When neither the assistant director of Procurement and Strategic Sourcing nor the account manager can agree on the classification of the individual, the assistant director of Procurement and Strategic Sourcing will review the classification with the director of Payroll and Tax Compliance. The president or the president’s designee may provide the final approval.

(IRS Pub 1779, IRS Tax Topic 762, Independent Contractor vs. Employee)

 

04.       PROCEDURE FOR PAYMENT TO FOREIGN PERSONS

 

04.01  Contact the director of Payroll and Tax Compliance for the proper procedures regarding payment of foreign persons invited by the university to perform services at least 30 days prior to their arrival on campus.

 

04.02  To review federal regulations and procedures for processing payments to visiting non-resident aliens, see UPPS No. 03.04.06, Nonresident Alien – Honorarium and Contracted Services Payments.

 

05.       PROCEDURE FOR PAYMENT OF UNIVERSITY EMPLOYEES OR FORMER UNIVERSITY EMPLOYEES

 

05.01  Any payment to a university employee performing contracted services must be evaluated to determine if the payment will be processed by a personnel change request (PCR) or if the payment will be paid as contracted services via Accounts Payable. When services are within the scope of the employee’s job duties, payment will be made via PCR. When services are beyond the scope of the employee’s job duties, payment may be made via form FS-03 through Accounts Payable. Account managers and supervisors should consult Human Resources or the assistant director of Procurement and Strategic Sourcing for assistance with that determination.

 

05.02  Payments made via PCR should follow all relevant guidelines including UPPS No. 04.04.12, Compensation in Excess of Base Annual Salary for Staff, and UPPS No. 04.04.08, Determining Contract Labor and Independent Contractor Status. Total payment will include matching fringe benefits.

 

05.03  When an individual who has been employed full time with the university within the last 12 months is to perform a contracted service, the account manager should consult with Human Resources or the assistant director of Procurement and Strategic Sourcing for assistance prior to services beginning.

 

06.       PROCEDURE TO REQUEST A UNIVERSITY VENDOR IDENTIFICATION NUMBER

 

06.01  If the contractor does not have a university vendor identification number (university financial system vendor number) assigned, or has a change of address or banking information, the contractor must complete and sign the Vendor Maintenance Request form.

 

07.       PROCEDURE FOR PROCESSING CONTRACTS

 

07.01  In selecting the contractor, the account manager will base the choice on “best value” or demonstrated competence and qualifications, and on the amount of the fee. If competitive solicitation is required, the account manager will base the choice on the best value to the university, as defined in the TSUS Board of Regents Rules and Regulations, Chapter III, Section 17. When all other considerations are equal, preference will be given to an independent contractor whose principal place of business is within the state of Texas.

 

07.02  Account managers should allow at least 30 days prior to the performance need date for the processing of the contracted services paperwork. They should allow a longer time when contract services require a formal notification or a solicitation process, posting in the Texas Register or the Electronic State Business Daily, or additional university or TSUS approvals.

 

07.03  The account manager must negotiate the fee offered for contracted services. The agreement must include the rate of pay, total fee to be paid or not to exceed amount, and the dates of service to be performed. The university prefers that the fee include material, travel, and other expenses; however, Texas State may pay for travel or incidental expenses in addition to the fee agreed upon in the contract.

 

            If the contract provides for payment of the contractor’s travel separate from the contracted services fee, the agreement should include the maximum reimbursable amount for travel and the planned travel dates. The account manager must also complete and obtain pre-approval for the travel in compliance with the university’s travel procedures. All reimbursements to the contractor or direct-billed expenses paid on behalf of the contractor must comply with the university’s travel procedures.

 

07.04  The account manager is responsible for obtaining all required approvals. Persons authorized to obligate the university in accordance with its policies (UPPS No. 03.04.02, Contracting Authority, and UPPS No. 03.04.04, Processing, Approving, and Executing Contracts, Purchases, and Agreements) must approve the contract. Individuals not authorized to sign contracts for the university may be held personally liable for any damages resulting from the repudiation of the contract.

 

07.05  The Contracted Personal Services Agreement (contract, or standard university contract) is used as a template for the standard university contract agreement.

 

07.06  Regardless of the cumulative fee of the contract, the account manager will assure that sufficient funds are available, reserved, committed, or obligated to pay the contract.

 

08.       PROCEDURE FOR CONTRACTED SERVICES OF LESS THAN $5,000

 

08.01  A standard university contract, while recommended, is not necessary if the fee for services to be performed during the fiscal year is expected to be less than $5,000. However, if travel or other expenses are to be reimbursed in addition to a fee, a contract is necessary. Without a formal contract, arrangements for services should be reduced to writing in order to eliminate any misunderstanding about expectations, deliverables, terms, and conditions or compensation.

 

09.       PROCEDURE FOR CONTRACTED SERVICES OF $5,000 OR GREATER

 

09.01  If the cumulative amount of payments to the contractor for contracted services during the fiscal year is expected to equal or exceed $5,000, the account manager must encumber the funds through the creation of a purchase requisition in the University Financial System, and obtain a Texas State purchase order number in addition to completing a standard university contract. The contract number and purchase order number must be referenced on the contract and the payment voucher when submitted for payment. If line items related to the purchase order can be identified on the invoice, they should also be noted.

 

09.02  At least 30 days prior to the need for performance of the contracted services, the account manager will send the original signed contract to the assistant director of Procurement and Strategic Sourcing. The assistant director of Procurement and Strategic Sourcing will review the contract for completion and proper approvals, keep a copy on file, and return any additional copies upon request to the account manager.

 

10.       PROCEDURES FOR CONTRACTS REQUIRING TSUS CHANCELLOR OR BOARD OF REGENTS APPROVAL

 

10.01  Requests for contract approval by The TSUS chancellor or Board of Regents will be submitted by the vice president for Finance and Support Services. Refer to UPPS No. 03.04.04, Processing, Approving, and Executing Contracts, Purchases, and Agreements, regarding which contracts require additional TSUS approvals.

 

10.02  Normally, requests for contract approval are prepared, reviewed and submitted no later than six to eight weeks prior to a regularly scheduled quarterly TSUS Board of Regents’ meeting. Refer to TSUS Board of Regents Rules and Regulations.

 

11.       PROCEDURE TO REQUEST PAYMENT FOR CONTRACTED SERVICES

 

11.01  The university will pay a contractor using the Contracted Services Payment Voucher (Form FS-03), except as noted in Section 11.03. Submit the payment voucher to the assistant director of Procurement and Strategic Sourcing for processing.

 

11.02  The contractor must sign the fully completed payment voucher unless an invoice from the contractor’s company is attached and verified. The name on the payment voucher or invoice must match the contractor’s name in the University Financial System. The account manager must sign the payment voucher. The designee in the Office of Sponsored Programs must sign the voucher if using sponsored program funds.

 

11.03  A vendor invoice may replace a payment voucher only if the invoice includes a Texas State purchase order number and a vendor number. The vendor name and address on the invoice must match the vendor name and address in the University Financial System. The invoice must contain the performance dates and description of work performed. The invoice must have the same approval signatures that are required by the payment voucher.

 

11.04  Approved travel expenses may be paid under the university’s travel procedures. The Travel Office must receive any travel expense reimbursement requests within 60 days of the date the travel concluded.

 

11.05  The university may not reimburse a university employee who pays an “out-of-pocket” payment to an independent contractor.

 

11.06  Texas State’s standard terms of payment are net 30 days in accordance with the Texas Prompt Payment Act (see Texas Government Code Chapter 2251, Payment for Goods and Services). Alternate payment terms proposed by a contractor, including pre-payment, installments, or requiring payment in less than 30 days, must be reviewed by the director of Procurement and Strategic Sourcing prior to the execution of the contract.

 

12.       REVIEWERS OF THIS UPPS

 

12.01  Reviewers of this UPPS include the following:

 

Position                                                         Date

 

Associate Vice President for                      August 1 E4Y

Financial Services

 

Director, Accounting                                   August 1 E4Y

  

Director, Procurement and                         August 1 E4Y

Strategic Sourcing

 

13.       CERTIFICATION STATEMENT

 

This UPPS has been approved by the following individuals in their official capacities and represents Texas State policy and procedure from the date of this document until superseded.

 

Associate Vice President for Financial Services; senior reviewer of this UPPS

 

Vice President for Finance and Support Services

 

President