Procurement Services works collaboratively with Contract Services in the preparation of Service Contracts, including coordinating contract review, execution, and submission to the state for Legislative/Joint Budget review and reporting. There are deadlines for submission that must be adhered to so it is strongly suggested that departments work closely with Procurement Services to ensure timely filing.
Services refer to the labor, time, or effort that a supplier furnishes as performance for separate consideration and not labor, time, or effort included in or incident to the production or sale of a commodity.
- “Included in” means that the cost of labor, time, or effort, if applicable, are covered in the cost of the commodity. For example, a department purchases a computer and the cost includes free delivery and installation.
- “Incident to” means that the cost of labor, time, or effort are not covered in the cost of the commodity but is provided for an additional fee. For example, a department purchases a computer and there is a small delivery or installation fee; the additional fee would be considered incidental to the purchase.
The following types of contracts are excluded from being considered a contract requiring services:
- Employment agreements
- Collective bargaining agreements
- Architectural or engineering contracts requiring the approval of the Division of Building Authority or the Division of Higher Education.
- Other commodities and services exempt by law. This means that exempt purchases do not require state reporting or review.
Technical and general services include work involving time, labor, and a degree of expertise, where performance is evaluated based upon the quality of the work and the results produced, or work performed to meet a demand, especially work of a recurring nature that does not necessarily require special skills or extensive training. TGS contracts specify the performance standards expected in the rendering of services.
Examples include, but are not limited to: delivery of standard training programs, data entry, transport service, actuary service, collection service, certain repair services, translation (interpreter) services, janitorial service, guard service, pest control, lawn care service, and waste disposal services.
Professional services are services where the contract specifies the performance standards expected from the rendering of the services, rather than detailing the manner in which the services shall be rendered.
Such services are generally acquired to obtain information, advice, counsel, or direct assistance. Under such a contract, the university would have no direct managerial control over the day-to-day activities of the contractor providing the service.
Examples include, but are not limited to: attorneys, architects, accountants, engineers, physicians, and technology experts.
Reporting Requirements
A contract for services must be reported if the total initial contract amount is at least twenty-five thousand dollars ($25,000) but less than an annual contract amount of fifty thousand dollars ($50,000) in any one (1) contract year or a total projected contract amount is less than three hundred fifty thousand dollars ($350,000).
- All executed contracts for services between $25,000 – $49,999.99 must be reported to the legislature.
- This applies when the annual contract amount or total projected cost including any amendments or possible extensions place the contract within this value range.
- Amendments that do NOT include a “material change” do not go for review but are entered into the Office of State Procurement portal for reporting purposes.
- Emergency Procurements over $20,000.
Review Requirements
A contract requiring the services of one (1) or more persons shall be presented to the Legislative Council/Joint Budget Committee if the annual contract amount is at least fifty thousand dollars ($50,000) in any one (1) contract year or if the total projected contract amount, including any amendments or possible extensions, is at least three hundred fifty thousand dollars ($350,000).
- Service contracts with an annual contract amount of $50,000 or if the total projected contract amount (including any amendments or possible extensions) is at least $350,000 must be presented to the Legislative Council/Joint Budget Committee for review prior to the execution of the contract.
- Amendments that include a “material change” will need to be reviewed.
Material Change
A “material change” is defined as:
- An increase in the contract amount.
- An increase in the total projected contract amount.
- A change in any of the essential terms of the contract.
- A change in any performance-based standards.
- The submission of a vendor performance report during the year preceding the renewal or extension of the contract.
Note: An agency may elect to submit a contract for review if it is uncertain whether the contract has a material change.
Services over $25,000 must comply with Act 557 standards and reporting. The following additional documents may also be required. The OSP Checklist for Service Contract Submissions and all of the documents below are located on the OSP Service Contract Resources website.
- Contract and Grant Disclosure. Required for initial contracts and extensions $25,000 or greater.
- Combined Certifications Form. Required for the initial contract and all extensions.
- Equal Employment Opportunity Policy (EEO). One-time submission unless policy changes for contracts $25,000 or greater.
- Bid tabulation sheet
- Justification for the method of procurement (Sole Source or Special Procurement)
- Service Contract Form SRV-1. Required for contracts with an annual contract amount totaling $50,000 or greater.
- Service Contract Amendment Form SRV-1A. Required for contract amendments with annual contract amount totaling $50,000 or greater.