Title: Fish and wildlife service logo - Description: fish and wildlife service logo

264 FW 1
Cost Recovery and Cost Allocation – Policies and Procedures

Supersedes 264 FW 1, 9/24/2015

Date: 01/02/2018

Series: Finance

Part 264: Cost Recovery and Reimbursable Agreements

Originating Office: Division of Financial Management

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                                                                                    TABLE OF CONTENTS

Topics

Sections

OVERVIEW

1.1 What is the purpose of this chapter?

1.2 What is the scope of this chapter?

1.3 What are the authorities for this chapter?

1.4 What is cost recovery?

RESPONSIBILITIES

1.5 Who is responsible for cost recovery?

Full Cost Recovery

1.6 Why does the Service recover full costs?

1.7 How does the Service recover full costs?

Indirect Rates

1.8 How does the Service calculate indirect rates?

1.9 How often does the Service review the indirect rates?

1.10 Are there different indirect rates the Service uses for certain projects?

1.11 Must the Service always recover full costs?

1.12 What happens if a Service program or office charges a lower rate than this policy requires?

 

OVERVIEW

 

1.1 What is the purpose of this chapter? This chapter provides direction and assigns responsibilities for cost recovery and cost allocation activities in the U.S. Fish and Wildlife Service (Service).

 

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 a non-Service entity, 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? See 264 FW 1, Exhibit 1 for a list of the authorities for all the chapters in Part 264.

 

1.4 What is cost recovery? Cost recovery is the process of recouping the full costs (both direct and indirect) associated with providing goods, resources, or services to another entity.

 

A. Direct costs are those that we can identify with producing a specific product or providing a specific service. Direct costs include direct labor, equipment, and other items we purchase or consume 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 cannot be specifically identified with the product or service. For example, the costs of space and information technology (IT) support are indirect costs (see Exhibit 2 for a detailed list of direct and indirect costs).

 

RESPONSIBILITIES

 

1.5 Who is responsible for cost recovery? See Table 1-1.

 

                                                                        Table 1-1: Responsibilities for Cost Recovery

These employees…

Are responsible for…

A. The Director

(1) Ensuring there is a cost recovery policy in place, and

 

(2) Approving exceptions to the policy.

B. The Assistant Director – Business Management and Operations (ABMO) (i.e., Chief Financial Officer)

(1) Recommending changes to the cost recovery policy,

 

(2) Communicating the Service’s cost recovery activities to the Department of the Interior’s (Department) Office of Financial Management, and

 

(3) Reviewing requests for exceptions to policy and recommending to the Director whether or not to approve them based on Servicewide impacts. (See sections 1.11 and 1.12 and Exhibit 3 for more information about exceptions to cost recovery policy.)

C. The Chief, Division of Financial Management

(1) Reviewing requests for exceptions to policy and recommending to the ABMO whether or not to endorse the requests based on their impacts on funding, and

 

(2) Reviewing our cost recovery policy biennially and updating it when necessary.

 

FULL COST RECOVERY

 

1.6 Why does the Service recover full costs? The Office of Management and Budget (OMB) requires in Circular A-25, Memorandum for Heads of Executive Departments and Establishments, User Charges, that we recover the full cost 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 that we provide to other entities is self-sustaining; and

 

B. Promote efficient allocations of our resources by establishing charges for special benefits that we provide that are at least as great as the cost 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 the Financial and Business Management System (FBMS). Accumulating the costs in FBMS is the most effective way to recover indirect costs. We bill other entities using an indirect rate (see section 1.8) that is applied to the cost of goods or services. Following 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. Appropriated Funding and Appropriation Transfer: For other Federal agencies only, we may recover costs by requesting a Treasury transfer from the user’s appropriations to the Service’s appropriations. Duty stations must still include indirect costs within the estimate for Treasury transfer requests from another agency. We must disclose and obtain approval for these allocations from the congressional committees on appropriations.

 

INDIRECT RATES

 

1.8 How does the Service calculate indirect rates? See Table 1-2.

 

                                                                                                Table 1-2: Calculating Indirect Rates

Rate

Components

Calculation

Additional Information

Standard Indirect Rate

 

Prior year indirect costs ÷ Prior year direct costs

Department recommends this calculation.

National and Regional administrative cost component

(Prior year Central Office Operations + Regional Office Operations + Operational Support) ÷ Specific Direct Costs*

N/A

Regional program management component

Prior year Regional program expenditures supporting reimbursables ÷ Specific Direct Costs*

Includes Assistant Regional Directors and related offices that play a role in reimbursable oversight.

Pass-through Rate

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

(Prior year Resource Management – Denver Financial Operations Cost Accounting System + % of Reimbursable Effort – Regional Budget & Finance and CGS** + % of Reimbursable Effort – PRISM + % of Reimbursable Effort – BAS***) ÷ Prior year Resource Management reimbursable obligations 19xx, 269x, 17xx, 48xx, 437x, and 847x Functional Areas

BOCs:

 

25 (Contracts),

 

32 (Land and Structures), and

 

41 (Grants, Subsidies, and Contributions).

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

 

1.9 How often does the Service review the indirect rates? We review the indirect rates every 2 years.

 

A. The Division of Financial Management must coordinate a biennial review of the 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 Headquarters (HQ).

 

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 for projects. Always consult your Regional Budget and Finance Office to ensure that you are selecting the current correct indirect rate. Table 1-3 identifies the different types of agreements and whether to use the standard indirect rate or another indirect rate. Exhibit 4 provides the current rates for each of the agreement types, and we amend it when the rates change.

 

                                                                        Table 1-3: Agreements and Different Types of Rates

Type of Agreement

How It Is Used

Type of Rate (see Exhibit 4 for current rate)

Reimbursable agreements for work in leased facilities.

For leased space, payroll/personnel/financial systems, phones, Regional office support, contracting and procurement, and information systems.

Standard rate.

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.

For payroll/personnel/ financial systems, phones, Regional office support, contracting and procurement, and information systems.

Standard rate for Service-owned facilities.

Pass-through agreement.

(1) To fund a third party, such as a state, local, or tribal government; institutions of higher education; or non-profits.

 

(2) Little or no Service administrative oversight.

 

(3) For acquisition or financial processing services.

 

(4) For labor, travel costs, and non-contractor costs (if less than or equal to 5% of total agreement).

Pass-through rate.

 

(Agreements may have a pass-through component and a non-pass through component where Service staff participates. If staff participation is >5% of the total, then you must separate the rates into both pass-through and standard rates proportionately.)

Special pass-through agreements related to construction, land acquisition, and non- Government land.

(1) For private construction contractors/subcontractors.

 

(2) For right-of-way agreements that involve two or more Departmental bureaus or offices.

 

(3) To make capital improvements or to buy new property.

 

(4) To give funding to a private landowner or another Government agency for partnership projects on non-Government lands.

Pass-through rate.

Pass-through agreement initiated by the Department’s Office of the Secretary.

As directed.

Pass-through rate unless otherwise stated by the Secretary or appointee, or otherwise prohibited by legislation.

International agreements.

To provide services to an international partner.

Standard rate, but allow for exceptions (see OMB Circular A-25) based on approved exception to policy.

Fish and Wildlife Coordination Act (FWCA) agreements.

For work with the U.S. Army Corps of Engineers and the Bureau of Reclamation under the Act (16 U.S.C. 661-667e).

Negotiated rate established in 2003 Memorandum of Understanding (MOU) with the Corps of Engineers (1/22/2003) and in 1982 with the Bureau of Reclamation (BOR).

FWCA subcontracting agreements.

For Service work subcontracted to a third party.

Negotiated rate established in MOU (1/22/2003).

Spill Response.

For activities related to response for oil spills or hazardous material spills with the U.S. Coast Guard or the U.S. Environmental Protection Agency (EPA).

 

(See 264 FW 3, Reimbursable Agreements for Spill Response Activities.)

Although the rate varies by Region, we assess a rate of 26.5% as a beginning point on the agreement. We calculate the actual overhead amount using our Spill Response and Natural Resource Damage Assessment and Restoration (NRDAR) Cost Documentation Tool (CDT). We manually adjust any differences between the calculated amount and the 26.5%.

Natural Resource Damage Assessment and Restoration (NRDAR) agreements.

(1) For restoration-specific activities.

 

(2) For claims related to past or future damage assessment costs.

 

(3) Department collects settlement funding and the Service requests funds using the applicable Regional indirect rate.

 

(4) Requests must include spreadsheet showing estimated indirect cost or explanation of why it is not included.

Although the rate varies by Region, we assess a rate of 26.5% as a beginning point on the agreement. We calculate the actual overhead amount using our Spill Response and NRDAR CDT. We manually adjust for any differences between the calculated amount and the 26.5%.

U.S. Environmental Protection Agency (EPA) Superfund agreements.

For activities related to cleaning up hazardous waste sites for EPA Superfund projects.

No indirect rate.

Grant agreements from the National Fish and Wildlife Foundation (NFWF)

We must process grant funds received from NFWF as a reimbursable agreement.

No indirect rate.

Grant agreements from another Federal source.

We must process grant funds received from another Federal source as a reimbursable agreement.

Standard rate.

(Chief Financial Officer may request a lower or 0% rate, but the program office must compensate the difference between it and the standard rate.)

Grant agreements from a non-Federal source.

We may process grant funds received from a non-Federal source as either a reimbursable agreement or a donation.

 

(See 264 FW 2 for what to consider when determining how to process grant funding.)

(1) Standard indirect rate applies if processed as reimbursable agreement (see 264 FW 2).

 

(2) No indirect rate if processed as a donation (see 212 FW 8).

 

Service First.

(1) For work with Service First partners (National Park Service, Bureau of Land Management, and U.S. Forest Service).

 

(2) We have mutually agreed with these partners to waive overhead up to a certain threshold.

 

(3) Signed joint November 2006 MOU.

 

(4) Complies with requirements in the 9/17/2007 memorandum, “Indirect Cost Recovery Policy for Service First Agreements.”

Regional Directors have the discretion to waive indirect charges for reimbursable agreements that do not exceed $25,000. For reimbursable agreements exceeding $25,000, the applicable reimbursable agreement rate applies to the overall total agreement amount.

Special Approved Reduced Rate.

For reimbursable agreements with an approved exception to policy (FWS Form 3-2208) authorizing a lower overhead rate.

Based on approved exception to policy.

Office of Wildland Fire agreements.

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).

Standard indirect rate.

 

(Current legislation does not allow the Service to routinely waive overhead.)

 

Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies (RESTORE) of the Gulf Coast States Act pass-through agreement.

For reimbursable projects funded by the RESTORE Act and that are subsequently passed through to an external entity.

4.3%

Intra/Inter-agency Personnel Agreements (IPAs).

For detailing a Service employee to another agency, bureau, or to a state or local government agency.

 

(See 223 FW 1 for policy on details for Service employees.  See 265 FW 9, Temporary Duty Travel – Extended Assignments regarding temporary duty in excess of 30 days.)

(1) No indirect rate.

 

(2) Must use SF-50 (Notification of Personnel Action) or OF-69 (Title IV Intergovernmental Personnel Act Assignment Agreement).

International Technical Assistance Program (ITAP)

For ITAP with the Department of the Interior.

No indirect rate.

Intra/Inter-agency travel and award agreements.

For transferring funds between agencies for reimbursement of travel or award costs.

Travel – Standard indirect rate applies.

Award – No indirect rate.

Agreements for emergency appropriations.

For emergency supplementals.

No indirect rate.

Agreements with special authorizing legislation or Departmental policy.

(1) Vary with legislation/policy.

 

(2) Director’s signature required.

 

(3) Must attach legislation/policy to agreement when submitting it to the Division of Financial Management.

Based on legislation or policy.

Agreements accepting contributed funds.

(1) Vary depending on the circumstances.

 

(2) Must use contributed funds account or another donation account for donations.

 

(See 212 FW 8 for policy on Donations, Fundraising, and Solicitation.)

No indirect rate.

 

1.11 Must the Service always recover full costs? Yes. Unless the Director approves an exception to policy, we must recover full costs. See Exhibit 3 for procedures for requesting an exception to policy.

 

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 obtains an 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 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/office’s use of a lower rate, they must regularly update the request for an exception according to the procedures in Exhibit 3.

 

(1) If the program/office does not update the exception to policy and obtain the Director’s approval, they must modify the 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 at the standard rate.

 

 

For more information about this policy, contact the Division of Financial Management. For more information about this website, contact Krista Bibb in the Division of Policy, Performance, and Management Programs.

 

 

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