Chapter 9
ADMINISTRATIVE REQUIREMENTS FOR SERVICE CONTRACTS
The Iowa State Legislature has shown a continuing interest in service contract
activities. As a result, the executive branch has implemented several measures that
address some of the concerns expressed by members of the legislature and that will
help the executive branch gather useful information about service contracting so that it
can provide effective reports to the legislature.
This chapter provides information
about some of the administrative requirements that have been adopted to help ensure
that agencies are responding to the concerns raised by the legislature.
9.1
Procedures for Sole Source Procurements
SOLE SOURCE PROCUREMENTS
"Sole Source" indicates the vendor was selected without a competitive process. Sole
source procurement is justified only when the sole source conditions are met.
The head of the contracting agency must approve the sole source procurement that
has an annual cost greater than five thousand dollars or an estimated multi-year cost,
including renewals, equal to, or greater than, fifteen thousand dollars. Approval is to be
obtained using the Sole Source Procurement Justification Form. The head of the
contracting agency or designee must sign the contract for all sole source contracts with
an annual cost greater than five thousand dollars or an estimated multi-year cost,
including renewals, equal to, or greater than, fifteen thousand.
Submission of the " Sole Source Procurement Justification " Form:
The person responsible for the contract is to complete the " Sole Source Procurement
Justification" form. The form should be completed as follows:
Agency Information:
Enter the name of the work unit or entity proposing the contract. The contact person
listed will be the one to answer questions about the content of the form.
Amount of Contract:
The amount to be entered is the total value of the contract, exclusive of extensions.
Duration of Contract:
Specify the beginning and end date of the contract.
Description of Procurement:
This section must include the name of the vendor and a brief description of the service
to be procured.
Justification for Sole Source Procurement:
The list below identifies the circumstances under which an agency may use a sole
source procurement. In this section, identify which one of the circumstances applies to
the contract in question and provide information specific to the contract in question that
supports that conclusion.
NOTE: Justification for a Sole Source cannot be based on the fact that the contractor
has done the work for several years.
There must be evidence to support the
conclusion that there is no one else who could do the work, based on one of the
reasons listed below. Describe the research performed or steps taken to support your
conclusion that no other vendor could provide the service.
The following six
justification reasons are from 11 IAC Chapter 106.7.
1. An agency determines that one service provider is the only one qualified or eligible
or is quite obviously the most qualified or eligible to perform the service; or
2. The services being purchased involve work that is of such a specialized nature or
related to a specific geographic location that only a single source, by virtue of
experience, expertise, proximity to the project, or ownership of intellectual property
rights, could most satisfactorily provide the service;
or
3. An agency is hiring a service provider to provide peer review services for a
professional licensing board pursuant to Iowa Code chapter 272C; or
4. An agency is hiring the services of experts, advisors, counsel or consultants to
assist in any type of legal proceeding including but not limited to testifying or
assisting in the preparation of quasi judicial or judicial proceedings; or
5. The federal government or other provider of funds for the services being purchased
(other than the state of Iowa) has imposed clear and specific restrictions on the
agency’s use of the funds in a way that restricts the agency to only one service
provider; or
6. Applicable law requires, provides for, or permits use of sole source procurement.
Description of the research performed for steps taken to determine that this
procurement satisfies the requirements of 11 IAC Chapter 106.7.
Description of what was done to reach the conclusion that selection of this vendor
satisfies the requirements.
For example, activities may have included calling
organizations representing vendors with the required expertise to determine if there
were other vendors that might be interested.
Time Frames:
The Sole Source Procurement Justification form shall be submitted for approval by
the head of the contracting agency for approval prior to the execution of a contract.
The submission should allow for sufficient time to complete a competitive process
should the Sole Source procurement not be approved.
Review Process:
Appropriate agency personnel should review the Sole Source Procurement
Justification form within time frames established by the agency. If the procurement
meets the criteria, the head of the contracting agency must sign the Sole Source
Procurement Justification form.
Once the head of the contracting agency has
approved the request, the contract may be submitted to the contractor and the head of
the contracting agency or designee for signatures.
Summary
The contract for the sole source procurement shall comply with 11 IAC 107.4(8,18),
uniform terms and conditions for service contracts, or 11 IAC 107.5(8,18), special
terms and conditions (11 IAC Chapter 107.5).
Uniform Terms and Conditions, and
Special Terms and Conditions are discussed elsewhere in this Guidebook.
Processing the claim for the first payment on a contract requires a copy of the
signed original contract, a copy of the pre-contract questionnaire, a signed copy of the
Sole Source Procurement Justification form, and an original invoice or original
claimant signature. (11 IAC Chapter 106.7)
9.2
Procedures for Emergency Procurements
EMERGENCY PROCUREMENTS:
Emergency includes, but is not limited to, a condition:
1. That threatens public health, welfare or safety; or
2. In which there is a need to protect the health, welfare or safety of persons
occupying or visiting a public improvement or property located adjacent to the
public improvement; or
3. In which the agency must act to preserve critical services or programs or in
which the need is a result of events or circumstances not reasonably
foreseeable.
An emergency procurement shall be limited in scope and duration to meet the
emergency. When considering the scope and duration of an emergency procurement,
the agency may consider price and availability of the service in order to obtain the best
value for the funds spent under the circumstances. Agencies should attempt to acquire
services with as much competition as practicable under the circumstances.
Emergency purchases should not be used as a solution for hardships resulting from
neglect, poor planning or lack of organization by the agency.
The head of an agency shall sign all emergency contracts and amendments
regardless of value or length of term. If the head of an agency is not available, a
designee may sign an emergency contract or amendment. (11 IAC Chapter 106.8)
The following process for emergency procurements is required when the cost of the
contract exceeds five thousand dollars.
Submission of the Emergency Procurement Justification form:
An Emergency Procurement Justification form must be completed as soon as the
need for emergency procurement is identified.
The guidelines for completion are
outlined below. The Emergency Procurement Justification form should be reviewed
within the time frames established by the agency.
The form should be completed as follows:
Agency Information:
Enter the name of the work unit or entity proposing the contract. The contact person
listed will be the one to answer questions about the content of the form.
Amount of Contract:
The amount to be entered is the total value of the contract, exclusive of extensions.
Duration of Contract:
Specify the beginning and end date of the contract.
Description of the Procurement:
This section must include the name of the vendor and a brief description of the service
to be procured.
Justification for Emergency Purchase:
This section must show why the purchase is qualified as an emergency purchase.
There are three allowable emergency situations: Emergency includes, but is not
limited to, a condition:
1. That threatens public health, welfare or safety; or
2. In which there is a need to protect the health, welfare or safety of persons
occupying or visiting a public improvement or property located adjacent to the
public improvement; or
3. In which the agency must act to preserve critical services or programs or in
which the need is a result of events or circumstances not reasonably
foreseeable.
Information in this section should describe how the situation in question meets one of
the above situations.
Competitive Steps Taken Before The Procurement Was Made:
This section must show the following:
•
The process used to determine a fair and reasonable price for the service, i.e.
competition where practical, negotiation with the vendor [or previous expenditure
comparison for similar services.]
•
Actions taken to verify the vendor's qualifications, applicable insurance
coverage, license or other requirements pursuant to the contract.
Time Frames:
The Emergency Procurement Justification Form shall be submitted for agency the
head of the contracting agency approval prior to the execution of a contract and should
be submitted immediately upon identification of the situation warranting the emergency
procurement.
Review Process:
The head of the contracting agency or designee must sign the Emergency
Procurement Justification Form to indicate approval that the procurement meets the
criteria for an emergency. Once the head of the contracting agency or designee has
approved the request, the contract may be submitted to the Contractor and the head of
the contracting agency or the head of the contracting agency’s designee for
signatures.
If an emergency procurement results in the extension of an existing contract that
contains performance criteria, the contract extension shall comply with 11 IAC
107.4(8,18), uniform terms and conditions for service contracts, or 11 IAC 107.5(8,18),
special terms and conditions. Uniform Terms and Conditions, and Special Terms and
Conditions are discussed elsewhere in this guidebook.
9.3
DAS-SAE Procedures 240.102
The purpose of DAS-SAE's policy in Procedure 240.102 is to provide general
guidelines to be used by departments in the Employer/Employee Relationships, PCQ
(Pre-Contract Questionnaire), SS-8 and payment processes.
Employer/Employee Relationship, PCQ, SS-8
Prior to signing a contract, Department of Administrative Services – State Accounting
Enterprise (DAS-SAE) personnel must make a determination as to whether or not the
contractor has an employer/employee relationship with the State.
Contracts that
create an employer/employee relationship are not allowed. See DAS-SAE's Procedure
240.102 section IV. (7.), to determine if an employer/employee relationship exists.
Prior to signing a contract, the department must review the VCUST (Vendor
Customer Table) that is a part of the Iowa statewide accounting system (I/3). When
DAS-SAE has reviewed and determined that no employer/employee relationship with
the state exists, SAE will enter the SAE CONTROL # in the SAE Control # field on the
VCUST table.
If an individual (using a social security number or a tax identification number) or a
company has the SAE Control # field populated, enter the SAE Control # on the PreContract Questionnaire and complete other department actions on the contract.
If the individual or company does not have an SAE Control #, then PRIOR to signing
the contract the department MUST prepare and submit the original Pre-Contract
Questionnaire (see Appendix Q for sample form), the completed Internal Revenue
Service (IRS) form SS-8, if not contracting with a corporation (see Appendix F for a
SS-8 and Appendix R for a Substitute SS-8 form), and the proposed, unsigned
contract to DAS-SA.
If contracting with a group of individuals who will perform essentially the same function
for the State and who will have essentially the same working relationship with the
State, only one form SS-8 need be prepared.
In preparing a "generic" SS-8, a
statement must be attached outlining the estimated number of individuals per contract
period. If the generic SS-8 must be later modified, then a new generic SS-8 must be
processed through DAS-SAE for approval.
If the contract is between the department and an individual, and the service is to be
performed in (3) days or less and sufficient evidence can be presented as part of the
Pre-Contract Questionnaire or attachments so that DAS-SAE can ascertain that no
employer/employee relationship exists, no SS-8 need be completed.
In addition to the SS-8, a recap of the Twenty Common Law Factors used by the IRS
to determine the existence of an employer/employee relationship is found in Appendix
S.
If the contracting department has not pre-determined the existence of an
employer/employee relationship and the contractor does not have the SAE Control #,
then the completed SS-8, if not contracting with a corporation, along with the
proposed, unsigned contract, must be attached to the Pre-Contract Questionnaire
when it is submitted to DAS-SAE. In certain instances, the contractor may be required
to complete IRS form W-9, Request for Taxpayer Identification Number Certification,
as an aid to deciding the employer/employee relationship question. (See DAS-SAE
Procedure 270.450 pg. 22 for an example of the W-9).
DAS-SAE will review the proposed, unsigned contract to determine if an
employee/employer relationship will exist.
Questionnaire
and
supporting
If, after review of the Pre-Contract
documents,
DAS-SAE
concludes
that
an
employer/employee relationship will exist, the department must either select another
contractor that will meet the independent contractor test, add as an employee on
payroll, or use the State's third party contract with Temporary Staffing Services to pay
the contractor.
After DAS-SAE review, the Pre-Contract Questionnaire (PCQ) and supporting
materials will be returned.
Contracted services are not to be performed until all signatures are obtained and
distribution of contract copies is made to the parties.
The contract should specify a starting and ending date. You should not enter into a
service contract for a period of longer than six years (including extensions) unless you
get a waiver of the duration limitation from the Director of the Department of General
Services. See 11 IAC 106.11.
Contracts should include a termination clause including a non-appropriation clause.
Service contracts may cross biennial and fiscal year lines, and, when they do the
contract should specifically include a non-appropriation provision.
Create a sufficient number of originals of the contract so that the department maintains
a copy for its file and a copy can be sent to the DAS-SAE when the first invoice is
remitted for payment.
Exemptions
Contracts between state departments, political subdivisions of the State of Iowa,
federal government agencies, another state government or a political subdivision
thereof are exempt from the PCQ process (See 11 IAC 106.4).
Contracts under $1,000.00 (plus allowable expenses) are exempt from the PCQ
process.
Contract Payments
The claim for payment or the first claim in a series of payments requires:
1. a copy of the signed original contract,
2. and a copy of the PCQ,
3. and a copy of the Report of Sole Source Procurement if applicable,
4. and a copy of the Report of Emergency Procurement if applicable,
5. and an original invoice or original claimant signature.
Subsequent claims shall include the following information on the voucher:
1. the number of payments processed in contract sequence,
2. and the document number and date the initial claim of this contract series was
processed through I/3. (The initial claim of the series will have the contract
attached). If an amendment was made, reference future payments to the claim
which has the amendment attached,
3. and an original invoice or original claimant’s signature.
Proper object codes shall be used. When paying attorneys use: 2462 Legal Fees,
2553 Adult Contract Legal Fees, 2554 Juvenile Contract Legal Fees.
For other
contractual services use the proper object code found on I/3 under the OBJ table.
Vouchers for contracts with individuals must contain the TIN (Taxpayer Identification
Number).
When payment is made on a PRC (Payment Voucher for Purchasing) where a General
Service Enterprise (GSE) contract is referenced, the state department is responsible
for the Pre-Contract Questionnaire (PCQ) and the department should attach the PCQ
referencing the SAE Control #.
Contracts in which the dollar amount is unknown, such as when payment is based on a
percent of recoveries, certain generic contracts, etc., MUST have the PCQ and the
contract signed by the department director, or designee.
When there is an amendment to the original contract it is not necessary to do a new
PCQ (Pre-Contract Questionnaire), unless, the Employee/Employer relationship
changes. The amendment is signed by both parties and attached to the GAX/PRC
(Payment Vouchers), which references the claim with the original contract.
The GAX/PRC document number with the amendment attached should be referenced
on all subsequent payments.
9.4
Department of General Services (DGS) Reporting Requirements
The Department of General Services has been asked to collect information relating to
the state’s services contracting practices so that it can compile reports on the status of
services contracting in the state. As a result, DGS periodically asks agencies about
contracts that they have entered into. Good record keeping by agencies regarding
their services contracts is essential to the reporting process.
DGS asks agencies to complete two separate reports on services contracting. The
reports are the Annual Services Contracting Report and the Quarterly Sole Source
Report. The Sole Source Report includes information from the Sole Source
Procurement Justification form, although DGS may request more detail. Both reports
are needed to provide useful information on the status of state services contracting to
the Legislature. Information required for the reports may vary over time as needs
change. DGS will work with agencies to gather information deemed to be most useful
for the time period covered.
Appendix F:
http://das.gse.iowa.gov/procurement/AppF_FormSS-8.pdf
Appendix Q:
http://das.gse.iowa.gov/procurement/AppQ_ServicesPreContractQuestionnaire.pdf
Appendix R:
http://das.gse.iowa.gov/procurement/AppR_SubstituteSS-8.pdf
Appendix S:
http://das.gse.iowa.gov/procurement/AppS_TwentyCommonLawFactors.pdf
