External Sales & Agreements (Contracts)

Introduction to Staff Keith Jansen - Manager Russ Bakke - Financial Professional Steve Brandeen - Financial Professional Email address - extsales@umn.edu

Agenda Objectives Policy and Procedure Contract Requirements Introduction Objectives Policy and Procedure Contract Requirements Risk Assessment Use and Review of Contracts Standard Agreements vs. Non-Standard Agreements Contracts List Contract Process Delegation of Authority Other considerations KEITH

Objectives Explain the process used for establishing External Sales (Contracts) Explain which form to use Identify what can be done to improve the process KEITH

External Sales Policy and Procedure University Administrative Procedure: “Establishing External Sales Agreements” University Policy: “Selling Goods and Services to External Customers” KEITH

Contract Requirements Obtain an agreement (legal contract) after receiving initial external sales activity approval (IESAF) University departments are required to have an agreement (contract) in place to govern external sales transactions with non-University entities There is not a minimum dollar threshold to have a contract KEITH

Risk Based Approach Use the on-line risk assessment survey to determine whether a sales transaction is classified as low, medium or high risk. Defines the accountability Operating procedures Oversight Monitoring procedures Handout provided: Risk Profile of Sales Transactions (Roles and Responsibilities) KEITH

Contract Requirements For sales transactions that fall within the low risk factors, units can: Use a University-approved contract and use approved billing method: EFS Not use a University-approved standard contract and only bill customers via the EFS billing system, which incorporates University-approved terms and conditions on the back of the invoice For medium and high risk sales transactions, units follow the procedure to establish external sales agreement KEITH

Low Risk Self-monitor and provide local oversight regarding pricing decisions and financial implications Discretion as to the method used to process sales activity Units may choose to either use a University-approved contract Bill customers via the EFS billing system Management of compliance activities Controller's Office will review low risk sales activities every 5-7 years for compliance with the policy Controller's Office will keep a repository of all external sales contracts (not the signed version) KEITH

Medium Risk Units will work with the Controller's Office: To complete a business plan for sales activity Formal rate development Contract Market pricing Controller's Office will provide: Pricing assistance for units requesting the service Responsible for monitoring and providing oversight Review medium risk sales activities every 3-4 years for compliance with the policy KEITH

High Risk Units will work with the Controller's Office: Business plan for sales activity Formal rate development Contract Market pricing Financial stability of customer Controller's Office will provide: Pricing assistance for units requesting the service Responsible for monitoring and providing oversight Review high risk sales activities every 1-2 years for compliance with the policy KEITH

Use of Contracts Agreement purposes: Written mutual understanding with the customer Reduces misunderstanding; supports enforcement of agreement University’s obligation to the customer Customer’s obligation to the University Mitigates risk to the University by clearly stating or disclaiming terms Provides contact information for billing, termination notices, etc. DON

Contract Library Utilize standard U of M agreements whenever possible, available at OGC website: www.policy.umn.edu/contracts/ Standard Agreement – University’s form with no changes to terms and conditions OGC does not review unless specifically requested Non-Standard Agreement – University’s or Customers form with changes to terms and conditions If non-standard agreement is used, OGC must review, and usually negotiate with customer’s legal counsel, which will lengthen the time to complete a contract All agreements should come through the External Sales office first. OGC will automatically send any agreement they receive to OES. DON

A word about using the most current version of the forms… Contract Library A word about using the most current version of the forms… Always go to the contract library and use the most current version Saved version may not be updated with current terms and conditions DON

Standard Contracts Library includes many forms for the following: Service Agreement – OGC-SC102 Lab Use Agreement (Individual) – OGC-SC103 Lab Use Agreement (Company) – OGC-SC104 Workshop Agreement – OGC-SC251 Short Form Services Agreement – OGC-SC109 Specialized Agreements for some departments Other Agreements such as Confidentiality Addendums (OGC-SC106 & OGC-SC107) DON

Handout: Information entered into OGC approved Standard Agreement Contracts Information entered on the Standard Services Agreement: Customer’s legal name Customer’s kind of entity (eg. Inc., LLC, LTD, Sole Proprietor) ‘Description of Services’ to be performed Compensation and invoicing Term – “Start”, “Effective” and “Expiration date” Notices (name and address) – contact information: University and Customer Signature lines Handout: Information entered into OGC approved Standard Agreement DON

Contracts Standard Agreement process: After a discussion with a potential customer Send a copy of the standard agreement to the customer Let the customer know that if the standard agreement can be accepted, the process will take less time If the customer presents their own contract (unique agreement) or modifies the University standard agreement it will take more time

Contract Review Submit unsigned contract to extsales@umn.edu for review and assignment of contract number Include rate details if not previously sent Also include DeptID# and ESAF# - Keith

Contract Review External Sales will send to unit an email reply and contract number with pdf version of the contract After reply is received, unit will forward to customer for signature Unit to validate Delegation of Authority to determine who signs for the University Email – pdf

Delegation of Authority Website: http://compliance.umn.edu/index.htm Search by unit name – check to see if person who has the right level of authority is signing the agreement External Sales Delegations categories FN02 – Non-Lab Use External Sale and/or Lab-Use External Sale Pay close attention to the probable presence of a dollar threshold in the delegations listing.

Contract Review Customer signs first, then University representative Keep signed version saved in the unit Electronic signatures are acceptable Do not begin activity without having a fully signed (executed) contract Customer signs first – prevents having to return to customer in case of contract changes Electronic signatures – acceptable provided that the entire agreement is included along with the electronic signature

Handout: Contracts that would not be acceptable. Contract Review External Sales Office reviews contracts for: Appropriate type of service (matches initial I/ESAF approval) Legal customer name and kind of entity Appropriate rate (pricing) structure Handout: Contracts that would not be acceptable.

Handout: Contracts that would not be acceptable. Contract Review Internal/External Sales Office reviews contracts for: Related concerns (export controls, currency validation USD, excluded transactions etc.) Classification (classification@umn.edu) to determine that contract is not a gift or a Sponsored Project Risk assessment Sales, Use and UBIT tax Handout: Contracts that would not be acceptable.

Other Items Units are responsible for maintaining copies of all final, signed external sales agreements and managing record retention. Longer term agreements (up to 5 years) can be made that can cover multiple activities with a single customer. Units are responsible for communication between the University and the customer. Utilize standard U of M agreements whenever possible. - Keith

Tips to help Unit speed up a medium or high risk contract through OGC: Contracting Tips Tips to help Unit speed up a medium or high risk contract through OGC: Use the latest revision of the standard contract from the library Supply any background information and/or related contracts with customer. Provide standard rate sheet or rate development. Provide the contact information for the customer's legal representative. - Russ

Handout: Steps to help speed up the contracting process Contracting Tips Additional tips: Provide a date when you need the contract to be ready for customer signature. Provide any changes to the insurance clauses. Provide information if work is for a foreign entity or services will be provided in or are coming from a foreign entity. Supply DeptID # and approved I/ESAF #. Handout: Steps to help speed up the contracting process - Russ

Questions & Answers

External Sales Contact Information extsales@umn.edu Keith Jansen – 4-5540 Russ Bakke – 4-8835 Steve Brandeen – 4-9014