Professional Services Frequently Asked Questions

This page should answer most questions about Professional Services Contractual Agreements at Iowa State University. You can also visit the Procurement commodity page for professional services for further information. Click on the question below to link to the appropriate answer.

What is the definition of a professional service? 

The Regents Policy Manual defines "professsional services" as 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, ongoing responsibility of the institution. The services rendered are predominately intellectual in character even though the contractor may not be required to be licensed. Professional service engagements may involve partnerships, corporations, or individuals. Some examples of "professional services" typically utilized at the University include consulting, marketing analysis, banking services, medical/physician services, auditing, and software development/design. Speakers and entertainers do not require a university Professional Services Contractual Agreement (PSCA), unless they represent a conflict of interest.


What is the difference between a subcontract and a professional services agreement?


Subcontract, Consultant, or Vendor

There often exists substantial confusion when an investigator attempts to determine if the collaboration with another organization constitutes a subcontract, a consultant, or vendor relationship. Therefore, OSPA provides the following guidance.

An organization is considered to be a sub-recipient of an award when it:

  1. Determines who is eligible to receive financial assistance.
  2. Has its performance measured against whether the objectives of the program are met.
  3. Has responsibility for programmatic decision-making.
  4. Has responsibility for adherence to applicable program compliance requirements.
  5. Uses the funds to carry out a program of the organization as compared to providing goods or services for a program of the pass-through entity.


In contrast, an organization is considered a vendor when it:

  1. Provides goods and services within normal business operations.
  2. Provides similar goods and services to many different purchasers.
  3. Operates in a competitive environment.
  4. Provides goods or services that are ancillary to the operation of the program.
  5. Is not subject to compliance requirements of the program.


Much of this guidance was extracted from the July 1997 publication entitled “A Guide to Managing Federal Grants for Colleges and Universities”, copyrighted by the Atlantic Information Service, Inc., the National Association of College and University Business Officers, and the National Council of University Research Administrators.

Following are a series of questions from the above referenced publication that will help you understand the difference between a sub-recipient and a vendor as you decide which procurement mechanism is most appropriate for your specific situation.

  1. Is there an identified investigator at the lower-tier organization? If yes, is he/she a co-investigator on the primary award?
  2. Is the lower-tier organization free to decide how to carry out the activities requested of it?
  3. Will there be potentially patentable or copyrightable technology developed from the activities of the lower-tier entity? If yes, does the entity have rights to its technology?
  4. Are publications anticipated from the lower tier entity?
  5. Will individuals at the lower-tier organization be co-authors on articles?


The above questions must be considered collectively in order to determine the appropriate business relationship. Additionally, there may be specific circumstances not addressed in this guidance that must be considered in order to make a fully-informed decision.


When do I need to contact Procurement about a Professional Services Agreement?

Procurement Services must sign all Professional Services Contractual Agreements (PSCAs) over $2000. You should contact Procurement prior to the vendor beginning any work on the project. Procurement can review your agreement or assist you in writing the agreement. Agreements should go to Procurement first for review and then to the vendor for signature. Once the vendor has signed the agreement, Procurement will sign the PSCA and issue a purchase order. The only exception to this rule would be agreements that are with conflict of interest vendors. All agrements with vendors that represent a conflict of interest must go through Procurement.


What types of services are generally called professional services?

Some examples of "professional services" typically utilized at the university include consulting, marketing analysis, banking services, medical/physician services, auditing, and software development/design. Speakers and entertainers do not require a university Professional Services Contractual Agreement (PSCA), unless they represent a conflict of interest.


What types of services are not generally classed as professional services?

Services which would not be considered "professional services" include captioning, catering, computer programming, construction, data analysis, design services, editing, graphic design, illustration, inspections, interpreting, lab testing, photography, repairs, small equipment rental, translation, transcription, and video production. These services are often referred to as "routine services." Transactions involving "routine services" will be handled consistent with the university's procurement policy for the purchase of supplies.


When do I need to bid professional services?

Professional Services Contractual Agreements (PSCAs) where the total project expense (compensation, travel, lodging, etc.) is anticipated to exceed $50,000 are to be handled through a competitive selection process coordinated by the Procurement Services Department. Selection of the contractor will be based on a variety of criteria including, but not limited to: demonstrated competence, experience, knowledge, ability to meet the university's needs, references, methodology, and unique qualifications. In addition, the contractor must offer a fair and reasonable price consistent with current market conditions.


Who can sign a Professional Services Contractual Agreement for ISU?

All PSCAs in excess of $2,000 must be reviewed and signed by Procurement prior to the beginning of work. PSCAs under $2,000 may be signed by the department and paid through an honorarium voucher with a copy of the signed agreement.


Who can help me write the Professional Services Contractual Agreement?

Procurement is more than happy to assist you in developing the PSCA. Contact Cory Harms in the Procurement Services department for help.