4.0 Procedures

A proposal to enter into a service contract may be initiated by any employee of the University. Approvals to pursue the proposal further must be obtained from that person’s immediate supervisor and all his/her supervisors up to the level of the person with the authority to approve the final contract on behalf of the University. This authority is specified, with respect to the dollar amount of the contract, by the Signing Resolutions of the SFU Board of Governors. These are described in Appendix A to this Policy and may be changed from time-to-time by action of the Board of Governors. In addition, when proposals include international activities, the proposal must be submitted to the SFU Senate Committee on International Activities (SCIA) for review and must receive the approval of the Vice-President, Academic. Refer to SFU Policy GP-23 - "University Policy on International Activities." Any disagreement over whether the work under the contract comprises research or service will be resolved jointly by the Vice-President, Academic and the Vice-President, Research; if this is not possible, the question will be referred for resolution to the President.

In order to receive final approval, the final form of a service contract must receive the approvals of all the persons mentioned in the preceding paragraph. Appendix H to this Policy has a link to the Final Approval Form. To receive final approval, it must normally satisfy all the following criteria:

1. There must be a clear statement of the work to be performed, including deliverables and the schedule on which these must be provided;
2. There must be an itemized budget containing all sources of income for the project and all areas of expenditure. Explicit recognition of all the costs, both direct and indirect, must be included under "expenses." In specific cases, for specific reasons, some of these costs may be contributed by the University; in these cases, specific recognition of such contributions must be included under "income;" sample budgets are available through the office of the Vice-President, Academic;
3. There must be a schedule of payments, including the criteria for payment (e.g. milestones; reports) and means of initiating payment (e.g. prepayment, invoices);
4. There must be a clear description of reporting requirements, both financial and with respect to the performance of the work, which includes specification of the person or unit responsible for generating and transmitting the reports - if Financial Services would be required to generate or file reports, their approval of the terms of the contract must be obtained;
5. There must be provision in the contract for recognition of the indirect costs (overhead costs) of providing the services indicated at rates that are consistent with those given below under Guidelines;
6. There must be specification of the term of the contract and the period during which the work will be performed - these may differ;
7. There must be provision for early termination of the contract that clearly specifies the conditions under which this may occur and the consequences for all parties;
8. There must be provision for modifications to be made to the contract, preferably without reconsideration of the entire contract;
9. Normally persons employed under the contract will be University employees. In exceptional circumstances, other arrangements may be appropriate. To determine the appropriate procedures to follow, the Principal should contact Human Resources prior to signing of the proposed contract. For persons employed under contract as employees of the Principal, refer to Appendices C and D to this Policy for sample employment letters and Appendix E for a statement of the responsibilities and obligations of the Principal as an employer;
10. There must be provision for the disposition of intellectual property (IP) created in the course of performing the contract;
11. There must be provision for the handling of any pre-existing IP provided by the University and/or Sponsor during the course of performing the contract;
12. There must be provision for monitoring the performance under the contract, both on the part of the Principal and on the part of the Sponsor;
13. The contract must not expose the University to unacceptable levels of risk or liability, including risk of non-payment for services rendered;
14. The contract must be consistent with all pertinent external legislation (e.g. taxation and Freedom of Information/Protection of Privacy) and internal agreements (e.g. agreements between the University and its employee groups);
15. The contract must be consistent with all other relevant University Policies including but not limited to those on Conflict of Interest, Faculty Responsibilities, Freedom of Information/Protection of Privacy, Animal Care, Research Involving Human Subjects, Radiological Safety, Biosafety, Diving Safety, Intellectual Property (patent and copyright), International Activities, and the use of the University’s Trade-Marks. Note that several of the above-mentioned Policies mandate review and prior approval by other University Committees;
16. In cases where joint ventures are proposed, there are the additional requirements for: a) a business plan, b) staffing plans, and c) a clear description of equity contributions by the University, if any, and their size and source. In addition, there must be indication that consultation has occurred adequate to assure that there is no duplication of effort within the University and an indication of the schedule on which approvals of Senate and the Board of Governors would be sought (if required) or a statement to the effect that such approvals are not required;
17. Contracts involving international activities must contain an explicit agreement by the signatories to comply with the Policy on International Activities. The Office of International Cooperation should be consulted on the appropriate procedures to follow;
18. Under the contract, all cheques for payments received under the contract must be forwarded, along with appropriate backup identifying the contract and account number, to Financial Services for deposit.

In addition, there must be separate, explicit agreements within the University on:

1. provision of any University resources, including equipment and space; approval of these agreements must be given by the parties responsible for the specific resources; and
2. distribution within the University of funds or other assets received by the University, above the direct and indirect costs of performing the work.

Contracts involving Research Centres and Institutes established under SFU Policy R40.01 must receive approval of their Administrative Officer in addition to the other persons described in the first paragraph of this section.

A checklist of contract terms and conditions is provided in Appendix B to this Policy for the guidance of persons proposing contracts.

Work under a proposed contract must not commence until the contract receives final approval by the sponsor and by the University, as described above. The only exception to this is when an explicit, firm commitment to cover all costs and liabilities associated with an earlier start is made by the person with the authority to approve the final contract on behalf of the University, as described in the first paragraph of this section. In such a case, a copy of the current draft contract, including budget, reporting and billing requirements, the account to which expenses will be charged if the contract is not approved ("back-up account") and a Pre-Approval Financial Guarantee Form (copy attached as Appendix F) must be sent to Financial Services for review. If the draft contract appears to contain reasonable financial terms, Financial Services will set up a new account and expenses may be charged to that account. This preliminary approval will not imply approval of the terms of the final form of the contract. Financial Services may set a time limit within which the contract must be finalized. Note that the final contract may contain a date of commitment which could restrict the period within which expenses can be incurred. In this case, the contract account may not normally be charged for work done prior to the start date and the back-up account would be charged any such expenses.

 

5.0 Contract Terms

Direct costs include the value of the time of SFU employees and/or the cost of replacing these employees, as appropriate. The budget of the contract should include explicit reference to these costs and to all other direct costs such as space rental, provision of managerial services, equipment maintenance and materials and supplies.

Normally, overhead rates will be set at 40% of total direct costs for on-campus work and at 20% of total direct costs for off-campus work. Overhead on contracts that involve a combination of on-campus and off-campus work will be set at a rate that reflects their relative proportions. Direct costs include the full value of the time of SFU employees (salary and benefits) and/or the full cost of replacing these employees, as appropriate.

Overhead may be reduced from the levels indicated above in consideration of other tangible benefits accruing to the University such as equity-holding or revenue-sharing agreements, or intangible benefits such as increased community profile. As noted above, such reduction in overhead comprises a contribution by the University and should be so recognized under both the revenue and cost sections of the contract budget.

The person with authority to approve the service contract on behalf of the University has the authority to negotiate with the external agency the terms of the contract, including payment schedules, reporting schedules and the amount of overhead charged. Authority to negotiate (but not to approve the contract) may be delegated. Unless other arrangements are made in advance with the responsible Vice-President, that person, in approving a contract on behalf of the University, assumes full financial responsibility through his/her office for assuring that overhead payments are adequate to cover the indirect costs, and for the University’s liabilities from such factors as patent or copyright infringement and non-performance - including non-payment - on the part of the external agency. For this reason, it is required that all contracts be vetted by Financial Services prior to conclusion.

In cases where different units within the University are capable of providing the same or similar services, it is the responsibility of the person with the authority to approve a contract to make certain that adequate consultation has occurred within the University to ensure that the provision of the services under the contract is as efficient as reasonably possible and that duplication of effort is minimized.

With the exception of contracts that have a University-wide impact, all overheads realized from service contracts normally will be divided equally between General University Revenue and the initiating Faculty or equivalent unit; exceptions to this method of division require approval of the President. Contracts that have a University-wide impact will be reviewed by the Vice-President, Academic and the Vice-President, Finance and Administrative Services to determine the disposition of overheads, prior to final approval of the contract.

In cases of contracts involving foreign or other unusual settings, contract terms should take into account the specific cultures or modes of conducting business in those settings. Because there are additional costs normally associated with identifying, developing and delivering international activities, overhead rates are expected to be higher for international service contracts than for domestic ones. Guidelines for the financial conduct of international service contracts are contained in Appendix G to this Policy.

Contracts for secret work will not be approved for administration by the University. Results of all work undertaken in the University shall be fully publishable at the discretion of the Principal, subject to the qualification that a Sponsor may be given the right under the terms of a contract to publish research results of the work or approve such publication in advance. However, the Principal shall be completely free to publish after a maximum of 12 months from termination of the project or submission of the final report, whichever is later.

 

6.0 Payments to University Employees

Payments to Principals who are continuing University employees from contract funds are governed by Policy AD 3-11 "Employee/Independent Contractor Policy." Such payments normally will be withheld until the contract is successfully completed, all terms fulfilled and all payments received from the Sponsor. In the case of long-term contracts, partial payments may be made prior to completion of the contract at the discretion of the Department Chair and Faculty Dean (or equivalents for other employees).

7.0 Reporting

Copies of all contracts must be lodged with the responsible Vice-President and with Financial Services immediately on signing of the contract. In addition, for contracts involving international activities, a copy must be provided to the Office of International Cooperation.

 

8.0 Appendices

The appendices to this policy comprise guidance to persons proposing service contracts and may be altered by the responsible Vice-President without the necessity of approval by the Board of Governors of Simon Fraser University.

 

9.0 Interpretation

Questions of interpretation and application of this Policy or its procedures shall be referred to the President, whose decision shall be final.

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Appendix A

Level of Authorization required to Approve Service Contracts

The level of authorization required to approve service contracts on behalf of the University is determined under the Simon Fraser University Board of Governors Signing Resolutions, approved by the Board on April 15, 1993 and most recently amended by the Board on February 1, 2007. Full documentation is available from the Secretary to the Board; a brief synopsis may be located in the following document (in pdf format).

In cases where the work under a service contract is to be performed by a unit that does not report to the Vice-President, Academic, refer to the Board of Governors Signing Resolutions (B10.11) for the appropriate level of authorization to approve the contract.

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Appendix B

Checklist for Service Contracts  (see Service Agreement Template at Appendix H)

• Identify parties in the legal agreement: SFU & Funding Source.
• Identify term of contract - start date and end date.
• Review budget for:
  • amount to be paid by funding agency;
  • method of calculation;
    
  • overhead;
    
  • use of funds (restrictions on line items vs. bottom line budget control); GST implications;
    
  • carry-forward provisions;
    
  • payment, if any, to Principal;
    
  • payment to sub-contractor(s), if any;
    
  • operating fund budget implications, if any.
• Review ownership of fixed assets purchased under the contract.
  
• Review payment arrangements:
  
  • installments;
    
  • billing requirements;
    
  • payment schedule (timing and frequency);
    
  • whether payment is contingent on deliverables, financial reports and/or progress reports;
    
  • acknowledgement of receipt of funds;
    
  • holdbacks;
    
  • disposition of any unspent balance.
• Review reporting requirements:
  
  • responsibility for reporting;
    
  • timing and frequency of reporting;
    
  • degree of detail and work involved (efforts should be concentrated on reducing complex reporting; any requirement to submit copies of supporting invoices and vouchers should be strongly resisted).
• Review intellectual property (IP) requirements:
  
  • Confidentiality and/or restrictions on publication (secret work is not permitted);
    
  • Ownership of resultant IP.
• Review audit requirements:
  
  • length of time that documents are required to be kept after completion of contract imposition of other particular auditing requirements.
• Review responsibility of reporting on in-kind contributions.
• Evaluate financial risk factors:
  • type of contract (e.g. sub-contract that may pose liability after termination of main contract);
    
  • financial stability (history and current) of the company;
    
  • experience with the company or funding agency by the University and other organizations.
• Review termination clause:
  • right of the University to terminate the contract;
    
  • right to terminate with reimbursement of all expenses incurred.
• Review potential for limiting the University’s liability.
• Review potential conflicts of interest (e.g. Principal also has an interest in the contracting party).
• Completion of the Final Approval Form - Appendix H to this Policy — including provision of a complete copy of the final version of the contract.