Systems and Procedures
A Division of The Corporate Controller's Office

Procedure PC2008 - Instructions for the Procurement and Payment of External Consultants

Auxiliary & Business Services - Procurement Services

Policy Steward facilitating procedure: Associate Vice President for Auxiliary & Business Services

Table of Contents:


GENERAL:

A consultant is defined as an individual or organizational entity who is exceptionally qualified, by education or experience in a particular field, to render an opinion or give advice that is unavailable from an employee of the University. Employees of Penn State may not be hired as a consultant.

Policy BS17 provides guidelines specific to the use and procurement of a consultant, which is a form of purchased services. This procedure describes, in greater detail, the actual process involved in procuring and paying a consultant.

PROCEDURE:

The Role of the Area Initiating A Request for a Consultant

Read and understand Policy BS17.

Be sure that the need for a consultant is clear and justifiable. The nature of the services to be provided must be clearly defined. Deliverables must be established and work parameters such as the time frame or restrictions placed upon the University by external sources must be identified. Identify any particular skills or qualifications that the ideal consultant should possess as well as the minimum acceptable capabilities.

Identify potential consultants that would be able to provide these services within those specifications. Purchasing Services and the purchasing departments at the Applied Research Lab and Hershey Medical Center are willing to assist in the search for potential consultants. It is desirable to have informal discussions with potential consultants in order to ascertain the capabilities and suitability of a consultant for the task at hand as well as discussing cost approximations. Do not make any manner of verbal agreement with, or commitments to, any potential consultant.

A summary of the Policy BS17 rules for competitive bidding and the responsibility for price quotations follows. If the anticipated amount of consulting services will be under $5,000, competition is not required if prices from the suggested source are known to be reasonable . If the amount will be $5,000 to $24,999, either informal quotes must be obtained by the University department interested in obtaining the consultant, or the purchasing entity may chose to initiate a formal bid process. If the amount will be $25,000 or over, the purchasing entity must conduct formal bidding. Should a requisitioner feel that a specific Consultant is required, and the anticipated amount of consulting services will be $5,000 or more, justification is necessary to document why competition is restricted.

Once a pool of capable qualified consultants has been identified, select the most desirable consultant based upon the criteria that were established earlier.

If the preferred potential consultant is an individual, a Determination of Independent Contractor /Employee Status worksheet must be completed.

If the completed worksheet indicates that the individual is to be treated as an employee, the individual may NOT be hired as a consultant.

If the worksheet indicates that the individual is to be treated as an independent contractor, complete a Consulting Justification Form (Exhibit "A"). This form asks for much of the information just described.

If only one qualified consultant is indicated, and the total anticipated cost of the consultant is $5,000 or more, the Single/Sole Source Justification - which is the last page of the Consulting Justification Form - must be completed; or informal quotes must be provided. Be sure to provide as much useful information as possible on these forms.

Obtain the approval of the individual requesting the consultant. If restricted funds are to be used for consultant services, the justification form must be forwarded to the Office of Research Affairs at the Hershey Medical Center, or the Office of Sponsored Programs at University Park. Those offices will secure the approval of the Senior Vice President for Research and Graduate Education.

A Purchase Order Requisition must be completed and submitted. (Use either the Applied Research Lab or Hershey Medical Center versions for those areas, or the PURC for all others). The description area of the form must make reference to "Consulting Services." The object code 392 must be used in the budget distribution section of the form in all cases. Use the preferred consultant choice as the "suggested vendor."

For the Applied Research Lab and Hershey Medical Center, attach the completed Determination of Independent Contractor / Employee Status worksheet, and the approved Consulting Justification Form (and supporting documentation, if applicable) to the Purchase Order Requisition, and submit for normal Policy FN18 approvals and processing through those respective purchasing departments.

For PURC users, mark the completed Determination of Independent Contractor / Employee Status worksheet, the Consulting Justification Form (and supporting documentation, if applicable), with the IBIS document number of the PURC so that Purchasing Services will be able to match that paperwork to the respective PURC. Submit the PURC for approvals and processing under IBIS, and forward the completed Determination of Independent Contractor /Employee Status worksheet, the Consulting Justification Form (and supporting documentation, if applicable), to the first approver on the IBIS approval path. The last approver must send this paperwork to Purchasing Services.

The Role of the University Purchasing Entities in Processing Requests

The purpose of Purchasing Services and the purchasing departments at the Applied Research Lab and Hershey Medical Center is to protect the University's interests by assuring that proper University purchasing policies and procedures have been met, and that the University is getting the best quality services at the best price for the particular work to be done. These purchasing entities depend primarily upon the information submitted on the Purchase Order Requisition and Consulting Justification Form to make those judgments. Therefore, it is imperative that the area submitting those forms provide as much useful information as possible in support of the area's selection of the preferred vendor.

The appropriate purchasing entity will review the Purchase Order Requisition, Determination of Independent Contractor / Employee Status worksheet, and Consulting Justification Form for completeness. The purchasing entity will also be responsible for any bid solicitation required by University Policy BS17.

Once a consultant has been determined, the purchasing entity will complete and sign either a General Consulting Agreement (Exhibit "B") or an ARL Consulting Agreement (Exhibit "C"), along with any attachments. The appropriate agreement will be sent to the selected consultant along with a Purchase Order, University travel policies, a supply of Consulting Service Invoice forms (Exhibit "D"), and any other instructions for the consultant.

The Role of the Consultant in Accepting the Agreement

The consultant will be asked to review and accept the Agreement. If accepted, the consultant must sign the Agreement and return it to the purchasing entity. If unacceptable, the consultant must return the Purchase Order and the unsigned Agreement to the purchasing entity along with an explanation of why it is unacceptable.

The Role of the Consultant in Submitting Requests for Payments

The consultant will be asked to submit a billing on Penn State's Consulting Service Invoice. The use of this invoice will help to assure that Penn State receives specific information in a format that will facilitate payment processing. The consultant may attach his/her/its own business invoice, in which case the Consulting Services Invoice becomes a cover sheet, and the consultant's business invoice a support document.

The consultant shall submit invoices to the respective purchasing entity which issued the Purchase Order.

The Roles of the Purchasing Entity and Individual Who Requested a Consultant in Processing Requests for Payments

Upon receipt of a Consulting Service Invoice from a consultant, the purchasing entity will review the Invoice and attachments for completeness.

If deficient, the purchasing entity will contact the consultant for resolution. If complete, the purchasing entity will make a copy of the Invoice and attachments and send it to the individual within Penn State responsible for requesting the consultant (as indicated on the Consulting Justification Form). The purchasing entity retains the originals.

The individual within Penn State responsible for requesting the consultant must review the Invoice and documentation and determine if the charges are reasonable for the technical effort completed. The reviewer must indicate his/her approval on the Consulting Service Invoice and return the Invoice to the purchasing entity with a completed Receiving Report.

If the reviewer determined the charges to be unreasonable, the purchasing entity will attempt to resolve the billing with the consultant. If the charges are determined to be reasonable, the purchasing entity will process the Invoice for payment using normal processing procedures as for any other service.

Modifications to Consulting Agreements and Purchase Orders

If the need arises to make an adjustment to a consulting agreement and Purchase Order after they have been executed and sent to a consultant, a Purchase Order Change Form must be completed by the individual who submitted the original Consulting Justification Form. This form, along with specific details of the requested changes, must be submitted to the appropriate purchasing entity.

Purchasing Services and the purchasing department at the Hershey Medical Center will issue an Agreement Modification (Exhibit "E") to the consultant. The purchasing department at the Applied Research Lab will issue an ARL Agreement Modification (Exhibit "F") to the consultant. The Modification will be processed by the purchasing entity and the consultant as previously described for the original Agreement.

Forms Availability

A Consultant Procurement Packet is available to departments who wish to procure an external consultant. The packet contains a copy of this procedure, Policy BS17, a Determination of Independent Contractor / Employee Status worksheet and a Consulting Justification form.

AUDIT COORDINATION - FINANCIAL AND PROCEDURAL

The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area, as well as performing an annual audit that is submitted to the Assistant Controller.

RECORD RETENTION, DISPOSITION AND DESTRUCTION:

Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management, and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.

Upon expiration of a stated period of time, documents must be discarded and/or destroyed, unless permission is granted by Records Management Officer or designee to retain the records. Archival records created more than 20 years prior to the current date must be reviewed before destruction. Units should also contact the University Archivist before discarding any document which may be of permanent or historical value to the University. To safeguard the privacy of individuals, documents that contain salary information, personally identifiable information (PII), or student records must also be shredded. See Policy AD53 - Privacy Policy and AD22 - Health Insurance Portability and Accountability Act for additional information regarding privacy and the protection of an individual's personal information. For documents that must be shredded, departments may arrange for Blue Bag service by contacting the Blue/White Shredding Program of the Office of Physical Plant. Exceptions to the practice are as follows:

Additional questions may be directed to the University Archivist or the Records Management Officer.

EXHIBITS:

CONTACT INFORMATION:

For questions, additional detail, or to request changes to this procedure, please contact the Director of Procurement Services.

CROSS REFERENCES:


Procedure Status:

Date Approved: 03/27/00

Most recent changes:

Revision History (and effective dates:)