IMPORTANT NOTE: For individuals seeking to do business as an independent contractor, the Conflict of Interest Certification Form MUST be utilized, and all must complete Part A.  If required, Part B must be submitted to the Director of  Business Services.

See Consultant Agreements for the distinction between that activity and a PO for an independent contractor's professional services. 

UC Regents’ policy Business & Finance Bulletin 77 mandates that issuing PO's to individuals for services should be a rare occurrence, and that the common practice should be hiring individuals as employees, whether full-time, part-time, temporary, limited or contract employee status.

Always use a BFS requisition through Procurement Services, so that a Campus Buyer can issue a PO.Whenever a transaction is going through Procurement Services it is a priori a business transaction, meaning that the supplier is a business providing goods or services and must provide a proposal/quotation. 

The risk of the work performance must be transferred to the supplier in all cases, and they must show evidence of business liability insurance naming the UC Regents as additional insured, as per the requirements set forth in UC’s Terms and Conditions of Purchase (Appendix A) and incorporated in all purchase orders for services.  More specific details about reccommended insurance coverage can be found on the website of the Office of the President for the University of California in Business and Finance Policy B63 (http://www.ucop.edu/ucophome/policies/bfb/bus63.pdf).

We need to clearly define a business relationship with the individual (who is a business concern) proposing to provide well-defined services for predetermined fees.

* Independent Contractor Pre-Hire Worksheet:

http://www.ucop.edu/ucophome/policies/bfb/bus34a3.pdf

This form is completed and signed by the person in the campus dept. with the responsibility of determining employee hiring issues, and is used by Procurement Services to determine appropriateness of Independent Contractor status (vs. employee).

* Business Information Form (under “Policies and Forms” at the link below):

http://www.ucop.edu/purchserv/policiesfrms.html

This form is completed by the supplier. Its purpose is to provide further evidence of the appropriateness of non-employee status for the individual. Information presented here supports the presentation of the individual as a bona-fide, ongoing business concern. (NOTE: The individual may already have material supporting this so that the completion of this form may or may not be necessary; this would have to be determined based on what was provided.)

* Justification in writing - There should be a written justification explaining why this source for the service was selected and how it was determined that the price is reasonable. Were other businesses considered? If so, what are the details of the comparison? If not, why not? Was there any price comparison?

* Proposal in writing - As with all procurements of goods or services, the vendor/supplier (in this case, independent contractor) needs to provide a written proposal and price quotation, dated, on supplier letterhead .

* Payment Schedule - An issue that is paramount is that fees charged must be clearly linked to scheduled deliverables. If there is a desire for periodic invoicing and payments (not a flat fee at the end) or progress milestone payments, then those progress milestones need to be identified along with their timetable and associated costs. Individuals cannot be paid on an hourly basis that is paid monthly, for example. Such a relationship would support the need to hire an employee. Hourly rates should be used by the individual only as a means of determining a fee; the contractor should charge the University fees for "product"(scheduled deliverables). Here is a chart that outlines a clear link between scope of work, deliverables, schedule and fees which should be helpful to use as a guide in establishing a breakdown of fees and payment schedule (see Attachment – “Four Elements” Chart).

Whenever an independent contractor balks about the need to have routine business liability insurance (an industry standard), or the need to provide a proposal representing an offer of goods or services, those are red flags that the individual isn’t really a business but wants to act like an employee and should probably be hired as a temporary appointment employee instead.

We are always dealing with a choice of two methods: employment or business transaction.

Please be advised that whenever a P.O. is issued to an individual as a business concern (i.e.,” independent contractor”) as opposed to a company name, these are the issues that must be addressed: The alternative is for your department to hire them as a limited or part-time employee through human resources.