PSA TRAINING
PRESENTED BY: UNIVERSITY PURCHASING, HUMAN
RESOURCES, AND TAX SERVICES
WHAT IS A
PROFESSIONAL
SERVICES AGREEMENT?
• Professional Services Agreement, more commonly
called a PSA, is a legal contract for professional
services between MUSC and the contractor.
• Use a PSA when hiring persons or companies
employed on a fee basis and not providing a
tangible product
ITEMS TO CONSIDER
BEFORE ENTERING
INTO A PSA
• Nature and scope of the services to be provided in
relation to the services required are reasonable
• Necessity of contracting for the service, considering
the institution’s capability in the particular area
• The qualifications of the individual or business
rendering the service
• Fees charged
• Past pattern of such costs
ITEMS TO CONSIDER
BEFORE ENTERING
INTO A PSA
• Whether the service can be performed more economically by
direct employment rather than contracting
• On Federal Grants, whether the proportion of federal work to
the institution’s total business is such as to influence the
institution in favor of incurring the cost;
• Would this be a need if you did not have the grant
• particularly where the services rendered are not of a continuing nature
and have little relationship to work under Federal grants and contracts.
THE PSA CONTRACT
• Use the latest PSA form revision dated 9/27/2013
• The PSA contract should be completely filled out
• Submit the PSA contract unsigned by the vendor
• Allow 30 days for your PSA to be completed after
UDAK approval
PSA CONTRACT
• Services should not begin before a purchase order
is issued and the PSA is signed and fully executed
• If services begin prior to a fully executed contract and
purchase order being established, this will constitute an
unauthorized procurement.
PSA CONTRACT
• The Agreement Period constitutes when the
contract begins and ends
• The PSA contract has been reviewed and
approved by Legal. However, if you or the
contractor make changes to the PSA, Legal will
have to review and approve the revised contract.
Agreement Period:
The agreement date should be a
future date.
Edit the “first day of” to coincide with
the day the agreement begins.
Example: Agreement begins January
15th would read “entered into this
fifteenth day of January”
Terms of the Agreement:
This section should clearly state the
type of service the vendor will be
providing along with details of the
service and deliverables. The
deliverables should state the timeline
of the service being provided and
what amount will be paid for the
completed service.
Fee Schedule:
Choose item 1 or 2 and fill in the
required information. Delete the
section that is not used.
Out of pocket expenses:
Choose one and delete the other
option.
Include a do not exceed amount
for out-of-pocket expenses
Enter out-of-pocket expenses as a
second line on the requisition
Option 1 is used when out-ofpocket expense is considered as
part of the fee.
MUSC Coordinator :
MUST BE COMPLETED. Fill in
the MUSC Coordinator’s
Name and Address.
MUSC Signature:
The MUSC signature will be
provided by Purchasing
only
The Buyer will send the PSA
contract to the Contractor
(Vendor) for signature
REQUIRED DOCUMENTATION
• PSA form (unsigned by the Supplier)
• Employee Independent Contractor Classification
Checklist (EICCC)
• A Grant Certificate or Sole Source justification memo
for PSA’s greater than $10,000
• If this information cannot be provided the service
may be subject to the formal solicitation process
• Major Purchase Form if contracting with a true
Consultant for fees in excess of $50,000.
• Definition of a Consultant: One who is contracted to
provide opinion, advice, counsel, or to deliberate
together with MUSC.
REQUIRED DOCUMENTATION
• When submitting a PSA you must ensure that all
documentation is attached
• Failure to attach proper documentation will extend
processing time while we contact you to obtain the
missing documentation.
PSA Amendment:
Use the PSA Amendments form for
change(s):
in the Scope of the work
in price/fees
In performance period
Name, performance
location
PSA-INDIVIDUAL FORM
• Enter the Supplier name. If the Supplier is not currently available in the
MarketPlace, select “PSA Vendor” as the Supplier. Enter the Quantity, Rate, and
Total Cost. Include the Start and End Date of the Contract, along with a
description of the services to be provided
PSA- NON-INDIVIDUAL FORM
• Enter the Supplier name. If the Supplier is not currently available in the MarketPlace,
select “PSA Vendor” as the Supplier. Enter the Quantity, Rate, and Total Cost. Include
the Start and End Date of the Contract, along with a description of the services to be
provided
WHAT HAPPENS NEXT
• Once approved by both departments:
• requisition will be received in University Purchasing for review
• If the Contractor is not set-up in the MarketPlace, the Buyer will
obtain all required paperwork (W-9, W8-BEN (foreign vendor),
etc.) and complete the New Vendor Request form in the
MarketPlace.
• Purchasing Management will review and sign the PSA.
• Buyer will contact the Contractor to obtain required signatures.
• Buyer will attach the fully executed PSA and issue the purchase
order.
HUMAN RESOURCES
HUMAN RESOURCES
• HR reviews the responses indicated on the EICCC
(Employee/Independent Contractor Classification
Checklist),
• primarily Section 1 Relationship with the University and
• Section 2 Classification Guidelines.
• Also, Section 3: IRS Rule Test.
• At the end of the checklist there are definitions of
Employee and Independent Contractor.
HUMAN RESOURCES
• Definition of Employee: An individual who performs services that are
subject to the will and control of an employer – both what must be done
and how it must be done. The employer can allow the employee
considerable discretion and freedom of action, so long as the employer
has the legal right to control both the method and the result of the
services.
• Definition of Independent Contractor: An individual over whom the
employer has the right to control or direct only the result of the work and
not the means and methods of accomplishing the result.
• HR is also interested as to whether the individual will be performing the
assigned responsibilities, partially or totally, on campus for background
check purposes.
•
If the PSA is deemed to be that of an independent contractor and the individual will
be on campus, HR will work with the requestor to initiate a background check on the
individual in question.
PSA’S AND TAX ISSUES
INDEPENDENT CONTRACTOR VS EMPLOYEE
• From a tax perspective, the general premise of each PSA is
determining the control of the services to be provided in categorizing
the payee as an independent contractor or employee.
• Independent contractors are taxed differently from employees, and
substantial penalties could be imposed upon MUSC if the wrong
classification is made.
• According to the IRS, there are three basic categories one should
consider when assessing whether a person is an employee or
independent contractor:
• behavior controls,
• financial controls and
• the relationship.
THINGS TO REMEMBER
• All contracts are unique and it may be a
combination of factors that determines whether it’s
• An employee/employer relationship
• An independent contractor relationship
• An Allowable expense per State or Federal regulation
THINGS TO REMEMBER (CONT.)
• The MUSC Employee Independent Contractor
Classification Checklist should be completed with
careful consideration to each scenario.
• MUSC needs to determine where the work will be
done. In other words, if the individual is to be
performing services, totally or partially, on the MUSC
campus, a background check needs to be
administered to satisfy Human Resource policy.
THINGS TO REMEMBER (CONT.)
• A Form W-9 (or Form W8-BEN if the individual is a nonresident) must be obtained to confirm taxpayer
identification number.
• Purchasing will obtain when required
• Terms of each contract need to be thorough and
descriptive so that each department reviewing is fully
aware of all the duties that will be performed.
• Once all data has been gathered and is complete
pertaining to the contract, HR and/or the Tax Office will
determine the proper classification of the payee.
FOR MORE INFORMATION
• View the Tax Compliance web site at:
• http://academicdepartments.musc.edu/vpfa/finance/cont
roller/accounting/gentax.htm
• For more information on independent contractors
or employees, visit:
http://www.irs.gov/Businesses/Small-Businesses-&-SelfEmployed/Independent-Contractor-Self-Employed-orEmployee
• For questions and assistance with PSA’s, contact
your Buyer or purchasingcentral@musc.edu