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Business and Financial Policies and Procedures

17.1 Consultants and Other Contractors for Services


University of Illinois System units may contract for the purchase of services to accomplish the objectives of the system when such services are specialized, highly technical, and cannot be economically or satisfactorily performed by system employees as part of their normal duties. Units shall review the insurance policies (see 6 Insurance) of the system and comply with all requirements. Contractors are used for specific tasks and for explicit periods of time. Contractors can be either business firms or individuals who are not employees of the system.

Payments to contractors must be made in full compliance with all United States government and State of Illinois laws, orders and regulations. Specific issues related to payments are referenced throughout this section.

Agreements not addressed in this section include:

  • Revenue generating agreements - contracts wherein the system provides services, facilities or products for compensation. See 22.1 Contracts for Revenue Generating Activities.
  • Intellectual property rights or technology transfer agreements - contracts wherein the system provides intellectual property rights or technology transfer to outside entities for compensation. For assistance with these types of contracts, contact the Office of the Vice President for Research (OVPR).
  • No fund (or $0) agreements - contracts such as non-disclosure agreements, student placement agreements (including internships, student teaching, etc.), affiliation agreements with other institutions or settlement agreements (personnel or lawsuits). See 19 Contracts.
  • Other payable agreements - contracts for other types of payable activities, such as intergovernmental agreements and financial assistance or sponsorship agreements. See 19 Contracts.


A contract is an agreement between the system and one or more other parties, creating obligations that are legally recognizable or enforceable. A contract may or may not require the transfer of funds, the transfer of tangible property, and/or the issuance of a purchase order.

A contractor is either a business firm or an individual (who is not a system employee) who contracts with the system to perform a service.

An employee is any individual presently employed by the system.

Employer-Employee Relationship
An employer-employee relationship exists when an employer has the right to direct and control the work of an individual who performs the services, including not only the results to be accomplished but also the methods and means by which the results are accomplished. Even if the employer does not exercise the right to direct or control the manner in which the worker performs the services, the fact that the employer retains the right to do so is sufficient to create an employer-employee relationship.

Independent Contractor
An independent contractor is a business firm or an individual that contracts with the system to provide services for which the system controls or directs at most the result of the service, not the means and methods of accomplishing the result.

Types of Contracts

General Services (other than Professional and Artistic) - contracts for the purchase of useful manual skills or labor that may or may not produce a tangible commodity. Examples of these services include, but are not limited to: security guard services, transportation services, clothing rental and cleaning, laundry, film processing, janitorial work, window washing, rubbish and waste removal, and service and repairs to equipment. The process for acquiring such services is described in 7.2 Purchase of Goods and Services.

Construction-Related Services, including Architectural, Engineering, and Land Surveying Services - contracts used to procure construction related services that are usually obtained through the University Office of Capital Programs and Real Estate Services (UOCPRES), or the campus Facilities Management unit. The process for acquiring such services is described in 19 Contracts.

Professional and Artistic Services
Professional and Artistic Services means those services provided under contract to the system by a business firm or individual acting as an independent contractor and qualified by education, experience and/or technical ability as defined below.

An essential element distinguishing professional services from other services is confidence, trust and belief in not only the ability but also the talent of the individual(s) performing the services.

Professional and artistic services are primarily for intellectual or creative skills. Contracts for services involving primarily manual skills or labor are not considered professional and artistic services contracts.

If the professional or artistic services contract is with a business entity, the individuals whose education, experience, and technical ability provided the basis on which the business entity was selected must meet the required qualifications.

Professional and artistic services are further defined as follows:

  • Qualified by education means the individual(s) must have obtained the level of education required to provide the requested services.
  • Qualified by experience means the individual(s) must have the level of general experience required to provide the requested services.
  • Qualified by technical ability means the individual(s) must demonstrate a high degree of skill or ability to provide the requested services.

The appropriate purchasing and contract management office using the factors identified above, will determine on a case-by-case basis whether services qualify as Professional and Artistic Services. Any services identified as professional and artistic must be purchased in accordance with this policy.

How to Contract for Professional and Artistic Services

The policies and procedures to contract for professional and artistic services are based on the total anticipated fees and allowable expenses for the duration of the contract including all renewal periods. For any professional and artistic services contracts entered into with individuals, units must follow the administrative procedures outlined in 17.2 Classification of Independent Contractors Versus Employees, and as directed by the appropriate PCM's Contract for Services.

Guidelines for Selecting a Services Contractor

  • A determination is made that the services cannot be performed more economically or satisfactorily through the system employment process.
  • An appropriate selection process, based on the dollar level of the expenditure, is used to secure the most qualified firm or business entity or person available, subject to the constraints of timeliness and costs
  • Charges are appropriate considering the qualifications of the independent contractor, the contractor's normal fees and the nature of the services.
  • Conflict of interest is avoided. In general, the following contractors are prohibited from contracting with the system: members of the General Assembly; elected state officers; state employees (unless certain conditions are met - see below); members of The Board of Trustees; University officers and employees; and, their spouse, parents, and children. In the case of University officers, employees, and their families, an exception can be made by the President of the University or delegate if the contract is deemed essential to University operational, research, or academic needs and the conflict is approved by the State of Illinois Chief Procurement Officer and Procurement Policy Board. See the Higher Education Procurement Rules, Section 4.5013, and 7.2 Purchase of Goods and Services for more details.
  • If the services are to be provided by an individual and not by a business entity or firm, the service provider is properly identified and classified as an independent contractor versus an employee. The first step in contracting is to make this classification determination using the system's policy and guidelines contained in 17.2 Classification of Independent Contractors Versus Employees.

The Internal Revenue Service (IRS) may impose penalties on an employer that fails to correctly classify an individual as an employee and thereby fails to withhold the required income and employment taxes. If an individual is classified as an employee, units should contact the Office of Academic Human Resources for information and assistance on how to process an appointment or payment for the individual in question.

  • Federal employees may be utilized as consultants. They may receive compensation and/or reimbursement of expenses from restricted funds provided by the US government under the following conditions.
    • They obtain prior approval from their employing agency.
    • Services are performed outside their regular working hours (as defined by their employer) or while they are on leave status from official duties.
    • Persons paid from federal grants or contracts are normally not considered federal employees.
  • Employees of the State of Illinois, its agencies, and state-supported educational institutions may be utilized as consultants. They may be paid reasonable compensation and/or expenses for their consulting work under the following conditions:
    • Prior written approval is obtained from their employing agency.
    • Services are performed outside their regular working hours (as defined by their employer) or while they are on leave from official duties.
    • The dollar level of the state employee's current salary does not exceed 60% of the current salary of the Governor of the State of Illinois.
    • The potential conflict of interest is approved by the State Chief Procurement Officer and the Procurement Policy Board. See the Higher Education Procurement Rules, Section 4.5035.
  • The University employment contract provides that intra-University consultation is part of an employee's obligation to the system. When an employee provides services to more than one unit, those units may apportion the costs of the services between them. Except in unusual cases, employees may not receive additional financial compensation beyond their full-time base salary (and additional summer appointment, if applicable).

In unusual cases where consultation is across organizational lines, and the work performed is in addition to the individual's regular workload, special approval may be requested from the President of the University to enter into a separate consulting contract with the employee, including payment of a reasonable and customary consulting fee. This fee is in addition to the employee's salary as an employee.

The President is authorized to approve such consulting arrangements with an employee only if the services are deemed essential to the system. The unit requiring such services must submit a written request, approved by the Unit Head/Dean, who routes it to the respective Purchasing Director for approval as a delegate of the President. 

In addition, if a system employee is paid a consultant fee or additional compensation from restricted funds provided by the U.S. government, prior written approval must be obtained from the sponsoring agency. If payment for professional and artistic services, including consulting, is made from restricted funds provided by the US government (federally-sponsored projects), contact your Grants and Contracts University Unit for information regarding possible payment limitations.

  • Procedures for contracting for professional and artistic services with resident aliens are the same as detailed in this section. No Immigration and Naturalization Service (INS) or IRS restrictions exist regarding contracting with resident aliens for services.
  • Instructions for contracting for professional and artistic services with nonresident aliens as consultants, scholars, and dignitaries who will receive a University payment for services can be found in 18.2 Foreign Nationals. This includes University payments either directly to or on behalf of the nonresident alien for services as an independent contractor or expenses (i.e., hotel, meals, transportation, etc.). Services as an independent contractor include lecturing, consulting, or other activities for which the nonresident alien provides a service for payment to the system.

Insurance requirements

The system's policy is that contractors, consultants, and other service providers must have liability insurance and other insurance as necessary to protect the financial interests of the system.

Before the contracting process begins, unit representatives should discuss insurance requirements with the proposed contractor so there are no surprises or misunderstandings. Please review 6 Insurance and Treasury Operations, Risk Management's Outside Vendors, Providers, Contractors to determine the insurance required for the services to be purchased. Exceptions to the system's insurance requirements will be made only after a risk identification and evaluation process. To request an exception, submit a written request to University Office of Risk Management.

When the Competitive Selection Process is Not Required

Procurement in Illinois is heavily regulated - by the Illinois Procurement Code, Procurement Administrative Rules of the Chief Procurement Officer for Public Institutions of Higher Education, and other laws and related system policies. Competitive selection of vendors is required unless there is an exception, exemption, or existing contract. All procurement-related decisions, including when a competitive selection process is not required, are made by or subject to the approval of the State Purchasing Officer or Chief Procurement Officer, who report to the Executive Ethics Commission.

Exceptions include:

  • Small Purchases - Individual purchases of supplies or services can be made under the small purchase limit, which is set annually. Procurements may not be artificially divided so as to constitute a small purchase.
  • Sole Source - A purchase may be justified when requirements can only be met by a single supplier, or only one supplier is deemed economically feasible (sole economically feasible source).
  • Emergency - Emergency purchases can be made when there is a threat to public health or safety; when necessary for repairs to State property to protect against further loss of damage; to prevent or minimize serious disruption in critical State services that affect health, safety, or collection of substantial State revenues, or to ensure integrity of State records. The term of an Emergency purchase is limited to the time reasonably needed for a competitive procurement, not to exceed 90 days; an extension can be granted by the Chief Procurement Officer.
  • Professional and Artistic services - If contracts for such services are less than the small purchase limit, nonrenewable, and one year or less in duration.
  • Donations - A grant, gift, or bequest can call for the procurement of a particular good or service, or the use of a particular vendor, provided that the grant, gift, or bequest provides majority funding for the contract.

Exemptions include:

  • Intergovernmental agreements
  • Grants
  • Purchase of care
  • Hiring of an individual as an employee and not as an independent contractor
  • Collective bargaining agreements
  • Purchase of real estate
  • Anticipated litigation, enforcement actions, or investigations.

Intent to award a Sole Source, and all Emergency purchases, must be published in the Illinois Public Higher Education Bulletin, and provide notice for a public hearing - a minimum of fourteen (14) days for a Sole Source procurement or extension to an Emergency purchase. Concurrently, the Procurement Policy Board has a 14-day right of review unless they waive such review period. The Board also has authority under the Procurement Code to require hearings and can void any procurement or contract. Approval of the Chief Procurement Officer and Procurement Policy Board (unless waived) must be obtained prior to the execution of the contract or the commencement of services.

You should work with the appropriate PCM to assure that all requirements specific to non-competed procurements are met, and under what circumstances a competitive selection process must be used.

Sponsored Agreements

Sponsored agreements (including subawards) are reviewed and processed through the Office of Sponsored Programs (OSP) at University of Illinois at Chicago; Office of Research and Sponsored Programs, or Office of the Provost at University of Illinois at Springfield; and the Sponsored Programs Administration (SPA) at University of Illinois at Urbana-Champaign.

Contracting under a Sponsored Agreement for Professional and Artistic Services

Sponsored agreements funded by the U.S. government or other sponsors may include a named contractor for the provision of specific professional or artistic services, including consulting services. 

If the need for an independent contractor can be anticipated, the proposal to the funding agency may include the name of a preferred contractor.

If the contract is for professional or artistic services, including consulting services, the appropriate documentation for the dollar level of the contract as described elsewhere in this section must be furnished to the appropriate PCM.

Reimbursement Restrictions

Independent contractor fee (excluding allowable expenses) - Independent contractor fees paid from U.S. government grants of contracts may not exceed the current daily equivalent rate paid a United States GS-18 unless specific advance written approval is received from the sponsor.

Concurrent service - If during the duration of the contract, an individual is also being compensated at 100% time for services from other funds provided by the U.S. government, regardless of whom the employer may be, such individual may not receive a fee. The individual may be reimbursed by the system only for actual and reasonable allowable expenses. Any exceptions require prior written approval from the sponsoring agency.

Other restricted funds - Services of independent contractors may be utilized subject to the terms and conditions of award documents. If an award document prohibits or restricts the use of an independent contractor, prior written approval must be obtained from the sponsor to secure such services.

Federal and State Certifications

The Federal and State certifications that are required in University contracts have been incorporated into all standard University contracts. If the contractor requires the use of its own contract forms, certifications contained in the University's standard forms must be included. For certification requirements on contracts, submit the contractor's form to the appropriate PCM.

Standard Contract Templates and Forms

Standard contract templates and forms have been reviewed and approved by the Office of University Counsel (OUC). Use these if your unit has not opted to implement the Illinois Contracts System (iCS). If the contractor requires a change to any of the terms and conditions in these standard templates and forms, processing by the appropriate PCM is required.

Please send questions regarding this policy manual to

Last Updated: February 16, 2022 | Approved: Senior Associate Vice President for Business and Finance | Effective: February 2022

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