University of Minnesota
University Relations
http://www.umn.edu/urelate
612-624-6868
University of Minnesota
POLICY LIBRARY
POLICY
University of Minnesota
University of Minnesota
University M logo on red background
ADMINISTRATIVE POLICY
Home : Finance : Procurement and Payment

Purchasing a Professional Service

Effective Date: September 1994
Last Update: December 2008
Responsible University Officer:
  • University Controller
Policy Owner:
  • Director of Purchasing Services
Policy Contact:

Printed on: . Please go to http://policy.umn.edu for the most current version of the Policy or related document.

POLICY STATEMENT

In support of its overall mission, the University community will, at times, require access to professional services on an intermittent or temporary basis.

Professional Services are defined as customized services consisting of specialized intellectual or creative expertise based on personal skills or ideas of an individual(s) that are 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.
  • Individuals and firms are likely to be providers of these services.
  • Some reasons to purchase professional services are:
    • Limited or onetime 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.

Contracts with professional services providers must:

  • be fully and formally approved consistent with the President's Delegation of Authority 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
  • not conflict with other University policies

Additionally:

  • For purchases $50,000 and over, a competitive process (RFP) must be used to select a service provider.
  • For purchases under $50,000, the department may request that Purchasing conduct an RFP process OR the department may document some other credible basis for contractor selection, basis for price and assurance that price is reasonable.

Exclusions

This policy does not apply to purchases of Standard Services. Standard services are services that are routinely provided to a large number of customers usually at published rates without significant customizing. Firms rather than individuals are likely to provide these services.

Examples of standard services are dry cleaning, extermination services, equipment maintenance, laboratory testing services, lawn care, and courier services.

Purchases of standard services are covered by the Administrative Policy: Purchasing Goods and 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.

Special Situations

Legal services may only be purchased from an outside vendor by the Office of the General Counsel. Architect/Engineer services may be purchased only by Capital Planning and Project Management or with their authorization.

Purchases of any services from accounting/auditing firms require special approval by the Controller's Office. Purchases of goods, services and professional services from Fairview University Hospital will be handled in a manner consistent with University Purchasing Policy, 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.

PROCEDURES

FORMS/INSTRUCTIONS

Standard Contracts:

APPENDICES

FREQUENTLY ASKED QUESTIONS

There is no FAQ for this policy.

ADDITIONAL CONTACTS

Subject
Contact
Phone
Fax/Email
Primary Contact(s)
612-624-4554
  • Purchasing Services
  • Policy Clarification
  • Preparing a Request For Proposal (RFP)
  • Evaluating a Proposal
  • Non-Standard Contract
  • Administering a Professional Services Contract
Purchasing Services
612-624-2828
 
Sponsored Funds
SPA Grants Administrator
612-624-5599
 
Payment Procedures
Subject
Contact
Phone
Fax/Email
Hiring and Paying Employees
612-625-2000
 
Paying Contractors
Disbursement Services
612-624-4066
 
Tax Issues
Subject
Contact
Phone
Fax/Email
Federal Withholding Tax
Tax Treaties
Payroll Services
612-624-4585
 
State Withholding / 1099
Disbursement Services
612-624-4066
 
Immigration Issues
Subject
Contact
Phone
Fax/Email
Employment and Tax Issues
Payroll Services
612-624-4585
 
Visa Issues, Status
International Student & Scholar Services
612-626-7100
 

DEFINITIONS

Acronyms
CPS - Contract for Service
PCPS – Performance Contract for Professional Service
QCPS - Quick Contract for Service
VCPS - Voucher Contract for Service
RFP - Request for Proposal
Corporation
A business, formed and authorized by law to act as a single entity, although it is owned by one or more persons. A corporation is legally endowed with rights and responsibilities and exists independent of the owners and operators. Owners of Corporations have limited liability. Corporations doing business in Minnesota must have a state charter number or a state file number AND an Employer Identification Number (EIN).
Independent Contractor
A person who is considered self-employed and responsible for making their own tax payments. The University has no withholding or tax payment obligation for compensation paid.
Partnership
A legal entity that is jointly owned by two or more individuals (although a partner may also be a corporation or other entity) who agree to share in profit and be liable for loss. In limited partnerships, at least one partner must be liable for all losses.
Payroll Administrator

Person in a department that is trained in Payroll procedures and forms.
Professional Services Information Sheet (PSIS)
A form that collects information about professional service providers and is required as an attachment to QCPS, PCPS and CPS requisitions.
Reasonable Price
A price that can be shown to be not excessive and consistent with current market prices.
Request For Proposal
A document, usually sent to multiple vendors, inviting them to make a competitive offer to provide goods or services to the University.
Sole Proprietorship
An unincorporated business owned & controlled by one person. That person alone is responsible for profits, losses, debts and obligations. Income and expenses are reported on the person's individual tax return and taxed at that rate.
Statement of Work
An outline of what the contractor is expected to accomplish or deliver to the University for the price stated in the contract.
Types of Services
There are two types of services purchased by University colleges and departments; standard and professional services.
  • Standard Services: Services that are 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, 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) that are 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.
    • Individuals and firms are likely to be providers of these services.
    • Some reasons to purchase professional services are:

      • Limited or onetime 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.

RESPONSIBILITIES

Capital Planning and Project Management:
Review and approve architectural, engineering, interior design and building maintenance services being purchased by the University.
Disbursement Services
Review worksheet 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.
Payroll
Review requisitions for foreign nationals and handle any related issues.
Procurement Specialist
For contracts $25,000 and over, create Print Preview documents, obtain vendor and department Delegated Signature Authority signatures, and send final contract with all necessary attachments to vendor. Execute contract amendments. Oversee the processing of CPS invoices.
Purchasing Services
Develop the process for purchase of 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, and for purchases under $50,000 as requested by University departments. Review and electronically approve Professional Services transactions $25,000 and over.
Requestor/Requesting Departments
Complete electronic requisitions. Document justification for vendor selection (under $50,000). Prepare RFPs, review and evaluate vendor 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.

RELATED INFORMATION

"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:

  1. Have any financial interest or have any personal beneficial interest directly or indirectly in contracts or purchase orders for goods or services...
  2. 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."

Violation is classified as a misdemeanor and may also violate federal regulations regarding sponsored funds.

HISTORY

Amended:
July 2008 - Revised extensively to address rollout of the Enterprise Financial System.
Amended:
April 2006 - Added Special Situations section.
Amended:
January 2006 - Reference Policy 3.7.3 - Purchasing Goods and Services in exclusions section and noted that policy 3.7.3 covers standard services.
Amended:
April 2005 - Facilities Management changed to Capital Planning and Project Management.
Amended:
February 2005 - The Purchasing a Professional Services Policy using Paper has been retired.
Amended:
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 3.7.1.2 Establishing a Basis for Contractor Selection and Reasonable Price has been significantly expanded.
Procedure 3.7.1.3 Administering Contracts for Professional Services has been significantly expanded.
Amended:
March 2003 - Added Exclusion Section to include Master Agreement with U Physicians.
Amended:
February 2003 - Added the Guide to filling out the Professional Services worksheet in the Forms Section.
Amended:
September 2002 - Added MN New Hire Reporting Form.
Amended:
April 2002 - Changed references from "special payments" to "Non Purchase Order Related Payments".
Amended:
November 2001 - Added Paying Foreign Nationals to Appendices.
Amended:
October 2001 - Added Special Payments to Appendices.
Amended:
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.
Amended:
August 2001 - Changed University Attorney to General Counsel and deleted over $25,000.
Amended:
March 2000 - Updated Contacts Section.
Amended:
June 1999 - Added Contract for Professional Services Terms and Conditions.
Amended:
February 1999 - Policy Statement Change - first bullet changed from "be formally approved" to "be fully and formally approved before work begins".
Effective:
September 1994

Document Feedback

Did this document successfully answer your questions?

Additional comments: (2000 character limit)

Email Address: (so we can respond to your questions)

© 2014 Regents of the University of Minnesota. All rights reserved.
The University of Minnesota is an equal opportunity educator and employer.
Last modified on February 17, 2014