2100 PR.02 External Sales Approval Process
This Procedure is for those units wanting to sell technical, research, and professional services to external parties. There are two situations in which the External Sales Approval Process (“ESAP”) Owner will direct such units to use this Procedure:
- The unit has followed the instructions in Section 4 Service Agreements of Procedure 2100 PR.01 Executing Revenue Agreements and has been informed that it must go through ESAP; - OR -
- The unit has been selling externally and the ESAP Owner has informed the unit that it must go through ESAP. (Refer to the Implementation Schedule within this section below for how the ESAP Owner prioritizes units to go through ESAP.)
The ESAP Owner will direct you to this procedure, Procedure 2100 PR.02, if your proposed sales meet BOTH of the following criteria:
- 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, as 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.
Additionally, services sold externally by University Service Providers are also subject to Policy 1410 University Service Providers.
ESAP 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, the relevant Dean or Vice President, or their designee, and for Yale School of Medicine (“YSM”) units, the YSM Associate Controller, before the request is submitted.
Once an ESAP request is submitted, the ESAP Owner will shepherd the request through ESAP.
The Provost’s Office plays a key role in the process by approving or rejecting external sales requests based on whether the external sales provide a secondary benefit to 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.
The phased implementation schedule described in this section only applies to units and faculty that want to sell the services they provide within the University to external customers, as outlined in the criterion above.
ESAP will be phased in as follows:
A. Units that have never (or have only occasionally) sold externally must go through ESAP 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 ESAP 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 ESAP. The ESAP Owner will contact units with sales to external customers, starting with those with the highest volume of external sales and working down, to require them to go through ESAP and be formally approved to sell externally. Once a unit successfully completes ESAP, 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 an ESAP review and approval.
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 ESAP. 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 ESAP, for whatever reason, may do so.
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;
- 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 materials or items (hazardous or otherwise) that contain any of the following: 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.
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.
The reviewers must approve or reject each submission and inform the ESAP Owner of their decisions. If the submission is unclear or inadequate, the reviewer works with the Requestor to clarify any issues or, if necessary, reject 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.
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 the YSM Associate Controller, for YSM units only, and for all other requests, to either the appropriate Dean or Vice President, or their designee.
B. YSM Associate Controller
For YSM units only, the YSM Associate Controller reviews the documentation provided for proposed external customer rates, including the supporting rate calculation schedule and the fair market value (“FMV”) analysis, if applicable. If the submission is incomplete or inaccurate, the YSM Associate Controller works with the Requestor to correct any deficiencies. If the submission is complete and accurate, the YSM Controller sends an email, approving and attaching the request, to the Requestor and the appropriate Dean or Vice President, or their designee.
C. 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 ESAP 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, Dean or Vice President, or their designee, and for YSM units, the YSM Associate Controller. Additional supporting materials for the ESAP request should be forward to the ESAP Owner.
D. ESAP Owner
The ESAP Owner reviews the submission for completeness.
If the submission is incomplete for any reason, the ESAP Owner works with the Requestor to correct any deficiencies. If the submission is complete, the ESAP Owner approves the request and forwards short forms to the Provost’s Office (Step F, below) and standard forms to the Controller’s Office (Step E, below).
E. Controller’s Office (standard forms only)
The Controller’s Office:
- Reviews the documentation provided for the costing of the proposed external customer rates and the FMV analysis; and
- Composes a summary of the analysis to include with the submission.
Once complete, the Controller’s Office forwards the submission, including its analysis, to the ESAP Owner. The ESAP Owner then forwards the submission to the Provost’s Office.
F. Provost’s Office
The Provost’s Office:
- Determines if the request provides a secondary benefit to 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 ESAP Owner. If the request is rejected, the ESAP Owner informs the Requestor, Lead Administrator and Dean or Vice President, or their designee, and YSM Associate Controller for YSM requests.
If the request is approved, the ESAP Owner forwards the submission to the appropriate reviewers (Sections G through M) simultaneously. The reviewers vary depending on whether the request is a short or standard form submission and the Requestor’s responses to specific questions on the forms. Simultaneously, the ESAP Owner begins work on Step P.
G. Office of Sponsored Projects (standard forms only)
The Controller’s Office provides the Office of Sponsored Projects (“OSP”) with a Workday report of the capital project numbers and Moveable Equipment Inventory (“MEI”) tag numbers, for each asset, including its funding source(s) (the gift, grant, or YD (Yale Designated) and worktag in Workday). 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 external customer rate is at FMV or higher, pursuant to 2 CFR § 200.313 (Note: The ESAP Owner informs OSP whether the approved external customer rate 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.
H. 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, unrelated business taxable income (“UBTI”) requirements, sales tax requirements, and other applicable tax requirements.
I. Export Controls (both short and standard forms)
The Director for Export Controls reviews non-YSM submissions to confirm screening for denied or restricted party status using Visual Compliance and compliance with international trade laws.
- The Director for Export Controls confirms that the customer has been screened using Visual Compliance to ensure compliance with OFAC/EAR/ITAR denied and restricted parties lists.
- The Director for Export Controls reviews the ESAP request to determine whether a license is required to engage with the external party or to transfer any items, technical data, or software internationally.
The Director for Export Controls does not need to review submissions from YSM. Because YSM units are required to use the Workday Non-sponsored (“NS”) Accounts Receivable (“AR”) System, the customer set-up and billing processes automatically include screening through Visual Compliance. The Workday NS AR system also allows the Director for Export Controls to review whether the transfer of goods, technical data, or software may be transferred without a license.
J. Tax-Exempt Bond Compliance (“TEBC”) (both short and standard forms)
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, 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 UTB or PBU, TEBC determines whether tax-exempt bonds are used for the UTB/PBU work.
K. Yale Ventures (standard forms only)
Yale Ventures 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.
L. Environmental Health & Safety (standard forms only)
Environmental Health & Safety (“EHS”) ensures that the Requestor understands the approvals and processes required for any sales that involve the use of research materials (defined as materials or items (hazardous or otherwise) that contain any of the following: biological, chemical, and/or radioactive materials).
M. Other Reviewers (standard forms only)
The ESAP Owner determines whether other Yale units should review the request with respect to risks. If so, the ESAP Owner forwards the submission to them for review and approval. For example, before approving:
- Information Technology Services 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, including collection of Certificates of Insurance for Risk Management review;
- For requests from the Yale School of Medicine or the School of Nursing, if the sale is below FMV or FMV cannot be determined, OGC analyzes the situation to comply with fraud and abuse requirements (for example, Stark Law and Anti-Kickback Statute).
- For requests where confidential information will be received from the external customer, OSP assesses the situation and works with the Requestor on executing a standard Confidential Data Agreement (“CDA”), if appropriate.
Once the above reviewers have completed their reviews, they forward their approval or rejection, along with a brief explanation, to the ESAP Owner. If the request is rejected by any of the above, the ESAP Owner informs the Requestor and all reviewers.
If the request is approved, the ESAP Owner forwards the submission for contract drafting. Short form submissions go next to OSP (Step N, below). Standard form submissions also go next to OSP (Step N below) if approval is for a single contract. If approval is for multiple future sales, then the standard form submissions go next to OGC (Step O).
N. 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.
O. 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 contract template.
The template may be terms and conditions that the external customer agrees to online or a PDF or paper document that is signed electronically or by hand. OSP or OGC forwards the approved template to the Requestor and the ESAP Owner.
Requestors seeking approval to make many sales to many customers must continue to the next step.
P. ESAP Owner (multiple-sales standard forms only)
The ESAP Owner drafts an Approval Plan, outlining the ongoing responsibilities of the Requestor resulting from the ESAP reviews performed. In order to sell to external customers, the Approval Plan must be approved and signed by the relevant Dean or Vice President, or their designee.
Q. Requestor (standard forms only)
Upon execution of the Approval Plan (prepared in Step P), Requestors seeking approval for multiple external sales have completed the approval process. The Requestor may conduct external sales, pursuant to the Approval Plan and OSP/OGC-approved contract template.
Annually, the Requestor must confirm that the proposed fee schedule for the next year is appropriate and in line with the Provost’s Office approval of their rates, and that no circumstances have arisen which would cause a reevaluation of the Requestor’s authorization to sell externally. The ESAP Owner, in consultation with other units and Reviewers 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 ESAP Owner prior to executing the contract.
For a clearer image, please use the links under “Documents,” below, for a .jpeg file of the flowchart.
For a clearer image, please use the links under “Documents,” below, for a .jpeg file of the flowchart.