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1.1 What is the purpose of this chapter? This chapter provides
direction and assigns responsibilities for cost recovery and cost allocation
activities.
1.2 What is the scope of this chapter? This chapter covers
the:
A. Recovery of full costs that we incur when providing goods and
services to other entities, and
B. Allocation of administrative costs that we incur for these
activities to the proper appropriations and funding accounts.
1.3 What are the authorities for this chapter? The authorities for
all the chapters in Part 264 are in Exhibit 1.
1.4 What is cost recovery? Cost recovery is the process of
recouping all costs (both direct and indirect) associated with providing
goods or services to another entity.
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A. Direct costs are the costs that we can identify with producing
a specific product or providing a specific service. Direct costs include
direct labor, equipment, and other items purchased or consumed specifically
related to the development or delivery of a product or service.
B. Indirect costs are costs that we spend as part of providing a
product or service, but that we cannot specifically identify with the product
or service. For example, the cost of utilities and information technology
(IT) support are indirect costs (see Exhibit 2 for a
detailed list of direct and indirect costs).
1.5 Who is responsible for cost recovery? Table 1-1 identifies
responsibilities for cost recovery:
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Table 1-1 Responsibilities
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Official
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Responsibility
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A. Director
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1) Ensures we have a cost recovery policy in place, and
(2) Approves exceptions to the policy.
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B. Assistant Director – Business Management and Operations
(ABMO)
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(1) Recommends changes to the cost recovery policy,
(2) Communicates our cost recovery activities to the Department's
Office of Financial Management, and
(3) Reviews all requests for exceptions to policy and recommends
to the Director whether or not to approve them based on Servicewide
impacts. (See Exhibit 3
for more information about exceptions to cost recovery policy.)
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C. Chief, Division of Financial Management
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(1) Reviews all requests for exceptions to policy and recommends
to the ABMO whether or not to approve the requests based on funding impact,
and
(2) Reviews our cost recovery policy biennially.
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1.6 Why does the Service recover our full costs? The Office
of Management and Budget (OMB) Circular A-25 requires that we recover
full costs of providing goods and services to private entities, States,
tribes, and other government agencies to:
A. Ensure
that the service, sale, or use of Service goods or resources we provide to
agencies is self-sustaining; and
B. Promote
efficient allocation of our resources by establishing charges for special
benefits we provide that are at least as great as costs to the Service of
providing the benefits.
1.7 How does the Service recover full costs? We use one of the
following methods to recover full costs:
A. Billing: We may bill for direct and indirect costs that we
calculate either by researching and itemizing all of the costs or by
accumulating the costs in our financial accounting system. Accumulating the
costs in our accounting system is the most effective means of recovering
indirect costs and is executed by developing an indirect rate (see section 1.8) that we apply to the cost of our goods or
services. Below is an
example of a bill using an indirect cost rate of 22 percent:
Cost of goods or services: $1,000
Indirect rate of
22% : 220
Total bill
amount : $1,220
B. Treasury Transfers: We may recover costs by having the user pay
indirect costs by transferring funds to Service appropriations and funding
accounts (via a Treasury transfer). We must disclose and get approval on
these allocations from the Congressional Committees on Appropriations.
C. Schedules of Fees, Rates, and Prices: We may establish fees,
rates, or prices in a schedule (e.g., import/export permit fees, refuge
entrance fees). We must publish any schedule of fees, rates, or prices we use
to recover costs in the Code of Federal Regulations.
1.8 How does the Service calculate indirect
rates? Table
1-2 shows how we calculate indirect rates.
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Table 1-2: Calculating Indirect Rates
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Rate
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Components
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Calculation
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Additional Information
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Standard Indirect Rate
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Prior year indirect costs ÷ Prior year direct costs
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Department recommends this calculation.
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National and Regional administrative cost component
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(Prior year Central Office Operations + Regional Office
Operations + Operational Support) ÷ Specific Direct Costs*
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N/A
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Regional program management component
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Prior year Regional program expenditures
supporting reimbursables ÷ Specific Direct
Costs*
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Includes Assistant Regional Directors and
related offices that play a role in reimbursable oversight.
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Pass-through Rate
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Budget Object Classes (BOC) 25, 32, or 41.
(see far right column for BOCs)
BOC 32 applies for capitalized personal property assets
exceeding $15,000.
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(Prior year Resource Management – Denver Financial Operations
Cost Accounting System + % of Reimbursable Effort – Regional Budget & Finance
and CGS** + % of Reimbursable Effort – IDEAS + % of Reimbursable Effort –
BAS***)
÷ Prior year resource management reimbursable obligations 19xx,
269x, 437x, and 847x subactivities
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BOCs:
25
(Contracts),
32
(Construction), and
41
(Financial Assistance).
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Notes:
* Specific Direct Costs are the prior year audited gross costs
less adjustments for financial assistance, construction, stewardship asset
expense, and prior period adjustments.
**Contracting and General Services
***BAS = Budget Allocation System
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1.9 How often does the Service review the indirect rates? We must review our
indirect rates every 2 years.
A. The Division of Financial Management must coordinate a biennial review
of our cost recovery policy, practices, and procedures and recommend
necessary changes in every even-numbered year.
B. The review team must include members from:
(1) The Division of Financial Management,
(2) The Division of Budget,
(3) Regional offices, and
(4) Program areas from the Washington Office.
C. By January of each review year, the Division of Financial
Management must identify and contact review team members. The team must
complete recommendations by June of the same year to allow time to
communicate and implement any changes.
1.10 Are there different indirect rates the Service uses for
certain projects? Yes. Although we often use the standard indirect rate, in some
cases there are special indirect rates we use for projects. Always consult
your Regional Budget and Finance Officer (BFO) to ensure that you use the
current correct indirect rates. Table 1-3 shows the different types of
agreements we use and whether or not we use the standard indirect rate or
some other indirect rate. Exhibit
4 provides the current rates for each of these agreement types (we amend Exhibit 4 whenever these
rates change).
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Table 1-3 Agreements and Different Types of Rates
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Type of Agreement
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How It Is Used
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Type of Rate
(see Exhibit 4 for current rate)
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Reimbursable agreements for work in leased facilities
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For leased space,
payroll/personnel/financial systems, phones, Regional office
support, contracting and procurement, and information systems
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Standard indirect rate.
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Reimbursable agreements for work in Service-owned facilities
or host agency/partner facilities where the Service is not charged for the
use of the facilities
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For payroll/personnel/financial systems, phones, Regional
office support, contracting and procurement, and information systems
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Rate for Service-owned facilities.
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Pass-through agreement
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-To fund a 3rd party, such as a State, local, or
tribal government; institutions of higher education; or nonprofits
-Little or no Service administrative oversight
-For acquisition or financial processing services
-For labor, travel costs, and non-contractor costs (if less
than or equal to 5% of total agreement)
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Pass-through rate
(agreements may have a pass-through
component and a component where Service staff participate. If staff
participation is >5% of the total, then you must separate the rates into
pass-through and standard proportionately).
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Special pass-through agreements related to construction, land
acquisition, and non-Government land
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-For private construction contractors/subcontractors
-For right-of-way agreements that involve two or more
Departmental bureaus or offices
-To make capital improvements or to buy new property
-To give funding to a private landowner or another Government
agency for partnership projects on non-Government lands
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Pass-through rate.
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Pass-through agreement initiated by the Department’s Office of
the Secretary
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As directed
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Pass-through rate unless otherwise stated by the Secretary or
prohibited by legislation.
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International Agreements
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To provide services to an international partner
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Standard indirect rate, but allow for exceptions (see OMB
Circular A-25). If not using the standard rate, Regional Director or
Assistant Director must send recommendation to WO Division of Financial
Management. Division of Financial Management asks the Department’s Office
of Financial Management for permission to use something other than the
standard rate.
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Fish and Wildlife Coordination Act (FWCA) Agreements
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For work we do for the U.S. Army Corps of Engineers and the
Bureau of Reclamation under the Act (16
U.S.C. 661-667e)
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Negotiated rate established in 2003 Memorandum of
Understanding (MOU) with Corps of Engineers and in 1982 between the Service and the
Bureau of Reclamation (BOR).
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FWCA Subcontracting Agreements
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For Service work subcontracted to a 3rd party
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Negotiated rate established in MOU (1/22/2003).
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Spill Response
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For activities related to response for oil spills or hazardous
materials spills
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Rate varies by Region
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National Resource Damage Assessment and Restoration (NRDAR)
Agreements
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-For restoration-specific activities
-For claims related to past damage assessment costs
-Department collects settlement funding and we request funds,
using the applicable Regional indirect rate
-Requests must include spreadsheet showing estimated indirect
or explain why it is not included
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Rate varies by Regional office.
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U.S. Environmental
Protection Agency (EPA) Superfund Agreements
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For activities related to cleaning up hazardous waste sites
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No indirect rate.
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Grant Agreements
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-For grant funds we receive
-May be a reimbursable agreement (i.e., has statement of work,
requires billing statements) or a donation
(see 264 FW
2.20 for what to consider when determining how to process grant funding
)
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-If the grant agreement is a reimbursable agreement use the
standard rate.
-If the grant was awarded as the result of a competition, use
the pass-through rate.
-Our Chief Financial Officer may request a lower or 0% rate,
but the program office must compensate the difference between it and the
standard rate.
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Intra-Agency or Interagency Personnel Agreements (IPAs)
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For detailing a Service employee to another agency, bureau, or
to a State or local government agency
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-No indirect rate.
-Must use SF-50
(Notification of Personnel Action) or OF-69
(Title IV Intergovernmental Personnel Act Assignment Agreement).
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Intra-Agency or Interagency Travel Agreements and Award
Agreements
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For transferring funds between agencies for reimbursement of
travel or award costs
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-Charge a standard rate if we arrange the travel and file the
voucher.
-If the other agency arranges travel and pays the travel
voucher directly to the traveler, we do not apply an indirect rate.
- We do not apply an indirect rate to Interagency Award
Agreements
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Agreements for Emergency Appropriations
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For emergency supplementals
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No indirect rate.
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Agreements with Special Authorizing Legislation or
Departmental Policy
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-Varies with legislation/policy.
-Need Director’s signature
-Must attach legislation/policy to agreement when submitting
it to the Division of Financial Management for accounting
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Some legislation requires we do not charge an indirect rate.
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Agreements Accepting Contributed Funds
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-Varies
-Must use Contributed Fund or another donation account for
donations
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No indirect rate.
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Office of Wildland Fire Agreements
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For work with our Federal fire partners (Bureau of Land
Management, Bureau of Indian Affairs, National Park Service, Department of
the Interior, and U.S. Forest Service)
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Use standard rate.
(Current legislation does not allow the Service to routinely
waive overhead.)
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Service First
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For work with Service First Partners (National Park Service, Bureau
of Land Management, U.S. Forest Service)
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Regional Directors have the discretion to waive indirect
charges for the first $25,000 charged to Service First Partners. For
charges exceeding $25,000, the applicable reimbursable agreement rate
applies.
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1.11 Must the Service always recover full costs? Yes. Unless the
Director approves an exception, we must recover full costs. See Exhibit 3 for procedures for
requesting an exception.
1.12 What happens if a Service program or office charges a lower
rate than this policy requires?
A. Difference Comes from Program/Office Funds: Unless the program/office
gets approval from the Director not to make up the difference, Service
programs/offices must compensate the applicable reimbursable income accounts
for using an indirect cost rate lower than the agreement’s required rate.
B. Pass-through Agreements: If the labor, benefits, and travel
costs exceed the 5 percent threshold and we cannot modify the agreement to
increase the rate for the labor costs, the responsible Service program/office
must make up the difference between the cost recovered on the pass-through
rate and the cost recovered on the standard rate.
C. Expired Exception to Policy: If the Director
approves a program’s or office’s use of a lower rate, they must regularly
update their request for an exception according to the procedures in Exhibit
3.
(1) If the program/office does not update the exception and obtain
the Director’s approval, they must modify their agreement with the other
party at the applicable rate.
(2) If they cannot modify the agreement, the responsible program/office
must make up the difference between the actual cost recovered and the cost
recovered on the standard rate.
For information on the content of this chapter, contact the
Division of Financial Management. For information about this Web site,
contact Krista Holloway in the
Division of Policy and Directives Management.
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