Policies and Procedures for Professional Services Agreements

All of the following policies and procedures apply when The University of Iowa pays a consultant (UI employee or non-UI employee).

What is a Professional Services Agreement (PSA)?

Professional Service Agreements are contracts for unique, technical and/or infrequent functions performed by an independent contractor qualified by education, experience and/or technical ability to provide services. In most cases these services are of a specific project nature, and are not a continuing, on-going responsibility of the institution, except in the broadest sense. The services rendered are predominately intellectual in character even though the contractor may not be required to be licensed. Professional service agreements may be with partnerships, firms or corporations as well as individuals.

When is a PSA required?

A written Professional Services Agreement (PSA) must be used for consultants who are not University employees and who receive payments from the University meeting or exceeding a total cost of $5,000. If the expected fees for services meet or exceed $25,000, the University is required to issue a bid. If no other vendors can provide these services, a Sole Source Justification Form must be submitted to Purchasing for approval.


PSA Flow

How to create a PSA

Departments can download the Professional Services Agreement form. Once completed, a department can either send it to the appropriate purchasing agent for review or send it directly to the vendor for signatures. If vendor contact information is provided, the Purchasing department will send the department’s completed PSA form to the vendor.

Some of the key elements to completing this form are as follows:

  • 1st Paragraph: Add the vendor’s name and address
  • Section 1.B:
    • Enter the name of the UI individual who is coordinating the project and/or will be the main contact.
    • Enter the name and e-mail address of the main representative from the contracted vendor
  • Section 2: Provide the start and end dates for the length of this project. Enter the full name of the month and day. (Ex. October 21, 2015)
  • Section 3.A: Provide the quoted or estimated fees for the services.
    • Note: This does not include Expenses allocated in Section 3.C.
  • Section 3.C: Provide the quoted or estimated expenses for the project.
    • See the remaining details of section 3.C. for information of what is covered.
    • Note: This does not include Fees allocated in Section 3.A.
  • Section 8.B.ix: Enter in the purchasing agent’s name associated with this contract. Please contact Purchasing for verification.
  • Page 9, Statement of Work: Please provide details of work to be completed. This information may be found in the vendor’s quote or letter of proposal

Requirements for Professional Services from a Firm:

  • Completed Professional Services Agreement form
  • Purchase Order including:
    • Quote from the firm outlining the services and costs of the project
    • Draft of the Professional Services Agreement
    • Bid reference or Sole Source Justification if the costs of these services meet or exceed $25,000

Exceptions:


Requirements for Professional Services from an Individual:

  • Completed Professional Services Agreement form
  • Paper Payroll Voucher form for the full amount of services that has been approved by University of Iowa Payroll and send to Marianne Stratton or Katie Villhauer for review
  • Purchase Order including:
    • Quote from the firm outlining the services and costs of the project
    • Draft of the Professional Services Agreement
    • Bid reference or Sole Source Justification if the costs of these services meet or exceed $25,000

Exceptions:

  • If the Services provided to a department are less than $5,000, no Professional Services Agreement is required.
  • If paying an individual less than $5,000 for the project TOTAL, the department must create a Services eVoucher.
    Important: Cumulative payments to an individual from a department that meet or exceed $5,000 MUST undergo the PSA process and payments vouchered against a purchase order.
  • See more detailed list of exceptions below.

What are the exceptions to doing a Professional Services Agreement (PSA)?

A PSA is not required:

  • When project costs for the department do not meet or exceed $5,000 in total spend to a consultant.
  • When a vendor is performing offsite assembly/fabrication/construction of an item.
  • When services are performed offsite. (This includes offsite consultation and/or training.)
  • For maintenance or cleaning services.

Rules regarding UI Employees


University of Iowa Employees as Consultants

Unless otherwise justified and documented, payments to University of Iowa (hereafter "University") employees will be treated as extra compensation payments and processed accordingly. For income tax purposes, the status of such consultants will be that of University employees, not of independent contractors. The established University policy is to treat all payments to University employees for services as part of their total compensation and to withhold on them accordingly. University employees are subject to University of Iowa and Board of Regents policies and regulations, which set forth terms and rights regarding conflict of interest, inventions and intellectual property. Thus, no written Professional Service Agreement will be required when University employees perform services on University grants or contracts.  To initiate this determination, contact Payroll,Marianne Stratton or Katie Villhauer


 Non-University of Iowa Employees as Consultants

A written Professional Services Agreement must be used for consultants who are not University employees and who receive payments from the University in excess of $5,000 per project. For income tax purposes, the University of Iowa Payroll Department will determine the status of consultants who are not University employees. Whether the status of such consultants is considered that of employees or of independent contractors will be determined based on the relevant facts of each arrangement by answering the questions on the U.S. Internal Revenue Service (IRS) checklist to see whether a consultant is an independent contractor or subject to federal tax withholding. The determination should occur prior to submission on the proposal, if possible. To initiate this determination, contact Marianne Stratton or Katie Villhauer.


Recently Terminated or Retired University of Iowa Employees as Consultants (Terminated or retired within the past twelve months)

A written Professional Services Agreement is not required for consultants who are recently terminated or retired University employees. For income tax purposes, such consultants will be considered as University employees, not independent contractors, unless otherwise justified and documented. The University Payroll Department will determine whether there is sufficient justification to consider such consultants as independent contractors for income tax purposes. The determination should occur prior to submission on the proposal, if at all possible. To initiate this determination, contact Marianne Stratton or Katie Villhauer. If the Payroll Department deems the consultant to be an independent contractor, then a written Professional Services Agreement is required.


Payments 

Less than $5,000

For payments less than $5,000, the consultant must submit an invoice to the department. Payments may also be made with the Procurement Card, if accepted by vendor.

Payment to Individuals without SSN

Complete a paper Payroll Voucher form and W-8Ben form and route to payroll.

$5,000 or Greater

Payments applied to purchase orders for professional services should be submitted as an invoice on the Firm’s letterhead. Invoices for payment must be submitted to:

The University of Iowa | Accounts Payable | 202 Plaza Centre One | Iowa City, IA 52242-2500 or acntpay@uiowa.edu

All invoices should include a reference to the purchase order number assigned to the agreement and the compensation rate and number of hours or days of service if payment is to be made other than fixed fee. 

Project Total is $25,000 or greater

Purchasing and the department must review this project to establish a bid for services.  If a Bid is inapplicable, a PDF iconSole Source Justification form must be submitted with the PReq or selected on PReq form.