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Professional Services Agreements (PSA)

Policies and Procedures at the University of Iowa for Professional Services Agreements

All of the following policies and procedures apply when The University of Iowa pays a consultant (UI employee or non-UI employee). A written Professional Services Agreement (PSA) must be used for consultants who are not University employees and who receive payments from the University in excess of $5,000 per project year.

Professional Service Agreements are contracts for unique, technical and/or infrequent functions performed by an independent contractor qualified by education, experience and/or technical ability to provide services. In most cases these services are of a specific project nature, and are not a continuing, on-going responsibility of the institution, except in the broadest sense. The services rendered are predominately intellectual in character even though the contractor may not be required to be licensed. Professional service agreements may be with partnerships, firms or corporations as well as individuals.



University of Iowa Employees as Consultants

Unless otherwise justified and documented, payments to University of Iowa (hereafter "University") employees will be treated as extra compensation payments and processed accordingly. For income tax purposes, the status of such consultants will be that of University employees, not of independent contractors. The established University policy is to treat all payments to University employees for services as part of their total compensation and to withhold on them accordingly. University employees are subject to University of Iowa and Board of Regents policies and regulations, which set forth terms and rights regarding conflict of interest, inventions and intellectual property. Thus, no written Professional Service Agreement will be required when University employees perform services on University grants or contracts.


Non-University of Iowa Employees as Consultants

A written Professional Services Agreement must be used for consultants who are not University employees and who receive payments from the University in excess of $5,000 per project year. For income tax purposes, the University of Iowa Payroll Department will determine the status of consultants who are not University employees. Whether the status of such consultants is considered that of employees or of independent contractors will be determined based on the relevant facts of each arrangement by answering the questions on the U.S. Internal Revenue Service (IRS) checklist to see whether a consultant is an independent contractor or subject to federal tax withholding. The determination should occur prior to submission on the proposal, if possible. To initiate this determination, contact Marianne Stratton or 335-2420.


Recently Terminated or Retired University of Iowa Employees as Consultants (Terminated or retired within the past twelve months)

A written Professional Services Agreement is not required for consultants who are recently terminated or retired University employees. For income tax purposes, such consultants will be considered as University employees, not independent contractors, unless otherwise justified and documented. The University Payroll Department will determine whether there is sufficient justification to consider such consultants as independent contractors for income tax purposes. The determination should occur prior to submission on the proposal, if at all possible. To initiate this determination, contact Marianne Stratton or 335-2420. If the Payroll Department deems the consultant to be an independent contractor, then a written Professional Services Agreement is required.


Payments to Firms as Consultants

For payments less than $5,000, the consultant must submit an invoice to the Department. The Department must complete a University Voucher and Invoice form and attach the consultant's invoice or make payment with the University Procurement Card.

Payments of $5,000 or more to Firms as Consultants for professional services should be submitted as an invoice on the Firm’s letterhead. Invoices for payment must be submitted to:

The University of Iowa
Accounts Payable
202 PCO
Iowa City, IA 52242-2500

All invoices should include a reference to the purchase order number assigned to the Agreement and the compensation rate and number of hours or days of service if payment is to be made other than fixed fee. The University reserves the right to withhold ten percent (10%) from each payment until acceptance by the University of the Services rendered.


Instructions for Completing Professional Services Agreement form

University policy regarding the procurement of professional services requires that certain terms and conditions be covered. A written Professional Services Agreement (PSA) must be used for individual consultants and Firms who receive payments from the University in excess of $5,000 per project year.

  • Payment to Supplier
    • Start with – PSA update wording:  Project total is $25,000 or greater a Professional Services Agreement is required.
    • Change wording: Contractor’s Statement of Work – A copy….
    • Sole Source Justification Form
  • Payment to Individuals using their SSN or Tax ID
    • Project total is $4,999 or less complete Service Voucher through eVoucher
    • Project total is $5,000 or greater
      • Complete a paper payroll voucher and route to payroll
      • Then add the three bullets above from Payment to Supplier
  • Payment to Individuals without SSN
    • Project total is $4,99 or less
      • Complete a paper payroll voucher and W-8Ben form and route to payroll.
    • Project total is $5,000 or greater
      • Complete a paper payroll voucher and route to payroll
      • Then add the three bullets above from Payment to Suppliers

Professional Services Agreement form (word document).

A University of Iowa Purchase Order must also be established for the procurement of professional services for $5,000 or more. All University Departments must prepare and submit an approved electronic University Requisition to the Purchasing Department through the PReq system. Each requisition must include the following when created for professional services:

  • Sole Source Justification Form - If the total annual payment to the Contractor will exceed $25,000, a Sole Source Justification form must be submitted with the University Requisition. (This form is accessed by clicking the checkbox "View Sole Source Form" beneath the Comments section when creating the requisition.)
  • Contractor’s Proposal of Services - A copy of the proposed services from the Contractor must be submitted to the Purchasing Department. (Click the checkbox for Attachments when creating the requisition.)
  • Professional Services Agreement Form - The University’s Professional Services Agreement form must be filled out, signed and dated by the Contractor and returned with the supporting documents pertinent to the purchase to the University Purchasing Department. The official signature authority for contracts for the University of Iowa is the Director of Purchasing. (Click the checkbox for Attachments when creating the requisition.)