Senate Bill 1467 Guidance
The law contains four Conflict of Interest provisions and provides significant penalties for such violations:
I. Prohibits “Successor Contracts” (follow-on consulting agreements);
II. Further restricts hiring UC employees as Independent Contractors;
III. Restricts hiring back UC employees for 12 or 24 months; and
IV. Requires assignment of “unique supplier number” for all contracts over $10K.
I. Section 10515 – “Successor Contracts”
Requires that any person or business entity awarded a consulting services agreement by UC shall not bid on or be awarded a successor contract after July 1, 2003 to provide goods or services required, suggested, or otherwise deemed appropriate in the end product of the original consulting services agreement. In simple terms, Consultants who have performed work for the University cannot participate on subsequent projects relating to the Consultant’s findings or recommendations. This Section, however, does not apply if amount of extension is < 10% of original contract value.
Recommendations
Use an Independent Consultant Agreement (ICA) only when acquiring advice and the “Deliverables” are no more than a written form of the advice and/or recommendation(s), such as a report of findings and recommendations. Do not issue an Amendment or another Independent Consultant Work for follow-on work, as it may be a “Successor Contract.” For technical and professional services which execute an objective defined by UCSF, use an Independent Contractor Agreement.
Issuing a single contract for all possible scope or with contingent future scopes may avoid the need to issue a “Successor Contract”. However, Competitive Proposals will be required at the outset if the Cumulative Value including contingent scopes will exceed $50,000.
If a multi-phase project is contemplated, such as a pilot or prototype to be followed by full implementation, any agreement should cover all potential phases of the project with appropriate language reserving final cost figures and the University's discretion to proceed or not with full implementation. See Advice from Office of General Counsel and check with Business Contracts.
II. Section 10516 – Employees as Independent Contractors/Consultants
Restates more strictly current University Employee-Vendor policy, but creates a limited exception for teaching and research employees. No officer or employee may engage in any employment, activity or enterprise from which s/he receive compensation, in which s/he have a financial interest, or which is funded by or through any university department, activity, enterprise or contract, unless it is within the course and scope of their employment. Generally, employees without teaching or research responsibilities cannot be hired as independent contractors. This provision, however, does not apply to officers or employees with teaching or research responsibilities.
Recommendations:
Review the Employee-Vendor Relationship materials;
Consult HR for options to pay teaching and research employees for limited services and/or goods through the payroll system provided that Business Contracts has granted an Employee-Vendor waiver;
Use an Independent Consultant Agreement only where the service is advice only.
III. Section 10517 – Contractors who are former UC employees
A. No retired, dismissed, separated or formerly employed or otherwise appointed person may enter into a contract for 2 years in which s/he engaged in any negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant thereto.
B. For 12 months after retirement, dismissal or separation, no contracting with any University department if s/he was employed there in a policymaking position “in the same general subject area as the proposed contract”.
C. Does not apply to allowable rehire and excludes inventors and authors of intellectual property licensed under technology transfer agreements.
Recommendations:
Check with HR to verify the separation date of any former UC (not just UCSF) employee being considered for an Independent Contractor or Consultant contract.
Check with HR to determine whether the proposed activities touch on any policymaking duties the employee had in the “same general subject area” in which s/he served.
Check with Business Contracts or Campus Counsel where a former UC employee will be providing services related to their former UC employment through another independent contractor, if it is within 24 months of their separation.
Exceptions may be available for employees whose separation from UC was because of retirement.
IV. Section 10518 – Required assignment of unique ID number
Requires UC assignment of a unique contractor identification number to be displayed on ALL contracts of $10,000 or more. The unique identifier must remain unchanged regardless of change of name.
Recommendations:
Departments should check the signature page of all Independent Contractor Agreements to make sure the Federal Tax ID Number has been affixed, and put that number on all invoices if the contractor has not done so.
Caveats
Any contract/transaction entered into in violation of this law is void. (Section 10520)
UC or anyone acting on UC’s behalf may bring an action. (Section 10521)
Any officer or employee who “corruptly” performs an official act hereunder is guilty of a felony. (Section 10522)
Any person contracting with UC orally or in writing who “corruptly” permits a violation is guilty of a felony. (Section 10523)
Persons convicted are also liable for double what UC may have lost. (Section 10524)
The statute does not define "corruptly," but the Office of the General Counsel advises that a University officer or employee will generally not be considered to have performed an official act "corruptly" as a result of simple mistake or negligence.
References:
Business and Finance Bulletins, specifically BUS 34 (Securing the Services of
Independent Consultants);
BUS 43 (Part 7, Employee-Vendor Relationships).