1. External Sales & Agreements (Contracts)

2. Introduction to Staff Keith Jansen - Manager
Russ Bakke - Financial Professional
Steve Brandeen - Financial Professional
address -

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. Contract Library
Utilize standard U of M agreements whenever possible, available at OGC website:
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

14. 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

15. 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

16. 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

17. 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

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

19. Contract Review
External Sales will send to unit an 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
– pdf

20. 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.

21. 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

22. 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.

23. 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 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.

24. 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

25. 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

26. 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

27. Questions & Answers

28. External Sales Contact Information
Keith Jansen –
Russ Bakke –
Steve Brandeen –