Contracted
Services, Including Consultants, UPPS
No. 03.04.01
Speakers,
and Other Services Issue
No. 4
Effective Date: 04/21/2008
Review: August 1 E4Y
01. POLICY STATEMENTS
01.01 This
UPPS describes the policies and procedures to follow when using a contractor to
provide contracted services to Texas State University–San Marcos (Texas State).
01.02 Except
where federal or state laws prevail, or Texas State University System (TSUS)
rules and regulations or university policies prevail, each account manager at
Texas State is responsible for determining the need for contracted services in
his or her area of responsibility, recommending the award of a contract to a
contractor to perform those services, initiating the required contract
documents, obtaining any required approvals to enter into a contract and
initiating the payment process to pay for the services.
01.03 Contracted
services obtained from another state agency are procured consistent with UPPS No.
05.02.01, Interagency Cooperation Contracts.
01.04 The
University Attorney 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
Tax Specialist 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 Tax Specialist and the account manager
must determine whether the contractor will be an independent contractor or
university employee. Refer to Section 03.
02. DEFINITIONS
02.01 Personal
academic services include entertainment, performing arts services, speakers,
and guest lecturers.
02.02 Independent
contractors include 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.
02.05 Cumulative
fee is 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 required to process and execute larger
value contracts.
(Texas
Government Code Chapter 2254, “Professional and Consulting Services”.)
03. PROCEDURE FOR DETERMINATION OF CONTRACTOR
VS. EMPLOYEE
03.01 UPPS No. 04.04.08,
Contract Labor, 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 form FS-06 located on the Tax Specialist webpage (http://www.txstate.edu/gao/taxspec/).
03.02 The
account manager will submit this form to the Tax Specialist as documentation
that the individual is correctly classified as a contractor. If the account manager’s
determination is accepted, Form
FS-06 is filed with the contract and payment voucher in the Tax
Specialist’s office.
03.03 If,
as a result of completing the checklists, the Tax Specialist 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 Tax Specialist nor the account manager can agree on the
classification of the individual, the Tax Specialist will review the
classification with the Director of Accounting. 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 Tax Specialist for the proper procedures regarding payment of foreign
persons invited by the university to perform services at least thirty days
prior to their arrival on campus.
04.02 To
review federal regulations and procedures for processing payments to visiting
non-resident aliens, see FSS/PPS No. 03.09.03,
Non-Resident Alien Contract Payments.
05. PROCEDURE
FOR PAYMENT OF UNIVERSITY EMPLOYEES OR FORMER UNIVERSITY EMPLOYEES
05.01 All
university employees performing a contracted service must have an approved
contract for such work. See UPPS No.
04.04.12, Compensation in Excess of Base Annual Salary for Staff, for
policies regarding services allowed. If services are approved, payments will be
made by PCR (personnel change request) through the University’s payroll system.
Total payment for services performed which are charged to the account
designated will include matching fringe benefits. The PCR should clearly
indicate that the payment is for the performance of contracted services work.
05.02 Any
individual who has been a full time employee of the University within the past
twelve months must be paid by processing a PCR through Human Resources or
Faculty Records, as appropriate, due to the continuing relationship maintained
between the employee and the employer. The definition of employee includes
temporary employee, staff or faculty. Exceptions must be approved by the President
or designee on a case by case basis. For additional details, please see UPPS No. 04.04.08,
Contract Labor.
(IRS
Pub 1779, IRS Tax Topic 762 “Independent Contractor vs. Employee; Texas
Government Code 2252.901 “Contracts with Former or Retired Agency Employees”.)
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 Rules and
Regulations, Chapter III, Section 16.
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 thirty 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 contract must include the hourly rate,
day rate, and 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 reimbursement for the contractor’s travel or other
expenses along with the fee, it should include the maximum reimbursable amount
and the assumed travel dates. If the University is to be directly billed for
travel expenses in accordance with the contract, the account manager must
complete and approve a travel application and submit it to the Accounts Payable
Travel office.
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
and UPPS No.
03.04.04) 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 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.
08.02 Other
than the account manager approval signature on the payment voucher or contract,
no further university approval will be necessary prior to the performance of
the contracted service if the fees are less than $5,000.00.
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 purchase order
number must be referenced on the contract and the payment voucher when submitted
for payment.
09.02 At
least thirty days prior to the need for performance of the contracted services,
the account manager will send the original signed contract to the university
Tax Specialist. The Tax Specialist 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. PROCEDURE
FOR CONTRACTS - FOR CONSULTANTS ONLY - OF $25,000 OR GREATER
10.01 Consulting
services as defined in Section 02 of this UPPS, expected to equal or exceed
$25,000, require special processing. This includes transmitting notices of
intent to the Governor’s Planning and Budget Office and the Legislative Budget
Board, and the postings of an invitation to provide offers of consulting
services and notice of consultant contract award in the Texas Register.
10.02 Account
managers should contact the Director of Contract Compliance at least sixty days
prior to the need for performance of an affected consulting services contract for
the current procedures. The Governor’s Office has issued guidelines to assist
in processing these types of contracts. These guidelines may be found on-line
at: http://www.governor.state.tx.us/divisions/bpp/guidelines
11.
PROCEDURES FOR CONTRACTS
REQUIRING TSUS CHANCELLOR OR BOARD OF REGENTS APPROVAL
11.01 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,
Approval of Contracts, regarding which contracts require additional TSUS
approvals.
11.02 Normally,
requests for contract approval are prepared, reviewed and submitted no later
than 6 to 8 weeks prior to a regularly scheduled quarterly TSUS Board of
Regents’ meeting. Refer to TSUS Regents’
Rules and Regulations.
12. PROCEDURE TO REQUEST PAYMENT FOR
CONTRACTED SERVICES
12.01 The
University will pay a contractor using the Contracted Services Payment
Voucher (Payment Voucher), except as noted in Section 12.04 below. Submit
one original and one copy of the payment voucher to the Tax Specialist for
processing.
12.02 The
payment voucher is used for payments from all accounts, including general
revenue fund accounts, auxiliary fund accounts, designated fund accounts and
restricted accounts.
12.03 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.
12.04 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.
12.05 Approved
travel or other expenses may be repaid to an independent contractor on
university business or paid directly by the University on behalf of the
contractor. In order to meet IRS accountable plan rules, (1) there must be a
business connection and the expense must be reasonable; (2) there must be
reasonable accounting for the expenses; and (3) all excess reimbursements must
be repaid to the university in a reasonable time. The General Accounting Office
or the Tax Specialist must receive the payment voucher for reimbursement of
expenses within 60 days of the date the expenses were incurred. The University
will consider payments that do not meet IRS requirements as taxable income to
the vendor and will report it on IRS Form 1099-MISC.
12.06 The
University may not reimburse a university employee who pays an “out-of-pocket”
payment to an independent contractor.
12.07 Texas
State’s standard terms of payment are net 30 days in accordance with the Texas
Prompt Payment Act (Ref: 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 Assistant Director of Accounts Payable prior to the execution
of the contract.
13. REVIEWERS OF THIS UPPS
13.01 Reviewers
of this UPPS include the following:
Position Date
Associate Vice President for August 1 E4Y
Financial Services
Director of Accounting August 1 E4Y
Tax Specialist August 1 E4Y
Director of Contract Compliance August 1 E4Y
University Attorney August 1
E4Y
Vice President for Finance & August 1 E4Y
Support Services
14. 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 of Financial Services; senior reviewer of this UPPS
Vice
President of Finance and Support Services
President