Contracts and Services

Contracts for the purchase of services, including design and construction, executed under the New York State statutory regulations may be funded through State Purpose, DIFR, IFR, and other certain special funding.

Contracts funded independently (such as through ASC, Alumni Association, or similar entities) are generally not governed by New York State procurement regulations, with the exception of construction-related contracts. However, if any contract is partially funded with New York State funds, or is expected to transition to State funding in  a future fiscal year, full compliance with New York State regulations and these guidelines is required from the outset.

General Responsibility

Contract administration is a share responsibility across all levels of campus management, including:

• the President, as Chief Administrative Officer,
• the Division of Finance and Management
• the Business Office (Purchasing and Accounts Payable Office)
• operating departments

Each level is responsible for ensuring full compliance with applicable statutes, regulations, and campus procedures. This shared responsibility is supported through clearly defined delegation of authority, ensuring appropriate review, oversight, and accountability at every stage of the contracting process.

All levels of management are accountable for compliance within their delegated authority.

Business Office - Purchasing

The Business Office - Purchasing is delegated authority to ensure overall compliance with New York State procurement regulations and serves as the campus office responsible for coordinating and overseeing the contract development and execution process.

Key Responsibilities include:

• Exclusive authority to obligate the University, including issuance of purchase orders, AC-340 encumbrances, signed contracts, letters of agreement, or letters of intent
• Coordination of processing, documentation flow, and pre-audit review to ensure compliance with New York State statutes and regulations
• Review of draft contracts to ensure inclusion of required language, clauses, exhibits, and appendices to protect institutional interests
• Determination of whether external technical or legal review is necessary
• Assistance to operating departments in developing contract specifications, within the limits of available expertise and resources

Operating Manager

The operating (departmental) manager is responsible for the program or function served by the contract plays a central role in contract development, administration, and oversight.

Contract Development

The operating manager is responsible for developing the substance of contract specifications, including:

• scope of services
• performance objectives and deliverables
• reporting and documentation requirements
• procedural and operational expectations of the vendor
• supporting responsibilities of the University

Because the operating manager has the greatest familiarity with programmatic and technical requirements, they are best positioned to define these elements.

Procurement Process Participation

The operating manager is also responsible for:

• conducting pre-bid meetings and site visits when applicable
• evaluating responses to RFPs or solicitations
• making recommendations for award, often with assistance from an evaluation team

During contract development or modification, the operating manager may consult with subject matter experts or potential providers, provided there is no actual or perceived conflict of interest. The Purchasing Office should be consulted when questions arise.

Under no circumstances may any explicit or implicit commitment be made to a potential vendor prior to award.

Consultants or designers engaged in the development of specifications should not be permitted to bid on resulting work unless there is a documented and compelling justification. If all vendors are given equal opportunity to participate in design or specification development, all may be eligible to bid.

The primary responsibility for contract development and modification rests with the operating manager.

Contract Monitoring and Management

The operating manager is responsible for:

• monitoring contract expiration and renewal dates to ensure continuity of service
• initiating renewals or other required actions in a timely manner
• ensuring compliance with contract terms by both the vendor and the University
• conducting inspections, certifications, and ongoing performance monitoring
• documenting performance and maintaining records
• identifying and addressing unsatisfactory vendor performance

Summary

Contract administration is a shared function, with:

• operational responsibility resting with the operating manager, and
• legal, fiscal, and procedural oversight coordinated through the Purchasing and Accounts Payable Office.

Together, these roles ensure contracts are properly developed, executed, and managed in compliance with New York State requirements and institutional policy.

When contracting for services, careful consideration must be given to the issues related to outsourcing, independent contractor (non-employee) classification as defined by the Internal Revenue Service (IRS), and the New York State Public Works Law, when applicable.

Outsourcing decisions should include an assessment of whether the work can be appropriately performed by existing University staff before engaging an external provider.

Proper classification of individuals performing services is essential to ensure compliance with federal and state regulations governing employee versus independent contractor status.

To ensure full compliance with New York State requirements, all commitments for contracted services must be made exclusively by the Purchasing and Accounts Payable Office. Faculty and staff members may not independently authorize or commit the University to any contracted service agreement.

The Internal Revenue Service (IRS) closely regulates the classification of workers as either employees  or independent contractors and may impose significant monetary penalties when individuals are misclassified.

In general, the IRS favors classification as an employee, which ensures proper withholding of income taxes and Social Security contributions. Classification as an independent contractor is only appropriate when specific criteria are met and can be clearly supported.

To determine proper classification, the IRS applies a “twenty-factor test” (also referred to as the common-law test), which evaluates the degree of behavioral control, financial control, and the nature of the working relationship. The burden of proof rests with the employer to demonstrate that an individual meets the requirements to be treated as an independent contractor.

For this reason, careful evaluation is required prior to engaging any non-employee for services to ensure compliance with IRS regulations and to avoid misclassification risks.

New York State requires special treatment of construction-type contracts for services regardless of dollar value or funding source. Any work which in any way alters or adds to the physical structure of the campus must be defined as a construction contract and be fully developed by the Office of Facilities. The development would include, as applicable, approved specifications and drawings, prevailing wage rates, environmental assessments, external agency approvals, code compliance, adherence to Procurement Opportunities requirements, competitive bidding. The contracts are reviewed and executed by Purchasing. Unless there is a compelling reason, otherwise, design consultants may not bid on construction projects which they designed. As becomes evident, construction projects require thorough and advance planning and extra time and effort to develop and administer.

New York State requires that prevailing wage rates (as published by the NYS Department of Labor) be paid for any work performed of a "building trades" nature, unless that work is performed by a graded civil service position titled employee. Building trades cover a wide variety of skilled and semi-skilled specialties, including but not limited to, communications worker, carpenter, welder, sheet metal worker, machinist, painter, glazier, mason-bricklayer, plumber, etc. While virtually all construction project work fall under "trades," even work which does not alter or add to the physical structures, such as painting, must comply. It is for this reason that all contracted service must be carefully reviewed, given pre-approval, and executed via purchase order or contract issuance by the Purchasing and Accounts Payable Office with no prior commitment made to the vendor.

There is a limited opportunity for multi-year installment purchases within the State of New York. The duration of an agreement cannot exceed the useful life (five year minimum). Only purchases with an outright purchase price exceeding $250,000 may be acquired in this manner on the rationale that for purchases under $250,000 the additional cost of financing is not justified. The cost threshold is arguably too high for small agencies such as SUNY Cortland, but the policy is firm. Additionally, all multi-year installment purchases must follow C.O.P.S. (Certificates of Participation) procedures requiring advance appropriation requests (generally a request for C.O.P.S. multi-year purchasing must be submitted in October for the next fiscal year). The State has given the Office of General Services (OGS) sole authority for obtaining C.O.P.S. financing.

Leasing is generally discouraged by the State of New York as not cost effective unless leasing is the only option offered by the vendor. All proposals for leases must be presented for review and approval to the Attorney General (AG), Office of the State Comptroller (OSC), and Office of General Services (OGS). While leasing may be considered a viable alternative to outright purchasing for short term needs, strong arguments must be presented to persuade the external approving agencies. In cases where technological advances may render the acquisition obsolete in a period shorter than its useful life, leasing may be considered valid.

In cases of short-term need, renting may be permissible if clearly cost-effective. Because rentals are carefully scrutinized by OSC at the time of payment processing, it is essential that the Purchasing and Accounts Payable Office be contacted for advice and coordination at the early planning stages and that no unauthorized vendor commitments be made.