Research Foundation Policy Related to the Procurement of Services
Obtaining Independent Contractors and/or Lecturer Services
Exactly what does and does not constitute a consultant agreement can be extremely tricky to enumerate. The task is even more complicated because the body of law is constantly evolving. In general, an independent contractor should work with minimal direction, at his own time, and in his own way. The more you direct or lay constraints and restrictions on an individual, the less likely that individual is to be judged a consultant rather than an employee.
Bear in mind that classifying a worker as an independent contractor rather than, as an employee may appear to result in financial savings and less paperwork. However, if the employee is misclassified as an independent contractor, these perceived advantages are offset by the potential penalties that could be assessed by the Internal Revenue Service. Therefore, to claim an individual or firm as a consultant, thus avoiding the withholding process is a very questionable practice, which we must prevent.
Definitions of the most frequently used categories of independent contractors follow. However, the overall definition of an independent contractor is "a worker subject to the control and direction of the organization for which services are performed only as to the RESULT of the work and not as to the MEANS".
Consultant: an individual or firm processing expertise in a particular field that is engaged to give advice or perform a specific task in return for an established fee.
Incidental Lecturer: an individual having specialized knowledge on a particular subject who is engaged to convey this knowledge by delivering a one-time lecture on a specific area of expertise. Note: if the speaking engagements are extensive, and will take place over a period of time (more than one day), then the individual must be classified as an independent contractor. It should also be noted that a lecturer with an ongoing working relationship might be considered an employee.
Honorarium: A payment given to professional person for services for which fees are not being charged. An honorarium is usually paid to a lecturer or speaker when the speaking engagement is not extensive or the lecturer does not ask for compensation. NOTE: Employees of the State University of New York are limited to a reimbursement of $100.00 per day.
Technical Service: an individual or firm rendering technical and professional service for a fee. Note: in general, individuals, as opposed to corporations, rendering technical services are employees.
Selection of consultants and determination of appropriate fees are the responsibility of campus personnel who must consider the following policies of the Sponsor, the Research Foundation, and the College.
Documentary evidence that the services to be performed are essential and cannot be provided by persons receiving salary support or other compensation under the grant for their services. Note: an individual who is already on Research foundation payroll, regardless of the account from which they are paid, is not eligible to perform services as an independent contractor.
Evidence that a selection process was employed resulting in the selection of the most qualified consultant. The selection process must fall within these guidelines and limits set forth for the procurement of services, sponsor regulations and funds available.
The Project Director may NOT enter into any agreements with consultants that are motivated by potential gain or which give even the appearance of an apparent conflict of interest. A copy of the Research Foundation Conflict of Interest Policy must be provided to each potential consultant during the selection process.
Documentation that the charge to the sponsored program is appropriate considering the qualifications of the consultant, the level of fees charged by other consultants in the specific area of expertise, and the nature of services rendered. The policies are subject to sponsor regulations.
Evidence that the independent contractor has been correctly classified, that the IRS regulations have been applied and that the independent contractor's status should not be that of an employee, vendor contract, or sub recipient.
Travel expenses including lodging or subsistence costs provided under the agreement with the consultant may be reimbursed. Such travel expenses may be included as part of the consultant fee or paid separately if substantiated by receipts.
When the sponsor is an agency of the Federal government, consultant fees may not be paid to Federal employees without prior written sponsor approval.
Services of SUNY Faculty and Staff
Payments to academic and professional employees of SUNY for services performed as an independent contractor are permitted, provided that all of the following criteria are met:
Such services fall within the definition of independent contractors as previously stated.
The proposed independent contractor or lecturer is not a member of the Project Directors' own department.
The work to be performed will be in addition to the employee's normal obligation.
Such an engagement is allowable and conforms to any limitations that may be imposed by sponsor policy.
The processes for selection of external consultants are followed and rates of reimbursement are consistent with those charged by other recognized independent contractors in the field.
Payments in Excess of $5,000.00:
A contract is required for independent contractor charges of $5,000.00 or more. It is preferable that the contract be fully executed PRIOR to the services actually being rendered.
To generate this contract, the project director should submit the Independent Contractor Agreement Instructions Form to the Campus Research Foundation office. Research Foundation will process the contract and mail along with the purchase order to the contractor for signature. When the fully executed contract is received from the consultant, Research Foundation will forward a copy to the project director.
In some instances, sponsor approval is also required. When this is the case, documentation of sponsor approval should be provided before the contract is fully executed.
It usually takes about two weeks for the Research foundation to approve the consultancy, generate the purchase order, and fully execute the contract. Therefore, we recommend that requests for procurement of consultant services should be submitted at least ten working days prior to the date that the services are needed.
Research Foundation procurement policy requires that when the amount of the goods and services to be provided by the independent contractor are between $10,000.00 and $25,000.00 that three verbal or written price quotes be obtained. For payments to independent contractors in excess of $25,000.00 three written bids are required.
Payment Documentation and Requirements
Payments to independent contractors are made through the vendor payment process. Requests for payments must be supported by an appropriate statement of services performed. The Project Director must approve the payment and certify that the services were satisfactorily rendered. Signing and returning the gold copy of the purchase order provides this certification.
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