4.15 Consultant/Independent Contractor (08/01)

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4.15.1 Definitions

Purchase Orders used to acquire the services of a Consultant or Independent Contractor could fall into any one of the agreement types (labor hour, time & material, fixed price) described in section 2.12 of this manual. Refer to Procedure 2.12 for a further description of the all agreement types.

Regardless of the agreement type, Consultants and Independent Contractors have additional processing requirements necessary on the part of both the Department and Procurement.

4.15.2 Department/Laboratory Processing

A. Obtain a quotation (letter) from the consultant that describes the services to be provided, the items/reports to be delivered, the consulting rate proposed or agreed upon, and an estimate of the total cost of consulting and travel (if required), for the assignment in view.

B. Restrictions and Requirements

(1) Consultant type purchase orders are restricted for use only to obtain non-employee type services which are clearly consultative in nature from an individual who is clearly a bona fide consultant (expert adviser) who pursues this line of business for him/herself (independent contractor).

(2) The purchase order must not be used to incorrectly place an individual in the non-employee status of consultant as he/ she may nonetheless be considered an employee by operation of the law. This includes a self-employed individual who proposes his/her services as consultant to perform services similar to those performed by MIT employees or involving supervision of or by MIT employees. This also includes an individual who while an employee of another organization attempts to arrange with MIT, as an individual, to provide part-time employee type services not connected with his/ her other employment.

(3) If by law an employer-employee relationship exists, regardless of the intent of the parties or any formal agreement to the contrary, the Institute remains liable for fulfilling its statutory obligations relating to employees, and these can be invoked by the individual, the State, or the Federal Government, in some cases with penalties.

(4) It is a requirement, therefore, that prior to entering an agreement for services with any individual, that the Buying Agent review all of the circumstances, and, if the appropriate status of the individual is not clear, that he/she or the requisitioner refer the matter to the Personnel Office for the purpose of placing the individual on the regular or voucher payroll.

(5)If a Consultant is considered an Independent Contractor then the requisitioner must complete Form 4.15A, MIT Independent Contractor Information. This form must be submitted with an approved requisition to the Procurement Office.

4.15.3 Independent Contractor Renewal Requests

If a request comes through for the renewal of an Independent Contractor Agreement, the following procedure must be followed:

A. If the period of performance for the existing agreement is for less then two years, the filed copy of form 4.15A is sufficient to process request.

B. If the period of performance for the existing agreement is two years or greater, the requisitioner must resubmit an updated copy of form 4.15A.

4.15.4 Procurement Processing - Purchase Order Format

A. Obtain missing or additional information from the requisitioner.

B. Forward each consultant requisition received, with completed Form 4.15A, to the Comptroller's Accounting Office (CAO) (Accounts Payable Section) for special reviews for tax reporting purposes and to ensure that the person named as consultant is not listed on one of the Institute payrolls.

C. When the requisition with its attachments is returned by the CAO, negotiate the consulting rate and/or the travel cost estimate, coordinate with the Personnel office and the Office of Sponsored Programs (OSP), etc. - as requested by the requisitioner or by the CAO, or as required by this Procedure and Procedure 2.12.

1. Requisitions and purchase orders which provide for the services of consultants which charge sponsored research accounts must be reviewed in the Office of Sponsored Programs’ COEUS System to ensure that the intended purchases are in compliance with the provisions of contracts or grants before purchase orders may be issued. If COEUS does not provide appropriate information the requisition should be routed to OSP using form 2.16A or 2.16B.

2. Some Institute contracts and grants limit the rate of compensation that may be paid to a consultant. Buying Agent should review the grant or contract for appropriate rate.

D. If the Consultant is an Independent Contractor, obtain the consultant's signature and social security number on an acknowledgement copy of the purchase order contract.