Purchasing a Professional Service
Last Update: November 2014
Responsible University Officer:
- University Controller
- Director of Purchasing Services
- Updated: November 2014
- Primary Contact : Beth Tapp
Printed on: . Please go to http://policy.umn.edu for the most current version of the Policy or related document.
Units may purchase professional services on an intermittent or temporary basis. Following are examples of why Professional Services would be required:
- limited or onetime use of specialized or creative skills are needed;
- the provider has unique areas of expertise;
- the purchase provides rapid access to the latest technology and the supplier has experience with its application; or
- the supplier has access to unique problem solving alternatives.
- Professional services are customized services consisting of specialized intellectual or creative expertise based on personal skills or ideas of an individual(s) provided for a fee. This is determined individually with each customer for each service contract. Examples include artistic design services, editorial services, technical expertise, and consultants.
Units must ensure that contracts with professional services providers:
- are fully and formally approved before work begins (exception for under $3,000 - process VCPS after work is done).
- comply with IRS requirements for defining employees and independent contractors.
- comply with special requirements of projects supported by sponsored funds.
- include a complete statement of work including any deliverables.
- use either the University's standard Contract for Professional Services (CPS) with no alterations, additions or omissions, or use a contract that has been reviewed and approved by the Office of the General Counsel.
- do not conflict with other University policies.
- For purchases $50,000 and over, a competitive proposal process (i.e. a Request for Proposal (RFP)) must be used to select a supplier, OR the department may complete and submit a Department Request for Exception to Board of Regents Policy if the criteria for bypassing the competitive proposal process are met.
- For purchases under $50,000 a competitive proposal process is not required, however the department may request that Purchasing Services conduct an RFP process
Conflict of Interest
Per Minnesota Statute 1543, "no employee of the State or the University of Minnesota in direct contact with suppliers and potential suppliers to the State or the University, or who may directly or indirectly influence a purchasing decision or contract ... may:
- have any financial interest or have any personal beneficial interest directly or indirectly in contracts or purchase orders for goods or services ...
- accept directly or indirectly from a person, firm, or corporation to which a contract or purchase order has been or may be awarded a rebate, gift, money, or anything of value other than items of nominal value. No such employee may further accept any promise, obligation, or contract for future reward."
A violation of this statute is classified as a misdemeanor, and may also violate federal regulations regarding sponsored funds.
Separation of Duties
Units must give careful consideration to the assignment of duties to staff in regards to procurement transactions so that the same employee is not allowed to select the supplier, place an order, receive the goods/services, approve the transactions, and process the associated voucher and payments.
This policy does not apply to purchases of standard services. Standard services are services routinely provided to a large number of customers usually at published rates without significant customizing (e.g., administrative services, dry cleaning, extermination services, equipment maintenance, laboratory testing services, lawn care, and courier services.).
Purchases of professional services between the University of Minnesota and University of Minnesota Physicians will not require review and approval from Purchasing or from the Board of Regents, but will instead be consistent with the Master Agreement for the Purchase of Goods and Services between the University of Minnesota and University of Minnesota Physicians. The Master Agreement does not apply to lease of real property from one party to the other, or to sponsored research activities and related subcontractor relationships.
The Office of the General Counsel is the only unit that may purchase legal services from an external supplier. Architect/engineer services and design services may be purchased only by Capital Planning and Project Management (CPPM) or with their authorization.
The Controller's Office must approve all purchases of any services from accounting/auditing firms. In some instances, prior approval from the Board of Regents will also be required.
Purchases of professional services from Fairview University Hospital will be handled in a manner consistent with Administrative and Board of Regents Policies: Purchasing, but purchases from Fairview University Hospital that are related to research projects will not require bidding for any dollar amount.
REASON FOR POLICY
Compliance with laws, regulations, sponsor requirements, and University policy will avoid unnecessary legal fees, fines, penalties, loss of sponsored funding, and adverse impact to the University's reputation.
- Purchasing a Professional Service
- Establishing a Basis for Supplier Selection and Price, and Assuring a Reasonable Price
- Administering Contracts for the Purchase of Goods and Services
- UM 1721: Department Request for Exception to Board of Regents Policy: Purchasing Goods and Services and Professional Services $50,000 + and Construction Professional Services $100,00+; and Construction Services $250,000+ (DOCX)
- UM 1807: HIPAA Data Collection (DOCX)
- UM 1650: Independent Contractor Authorization Form (PDF)
- UM 1669, PSIS: Professional Services Information Sheet (DOCX)
- UM 1806: Request for Proposal (RFP) Referral (DOCX)
- UM 1697: Statement of Work Attachment for Professional Services (DOCX)
- SC-514 Performance Contract for Professional Services (PCPS) (doc)
- SC-501p Contract for Professional Services Terms and Conditions (doc)
- Contract for Professional Services Forms (PDF)
- Federal Tax Withholding Instructions - Nonresident Alien Contractors
- Minnesota Tax Withholding Instructions
- RFP Evaluation Template (DOCX)
FREQUENTLY ASKED QUESTIONS
- Are the procurement requirements in the new uniform guidance in OMB 2.CFR.200.320 applicable to existing and new awards?
The University of Minnesota has chosen to delay implementation of the new procurement requirements in OMB 2.CFR.200.320 until July 1, 2016. All other regulations in OMB 2.CFR.200 are applicable to new federal awards issued after 12/26/14 and may be applicable to existing federal awards depending on agency implementation plans.
- Purchasing Services
- Policy Clarification
- Preparing a Request For Proposal (RFP)
- Evaluating a Proposal
- Non-Standard Contract
- Administering a Professional Services Contract
CPS - Contract for Service
PCPS - Performance Contract for Professional Service
QCPS - Quick Contract for Professional Service
VCPS - Voucher Contract for Professional Service
RFP - Request for Proposal
- Standard Services: Services routinely provided to a large number of customers usually at published rates without significant customizing.
- Examples are dry cleaning, extermination services, equipment maintenance, laboratory testing services, lawn care, or courier services.
- Firms rather than individuals are likely to provide these services.
- Professional Services: Customized services consisting of specialized or creative expertise based on personal skills or ideas of an individual(s) provided for a fee, which may be determined individually with each customer for each service contract.
- Examples are artistic design services, editorial services, and consultants.
- Some reasons to purchase professional services are:
- Limited or one-time use of specialized or creative skills
- Unique areas of expertise
- Rapid access to the latest technology and experience in its application
- Access to unique problem solving alternatives
- Capital Planning and Project Management
- Review and approve architectural, engineering, interior design and building maintenance services being purchased by the University.
- Review proposed professional services contracts with accounting and auditing firms for possible "impairment of independence" issues relative to University of Minnesota audits. For contracts not representing an impairment of independence, approve contracts or recommend Board of Regents approval for contracts requiring Board approval.
- Disbursement Services
- Review PSIS (Professional Services Information Sheet) to ensure compliance with IRS rules and University policies and procedures. Properly record and withhold certain federal taxes per IRS guidelines. Accumulate IRS 1099 data.
- General Counsel
- Purchase legal services for the University. Review and approve all nonstandard contracts, and all revisions or exceptions to the University's standard Contract for Professional Services terms and conditions.
- Review requisitions for foreign nationals and handle any related issues. Advise on hiring ex-employees through CPS process.
- Purchasing Services
- Develop the process for purchase of professional services. Ensure that the process complies with University policies, applicable laws, and good business practice. Execute the RFP process for purchases of professional services $50,000 and over. Review and electronically approve professional services transactions $50,000 and over.
- Requestor/Requesting Departments
- Complete electronic requisitions. Document justification for supplier selection (under $50,000). Prepare RFPs, review and evaluate supplier proposals against the RFP evaluation criteria (for professional service purchases of $50,000 and over). Designate contract administrator. Verify deliverables prior to payment of invoices on contract.
- SPA/Certified Approver
- Sponsored Projects Administration. Review and approve Contracts for Professional Services for compliance with sponsored funding guidelines.
- Board of Regents Policy: Reservation and Delegation of Authority
- Minnesota Statute 15.43 - Acceptance of Advantage by State & University Employees
- Non-Resident Alien Contractors/ Payees
- November 2014 - Comprehensive Review, Minor Revision. 1. Ink signatures are no longer necessary. 2. Links have been updated and the policy was made consistent with other administrative policies. 3. Conflict of interest information in Minnesota Statue 1543 was moved from related information to the policy statement.
- July 2008 - Revised extensively to address rollout of the Enterprise Financial System.
- April 2006 - Added Special Situations section.
- January 2006 - Reference Policy 3.7.3 - Purchasing Goods and Services in exclusions section and noted that policy 3.7.3 covers standard services.
- April 2005 - Facilities Management changed to Capital Planning and Project Management.
- February 2005 - The Purchasing a Professional Services Policy using Paper has been retired.
- January 2004 - The Policy Statement contains a new requirement that Professional Services $50,000 and over will require that Purchasing Services conduct a formal Request for Proposal process to identify a vendor to receive the contract.
- The Routing and Approvals appendix is changed to reflect the fact that since the Contract for Professional Services is now available as a financial transaction on Financial Forms Nirvana (FFN), approval routing will be done electronically. The specific approval routing for each contract is triggered by information entered by the preparer, such as dollar amount, sponsored or non-sponsored funding, type of vendor (individual or corporation) and object code.
- The Routing and Approvals appendix reflects that Contracts for Professional Services entered on FFN under $10,000 may be signed by the individual who has been delegated signature authority under the Delegation of Authority. Contracts $10,000 and over will be signed by Purchasing.
- The Routing and Approvals appendix reflects that retention of paper FFN contracts under will be the responsibility of the department. Retention of paper FFN contracts $10,000 and over will be the responsibility of Purchasing.
- The Procedures section simply links to the appropriate pages on the Financial One Stop.
- Procedure 18.104.22.168 Establishing a Basis for Contractor Selection and Reasonable Price has been significantly expanded.
- Procedure 22.214.171.124 Administering Contracts for Professional Services has been significantly expanded.
- March 2003 - Added Exclusion Section to include Master Agreement with U Physicians.
- February 2003 - Added the Guide to filling out the Professional Services worksheet in the Forms Section.
- September 2002 - Added MN New Hire Reporting Form.
- April 2002 - Changed references from "special payments" to "Non Purchase Order Related Payments".
- November 2001 - Added Paying Foreign Nationals to Appendices.
- October 2001 - Added Special Payments to Appendices.
- September 2001 - Under Definitions, Request For Proposal, deleted "outlining services to be rendered and" and replaced inviting vendors to inviting them; added "and writing vendors to offer competitive proposals to provide goods or services to the University" to the end of the sentence. Under Appendices added 1) Certified Approver Program: Payments for Services and 2) Certified Approver Program: Payments for Individuals. Revised under Responsibilities - SPA - added "and approve" after Review and deleted Approve contracts (see Contract Approvals). Deleted Sole Source Letter info because it is obsolete. Revised under Responsibilities Purchasing Services and General Counsel paragraph.
- August 2001 - Changed University Attorney to General Counsel and deleted over $25,000.
- March 2000 - Updated Contacts Section.
- June 1999 - Added Contract for Professional Services Terms and Conditions.
- February 1999 - Policy Statement Change - first bullet changed from "be formally approved" to "be fully and formally approved before work begins".
- September 1994