Independent Contractors

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Northern Arizona University
Purchasing Policy and Procedure

Independent Contractors

POLICY:

JUSTIFICATION FOR PROCUREMENT

When specialized skills, knowledge, resources, and experience shall be are required and services are not available reasonably by existing staff or University service departments, services may be obtained from firms and/or individuals outside the University on a fee-for-service or Personal/Professional Services Agreement/Contract basis.

Independent contractors are required to provide a certificate of insurance prior to beginning work for the University. Requirements are outlined on the Independent Contractor Request form.

DEFINITION

Independent Contractor: As defined for federal tax purposes, is an individual having no employment relationship to the State of Arizona, including Northern Arizona University (University), either by statutory, common-law, or regulatory tests. Therefore, the State of Arizona has no FICA or income tax withholding obligations for the Independent Contractor. An Independent Contractor shall be generally referred to as a “non-employee.” An Independent Contractor possesses specialized knowledge and skills, provides a specific product or service and functions autonomously in determining when and how the work shall be accomplished. Northern Arizona University utilizes Independent Contractors for services, skills or capabilities, which are not available from within the University. The University, in effect, is purchasing expertise, which it does not have.

INDEPENDENT CONTRACTOR REQUEST (ICR) FORM

The Independent Contractor Request (ICR) form shall determine that: relationship between the Independent Contractor and the State of Arizona, including the University is not one of employee/employer, that the Independent Contractor is not related to a State of Arizona employee involved with the work, or determining the outcome, and that the Independent Contractor is not a current State of Arizona employee.

NOTE: The ICR form shall be required for Independent Contractors reporting income/payments to a Social Security Number (SSN), regardless of the amount. The ICR form shall not be required for Independent Contractors reporting income/payments to a Federal Identification Number (FID).

State of Arizona employees performing work outside of their job description or performing within their job description, but outside of their home department shall be paid through their applicable payroll system. These individuals shall not be considered Independent Contractors for the purpose of this policy.

It shall be the originating end-user department's responsibility to determine if the service provider is an employee or an Independent Contractor. If it is determined that an employer–employee relationship does not exist, personal/professional services may be procured, as outlined below, based on the cost of the services.

PERSONAL/PROFESSIONAL SERVICES COSTING UP TO $5000

For personal/professional services costing up to $5000, the department shall process a Departmental Purchase Order (PD) document (Refer to Section 304.05). For personal/professional services where a Personal/Professional Agreement/Contract shall be required, the department shall utilize a requisition (RQS) document. The department may select the firm or individual that shall provide service. Selection shall be on the basis of the best qualified at a fair and reasonable price.

A completed ICR form shall be forwarded to Purchasing Services for approval. If the personal/professional services fee shall be charged to a Sponsored Project account, the ICR form shall be forwarded to Sponsored Projects Department prior to submitting to Purchasing Services for final approval. The completed ICR form shall reference the Departmental Purchase Order (PD) document number.

PERSONAL/PROFESSIONAL SERVICES COSTING BETWEEN $5,000 AND $25,000

For personal/professional services costing between $5,000 and $25,000, the department shall process a requisition (RQS) document and forward all supporting documentation to Purchasing Services for processing. Purchasing Services shall determine the need for competitive bidding (Refer to Section 305). Purchasing Services and the department shall select the firm or individual that shall provide service. Selection shall be on the basis of the best qualified at a fair and reasonable price.

Requisition (RQS) document information shall include:

· Vendor

· Scope of services

· Service start and end dates

· Fees

· Reimbursement of Expenses, if applicable

Purchasing Services shall determine the need for an Agreement/Contract for services. This determination shall be made after consultation with the department. It shall be the responsibility of Purchasing Services to prepare and review Agreement/Contract documents and secure signatures of the parties concerned.

An ICR form shall be forwarded to Purchasing Services for approval. If the personal/professional services fee shall be charged to a Sponsored Project account, the ICR form shall be forwarded to Sponsored Projects Department prior to submitting to Purchasing Services for final approval. The completed ICR form shall reference the requisition (RQS) document number.

PERSONAL/PROFESSIONAL SERVICES COSTING BETWEEN $25,000 AND $50,000

For personal/professional services costing between $25,000 and $50,000, the department shall obtain three (3) written quotes. The department shall process a requisition (RQS) document and forward all supporting documentation to Purchasing Services for processing. Purchasing Services shall determine the need for competitive bidding (Refer to Section 305). Purchasing Services and the department shall select the firm or individual that shall provide service. Selection shall be on the basis of the best qualified at a fair and reasonable price.

Requisition (RQS) document information shall include:

· Vendor

· Scope of services

· Service start and end dates

· Fees

· Reimbursement of Expenses, if applicable

PERSONAL/PROFESSIONAL SERVICES COSTING MORE THAN $50,000

For personal/professional services costing more than $50,000, sealed competitive bidding (Request for Proposal) and a formal written Agreement/Contract, executed by both parties, shall be required shall issue a Request For Proposal that shall include:

· A complete description of services to be procured or the results that shall be obtained from said services. Specifications shall be developed by Purchasing Services and the department.

· Contractual terms and conditions applicable to the procurement

· A place, date, and time for the submission of and opening of proposals

· Evaluation criteria. The evaluation criteria that shall be used in determining award of the contract shall be developed jointly between Purchasing services and the department.

Newspaper advertising shall be required.

The department shall process a requisition (RQS) document to Purchasing Services for processing.

The RQS document information shall include:

· Vendor (Use; Unknown)

· Scope of services

· Service start and end dates

· Estimated Fees

PERSONAL/PROFESSIONAL SERVICES AGREEMENTS/CONTRACTS

If the Director of Procurement, Purchasing Services, determines that a written Agreement/Contract shall be required in the procurement of personal/professional services, a standard University Agreement/Contract shall be utilized. The Agreement/Contract shall require the performance of a task, project, or study that shall be completed within a given time frame. It shall be the responsibility of Purchasing Services to finalize all Agreements/Contracts and secure signatures of the parties concerned.

Under no circumstances shall a Personal/Professional Services Contract be used to circumvent University employment procedures or to accomplish a job that could be accomplished by resources within the University.

EXAMPLES OF PERSONAL/PROFESSIONAL SERVICES CONTRACTS

· Auditing, accounting, financial services

· Legal services

· Medical and health services

· Appraisals

· Research

· Consulting services

· Surveys and studies

· Architectural and engineering services

EXCEPTIONS:

The following shall be excluded from this policy:

DESIGN AND CONSTRUCTION CONSULTANTS when procured by Capital Assets and Services.

ENTERTAINERS

HONORARIUMS

STIPENDS

GUEST LECTURER/GUEST SPEAKERS

PERFORMERS

DEFINITIONS:

DESIGN AND CONSTRUCTION CONSULTANT - Architects, engineers, land surveyors, assayers, geologists, landscape architects, construction managers, construction programmers, and construction cost consultants.

(Refer to Independent Contractor Request form)

HONORARIUM - An Honorarium is an unexpected gift, expression of gratitude, or a token of appreciation presented to an individual for services which no fee is set, agreed upon, or legally obtainable. It may be monetary, but, just as often is a small work of art or other appropriate expression. Honorariums are by definition modest in value.

(Refer to Honorarium/Stipend form )

STIPEND - A Stipend is an allowance or periodical payment. A stipend can either be compensation for services rendered or a scholarship/fellowship where no service is required. Compensatory stipends are paid through the Payroll Department. Scholarship/fellowship stipends are paid through Purchasing Services.

(Refer to Honorarium/Stipend form)

GUEST LECTURER/GUEST SPEAKER - A Guest Lecturer/Guest Speaker shall be defined as an individual distinguished in his or her field of specialization that shall visit Northern Arizona University (University) for two weeks or less to lecture or interact with students, faculty or staff.

(Refer to Guest Lecturer/Speaker/Performer form )

PERFORMER - A Performer shall be defined as an individual distinguished in his or her field of specialization who shall visit Northern Arizona University (University) and conduct artistic classes or performances and the number of performances shall be limited.

(Refer to Guest Lecturer/Speaker/Performer form)