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2100 PR.02 External Sales Approval Process
January 9, 2019
The phased implementation scheduled described in this section only applies to units that want to sell the services they provide within the University to external customers. It does NOT apply to faculty who want to provide professional services to external customers. Faculty wanting to provide professional services to external customers will be subject to the External Sales Approval (ESA) Process described in this Procedure on the Procedure’s effective date.
The ESA Process will be phased in as follows:
A. Units that have never (or only occasionally) sold externally before must go through the ESA Process before selling externally. Units that have previously sold externally, and are engaging in a new type of sales activity, such as a new service, or a significant change in volume, business practices, customer class, etc., must go through the ESA Process before beginning the new type of activity.
B. All units selling externally as of the effective date of this Procedure will ultimately, but not necessarily immediately, be required to go through the ESA Process. The ESA Process Owner will contact units with sales to external customers, starting those with the highest volume of external sales and working down, to require them to go through the ESA Process and be formally approved to sell externally. Once a unit successfully completes the ESA Process, it is approved to sell externally. The Office of Sponsored Projects (OSP) will continue to assist those units that have always executed contracts for external technical sales through OSP, until the units have successfully completed the ESA Process.
C. Units that have had a steady volume of external sales over the years will not be required to stop selling externally while they are waiting to complete the ESA Process. While such units may continue to sell to external customers using whatever process and documentation (invoices, contracts, etc.) they currently use, they remain responsible for complying with all federal, state, Yale and other rules.
D. Units that want to go through the ESA Process, for whatever reason, may do so.
Procedure 2100 PR.01 Executing Revenue Agreements describes the different processes for executing revenue agreements for many of the University’s revenue streams. Before continuing with this procedure, please refer to the types of revenue streams listed in Section 1 of Procedure 2100 PR.01 to make sure that this Procedure (2100 PR.02) is the correct one for your situation.
Use this Procedure if BOTH Criterion #1 and Criterion #2 apply:
- Criterion #1: Either:
- You are in a Yale unit that wants to sell the services it provides within the University to external customers.
- OR -
- You are a Yale faculty member or a Yale faculty member in your unit wants to provide professional services to external parties under the auspices of Yale, meaning that Yale would be the contracting party and time spent performing these services would be considered in support of Yale and not part of the 1/7th of a faculty member’s time that can be spent on non-Yale work.
- AND -
- Criterion #2: The desired external sales are not being done primarily to further Yale’s research, education and patient-care mission. Yale’s mission might, however, benefit in some secondary way from the external sales. Sales are not considered to be related to the mission merely because the profits from the sale are used to support the mission.
This Procedure describes the formal process for reviewing and approving these external sales. All proposed external sales must go through the approval process detailed in this procedure.
The Process starts with the Requestor completing a request form. If certain certifications can be made, requests for external sales approval may use a short form (detailed in Section 2 and in the flowchart in Appendix A). If the required certifications cannot be made, requests for external sales approval must use the standard form (detailed in Section 3 and in the flowchart in Appendix B).
The Requestor must obtain the approvals of the Lead Administrator and the relevant Dean or Vice President or their designees before the request is sent to the External Sales Approval Process Owner (“ESA Process Owner”). At this point, the ESA Process Owner is responsible for shepherding the request through the ESA Process.
The Provost’s Office plays a key role in the process by approving or rejecting external sales requests based on whether the external sales are consistent with Yale’s mission, whether the external sales are an appropriate use of institutional resources, and whether the external sales are appropriately priced.
If the Provost’s Office approves an external sale, other reviewers are responsible for ensuring that the proposed external sale does not interfere with any grant, tax, export control, environmental health and safety, legal, or contractual requirements.
Yale units or faculty (collectively, “Requestors”) may utilize the external sales short form only if the Requestor can certify the following:
- The request is for a one-time contract;
- None of the Yale people (faculty and staff) providing the service will physically work outside of Connecticut to produce the service;
- No Yale facilities (other than the requestor’s office and standard office equipment) will be used;
- No Yale-provided fixed or moveable equipment, datasets, subscriptions, technology, software, or materials and supplies will be used to provide the service;
- No students or postdocs will be involved in providing the service;
- No non-Yale research materials [defined as gases, materials or items (hazardous or otherwise) that contain any of the following substances: biological, chemical, and/or radioactive materials], tools, equipment, software, data or other physical or intangible property will be used to provide the requested service(s); and
- No access to Yale computer systems by non-Yale employees will be required.
If the Requestor cannot certify all of the above, the Requestor should skip to Section 3.
After completing the standard form, the Requestor proceeds to Section 4.
All requests (both short form and standard form) for external sales must go through the following process to ensure that the proposed sales are appropriate and permissible.
A. Lead Administrator
The Requestor submits either a completed Form 2100 FR.01 External Sales Approval Request – Short Form or Form 2100 FR.02 External Sales Approval Request – Standard Form to the appropriate Lead Administrator. Upon receipt, the Lead Administrator reviews the submission to:
- Confirm that the time worked by the Yale employees providing the service is correctly shown in the payroll costing location and is not charged to any grant; and
- Confirm the accuracy of the information contained in the request.
If the submission is incomplete or inaccurate, the Lead Administrator works with the Requestor to correct any deficiencies. If the submission is complete and accurate, the Lead Administrator sends an email, approving and attaching the request, to either the appropriate Dean or the Vice President or their designee.
B. Dean or Vice President or Their Designee
The Dean or Vice President, or their designee, reviews the submission to determine whether it is an appropriate use of the school’s or department’s resources (including financial, personnel, and other resources).
If the submission is unacceptable for any reason, the Dean or Vice President, or their designee, works with the Lead Administrator and/or Requestor to correct any deficiencies. If the submission is acceptable, the Dean or Vice President, or their designee, sends an email, approving and attaching the request, to the Requestor.
The Requestor forwards the submission to the ESA Process owner by completing the information in the ESAP Request Portal. The Requestor attaches either a completed Form 2100 FR.01 External Sales Approval Request – Short Form or Form 2100 FR.02 External Sales Approval Request – Standard Form, as well as the email thread indicating approvals from the Lead Administrator and Dean or Vice President, or their designee. The Requestor clicks “Submit” once all requested information is completed and attached.
C. External Sales Approval Process Owner
The ESA Process Owner reviews the submission for completeness.
If the submission is incomplete for any reason, the ESA Process Owner works with the Lead Administrator and/or Requestor to correct any deficiencies. If the submission is complete, the ESA Process Owner approves the request and forwards short forms to the Provost’s Office (Step E, below) and standard forms the Controller’s Office (Step D, below).
D. Costing Unit in the Controller’s Office (standard forms only)
The Costing Unit in the Controller’s Office:
- Reviews the documentation provided for the fair market value (“FMV”), break-even rates, and proposed rates; and
- Composes a summary of its analysis to include with the submission.
Once complete, the Costing Unit forwards the submission, including its analysis, to the ESA Process Owner. The ESA Process Owner then forwards the submission to the Provost’s Office.
E. Provost’s Office
The Provost’s Office:
- Determines if the request is consistent with Yale’s mission, whether it is an appropriate use of institutional resources (including financial, personnel, and other resources), and whether it is appropriately priced; and
- Documents the grounds for approval or, after consultation with the relevant Dean or Vice President, rejection of the request.
Once the Provost’s Office either approves or rejects the request, the Provost’s Office forwards the submission to the ESA Process Owner. If the request is rejected, the ESA Process Owner informs the Requestor, Lead Administrator and Dean or Vice President.
If the request is approved, the ESA Process Owner forwards the submission to the appropriate reviewers (Sections F through K) simultaneously. The reviewers vary depending on whether the request is a short or standard form submission and on the Requestor’s response to specific questions on the forms.
The reviewers must approve or reject each submission and inform the ESA Process Owner of their decisions. If the submission is unclear or inadequate, the reviewer works with the Requestor to clarify any issues or, if necessary, rejects the request. If the submission is clear and adequate, the reviewer approves the request. Following is a description of what each reviewer is responsible for reviewing and either approving or rejecting.
F. Office of Sponsored Projects (standard forms only)
The Office of Sponsored Projects (“OSP”) sends the list of capital project numbers and Moveable Equipment Inventory (“MEI”) tag numbers to MEI.firstname.lastname@example.org and asks that the MEI Unit provide, for each asset, its funding source(s) (the gift, grant, or YD (Yale Designated) worktag in Workday) and, if grant-funded, whether the grant is still active. If the proposed external sales involve the use of Yale resources (fixed or moveable equipment, software, or materials and supplies) funded by a sponsored award, OSP reviews the submission as follows:
- If the proposed services involve the use of federally-funded resources, OSP confirms, based on the information provided by the Requestor:
- Whether the grant funding the resources is still active. If so, OSP addresses any Program Income issues with the Requestor prior to approval;
- That the price is at FMV or higher, pursuant to 2 CFR § 200.313 (Note: OSP will confirm with the ESA Process Owner that the approved price is FMV or higher); and
- That priority is given to federally-funded uses, pursuant to 2 CFR § 200.313;
- If the proposed services involve the use of non-federally-funded resources, OSP reviews the agreements for such third-party resources to determine whether any conditions apply to the use of those resources to provide the proposed services. If so, OSP works with the Requestor and any other department(s), as necessary, to ensure compliance. OSP will consult with the Office of General Counsel (“OGC”), if necessary.
If the Requestor will use any technology obtained by Yale through a material transfer agreement (MTA) to provide the external sales, then OSP will confirm whether the use of such technology violates the MTA.
G. Tax Office (both short and standard forms)
The Tax Office reviews the submission to confirm that the Requestor knows about, and agrees to comply with, sales tax requirements, out-of-state work location requirements, and other applicable tax requirements.
H. Director for Export Controls (both short and standard forms)
The Director for Export Controls reviews non-Yale School of Medicine (“YSM”) submissions to confirm screening for denied or restricted party status using Visual Compliance.
- In the case of a short form request, the Director for Export Controls confirms that the supplier has been screened using Visual Compliance to ensure compliance with OFAC/EAR/ITAR denied and restricted parties lists.
- In the case of a standard form request, the Director for Export Controls submits a written plan, understood and agreed to by the Requestor, for the use of Visual Compliance to ensure compliance with OFAC/EAR/ITAR denied and restricted parties lists.
The Director for Export Controls does not need to review submissions from YSM. Because YSM units are required to use the YSM Workday Accounts Receivable (AR) System, the customer set-up and billing processes automatically include screening through Visual Compliance.
I. Director for Tax-Exempt Bond Compliance (“TEBC”) (both short and standard forms)
The Director for TEBC reviews the submission to determine if the proposed sales could be an unrelated trade or business (“UTB”) or a private business use (“PBU”). If necessary, the Director for TEBC will meet with the Requestor and consult with OGC or the Tax Office in making this determination. If the proposed sales could be either an UTB or PBU, the Director for TEBC determines whether tax-exempt bonds are used for the UTB/PBU work.
J. Office of Cooperative Research (standard forms only)
The Office of Cooperative Research (“OCR”) reviews the submission to confirm that any technology that may be used by the Requestor to provide the external sales does not violate any license or material transfer agreement.
K. Other Reviewers (standard forms only)
The ESA Process Owner determines whether other Yale units should review the request with respect to risks. If so, the ESA Process Owner forwards the submission to them for review and approval. For example, before approving:
- Environmental Health & Safety ensures that the Requestor understands the approvals and processes required for any sales that involve the use of research materials (defined as gases, materials or items (hazardous or otherwise) that contain any of the following substances: biological, chemical, and/or radioactive materials);
- Information Technology Services and/or OSP ensures that the Requestor understands the approvals and processes required for any sales that involve the use or sharing of any non-customer, non-Yale data or software, or any access to Yale computer systems by non-Yale employees;
- OSP and/or OGC ensures that the Requestor understands the approvals and processes required for any sales that involve the presence/participation of any non-Yale individuals on campus;
- If the sale is below FMV, OGC analyzes the situation to determine the fraud and abuse risk (as defined in the Stark Law and Anti-Kickback Statute).
Once the above reviewers have completed their reviews, they forward their approval or rejection, along with a brief explanation, to the ESA Process Owner. If the request is rejected by any of the above, the ESA Process Owner informs the Requestor and all reviewers.
If the request is approved, the ESA Process Owner forwards the submission for contract drafting. Short form submissions go next to OSP (Step L, below). Standard form submissions also go next to OSP (Step L below) if approval is for a single contract. If approval is for multiple future sales, then the standard form submissions go next to OSP or OGC (Step M). Simultaneously, the ESA Process Owner will start to work on Step N.
L. Office of Sponsored Projects (short forms and single-sale standard forms)
OSP determines whether the Requestor has an OSP-approved contract to use for the external sale(s) and, if not, drafts one. OSP is responsible for handling and signing the contract with the external party on behalf of the University.
Upon completion of this step, Requestors seeking approval for a single sale to a single external customer have completed the approval process. The Requestor may conduct the external sale, as provided in the contract.
M. Office of Sponsored Projects and Office of General Counsel (multiple-sale standard forms only)
OSP or OGC ensure that the Requestor has an OGC-approved template by doing one of the following:
- Approving the Requestor’s current template;
- Adding some “boilerplate” language to the Requestor’s current template and approving it;
- Revising the Requestor’s current template; or
- Preparing a template tailored to the Requestor’s sales.
The template may be a click-wrap solution or an electronic or hard-copy document. Once approved, OSP or OGC forwards the template to the Requestor and the ESA Process Owner.
Requestors seeking approval to make many sales to many customers must continue to the next step.
N. Requestor and ESA Process Owner (standard forms only)
Requestors seeking approval for multiple external sales must have a review and approval process in place to ensure that each contract with external customers is properly reviewed, approved, and signed. If the Requestor is in a unit that has an established process, the Requestor must confirm that all contracts will comply with that process. If the Requestor is in a unit that does not have an established process in place, the Requestor works with the ESA Process Owner to define such a review and approval process, which must be approved by the relevant Dean or Vice President, or their designee.
Upon completion of this step, Requestors seeking approval for multiple external sales have completed the approval process. The Requestor may conduct external sales, pursuant to the approval and OGC-approved contract template.
Annually, the Requestor must confirm that the proposed fee schedule for the next year is appropriate and that no circumstances have arisen which would cause a re-evaluation of the Requestor’s authorization to sell externally. The ESA Process Owner, in consultation with other units and officials as necessary, reviews and approves this annual confirmation.
To confirm ongoing qualification to sell externally, the Requestor obtains and completes Form 2100 FR.03 External Sales Annual Reapproval Form.
Once a Requestor receives approval for external sales, and prior to executing any contract to sell to a specific external customer the Requestor must confirm that none of the changes listed in Form 2100 FR.04 External Sales Compliance Checklist have occurred since the Requestor’s original approval or reapproval. While it is not required that this form be completed and submitted, it serves as a good checklist for the Requestor. If the Requestor cannot confirm any of the listed statements, the Requestor must notify the ESA Process Owner prior to executing the contract.