External Sales &
Agreements (Contracts)
Introduction to Staff
• Keith Jansen - Manager
• Russ Bakke - Financial Professional
• Steve Brandeen - Financial Professional
Email address - extsales@umn.edu
Agenda
• 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
Objectives
Explain the process used for establishing
External Sales (Contracts)
Explain which form to use
 Identify what can be done to improve the
process
External Sales Policy and Procedure
 University Administrative Procedure:
“Establishing External Sales Agreements”
 University Policy:
“Selling Goods and Services to External Customers”
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
Risk Based Approach
Use the on-line risk assessment survey to determine
whether a sales transaction is classified as low,
or high risk.
• Defines the accountability
• Operating procedures
• Oversight
• Monitoring procedures
Handout provided: Risk Profile of Sales Transactions (Roles and Responsibilities)
Contract Requirements
For sales transactions that fall within the low risk
factors, units can:
o Use a University-approved contract and use approved billing
method: EFS
o 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
and high risk sales transactions, units follow
the procedure to establish external sales agreement
Low Risk
• Self-monitor and provide local oversight regarding pricing
decisions and financial implications
• Discretion as to the method used to process sales activity
o Units may choose to either use a University-approved contract
o 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)
• Units will work with the Controller's Office:
o
o
o
o
To complete a business plan for sales activity
Formal rate development
Contract
Market pricing
• Controller's Office will provide:
o Pricing assistance for units requesting the service
o Responsible for monitoring and providing oversight
o Review
sales activities every 3-4 years for
compliance with the policy
• Units will work with the Controller's Office:
o
o
o
o
o
Business plan for sales activity
Formal rate development
Contract
Market pricing
Financial stability of customer
• Controller's Office will provide:
o Pricing assistance for units requesting the service
o Responsible for monitoring and providing oversight
o Review high risk sales activities every 1-2 years for compliance
with the policy
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.
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.
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
Contracts
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)
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
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#
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
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
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.
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.
Contracting Tips
Tips to help Unit speed up a
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.
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
Questions & Answers
External Sales Contact Information
extsales@umn.edu
Keith Jansen – 4-5540
Russ Bakke – 4-8835
Steve Brandeen – 4-9014