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Guidelines for Recharge and Other Income Producing Activities
 

This issuance sets policies and procedures for the establishment, costing and pricing, and administration of VMRF recharge activities.

 

  1. DEFINITIONS
    1. Recharge Activity
      1. A recharge activity provides, at approved rates and on a regular and continuing basis, goods or services to a specific group of users. Examples include testing services, computer services and illustration services.
    2. Capital Costs
      1. Costs of fixed assets, such as equipment, buildings and certain building improvements, which benefit an extended period.
    3. Direct Costs
      1. Costs that can be consistently and specifically identified with the provision of goods or services by an activity. Examples of such costs are salaries, employee benefits, costs of materials, maintenance agreements and supplies.
    4. Operating Costs
      1. Expenditures, benefiting a single period, which are necessary to conduct normal business. Examples of operating costs include employee wages and benefits, supplies and equipment maintenance
    5. Operating Fund
      1. The accounting mechanism used to record operating costs and income.
    6. Other Income Producing Activity
      1. A department or unit which, at approved rates, provides goods or services to an organization not affiliated with VMRF and VASDHS or to individuals regardless of their affiliation.
    7. Recharge
      1. The assessment and collection by one VMRF department or unit of an approved fee for goods or services furnished to another VMRF department or unit. In general, a recharge reflects the sale, at approved rates, of goods or services by one departmentor unit to another.
    8. Recharge Rate Review Committee
      1. A committee which reviews and recommends approval or disapproval of requests to establish new recharge and other income producing activities. The committee also reviews and recommends approval or disapproval of rate change proposals and proposals to add rates for new goods or services.
    9. Startup Costs
      1. Non-recurring costs necessary to prepare a new activity for its normal business purpose.
    10. Working Capital
      1. Financing, or funding, required for current needs, such as inventories and capital needs such as equipment and certain area improvements.
    11. Project Core Director
      1. The person responsible for the day to day operation of the Recharge activity must be a VMRF Qualified Investigator.
  2. POLICIES
    1. General Policies
      1. Recharge and other billing transactions may be initiated only by those activities that adhere to the general policies enumerated below.
        1. Establishment
          2.
          1. The benefits, including relative prices and quality, of the proposed activity providing goods or services must be weighed against the benefits of obtaining similar goods or services from commercial sources or other VMRF sources.
          2. Goods or services shall not be sold to the general public unless the goods or services are unique or sales will not compete with commercial sources.
          3. If services are to be provided by the activity, they shall be unique or specialized, as opposed to general administration or other institutional support services.
          4. Proposals to establish new activities must be reviewed and approved by the VASDHS R & D Committee.
          5. New activities shall have a budget established usingExhibit D.
        2. Costing and pricing
          3.
          1. Activities shall be charged for all direct costs involved in producing their goods or services.
          2. All direct costs shall be recorded in the operating fund assigned to the activity.
          3. Rates of activities shall be sufficient to recover all direct costs.
          4. In addition to being sufficient to recover all direct costs, rates for sales made by activities to the general public shall recover overhead costs.
          5. Capital expenditures, including cost of equipment, shall not be charged to the operating fund of any activity that recharges Federally-funded users.
          6. Activities shall charge all users of goods or services at established, approved rates.
          7. Identical goods or services provided to VMRF/VASDHS users must have identical rates.
          8. Any subsidy provided to users should be provided through a central allocation of discretionary funds that will permit activities to charge rates based on full costs.
          9. Unless specifically approved by the VMRF officials, rates charged to non-VMRF users shall not be subsidized in any manner.
        3. Administration
          4.
          1. Activities shall submit any proposal to revise existing rates or rate methodology to the VMRF Controller for review and approval.
          2. Activities' recharge procedures, including monthly statements to be provided to users, shall be subject to VMRF Accounting Office approval and periodic review by the VMRF Accounting Office.
          3. Activities' cash handling and billing procedures shall be subject to periodic review by the VMRF Accounting Office.
          4. Activities shall maintain records to substantiate recharge and other billing transactions, including requisitions, purchase orders, or similar written verification of individual user requests for goods or services.
          5. Activities shall maintain records to substantiate that an individual user requesting goods or services has the authority to do so.
          6. Activities shall provide users with a receipt or similar written confirmation for each sale of goods or services at the time the sale is made. In addition, recharge users shall be provided a detailed monthly statement for each VMRF Fund recharged.
            7.  
    2. Specific Policies
      1. In addition to the general policies described above, recharge and other billing transactions may be initiated only by those activities that adhere to the specific policies enumerated below.
        1. Establishment
          2.
          1. There must be a regular and continuing demand for the goods or services to be provided by the service enterprise or academic support activity. The demand must stem from multiple users and be significant, both in dollar amounts and in number of transactions.
          2. There must be an annual operating plan whichincludes at a minimum, the proposed annual budget, annual operating statement, proposed rates or rate methodology, funding sources for startup costs, funding sources for equipment, funding sources for working capital, and funding sources for anticipated or unanticipated operating deficits.
        2. Costing and Pricing
          3.
          1. Other than acquisitions funded by the Federal government, all inventoriable equipment assigned to recharge activities shall be depreciated.
            1. Depreciation shall be on a straight-line basis.
        3. Administration
          4.
          1. Recharge activities shall be operated on a break-even basis. A year-end surplus should not exceed an amount equivalent to an average two months of operating costs. Two months after fiscal closing of the following year, activities with surplus balances in excess of this limitation must provide the VMRF accounting office with either an explanationwhich indicates the one-time nature of the surplus and the intent that this surplus will be absorbed in subsequent years, ora plan to revise costing which will eliminate the surplus of income over recorded expense.
          2. A surplus or deficit occurring in any year shall be taken into consideration when adjusting rates of a subsequent year.

             

          3. In exceptional cases where such adjustment would create a severe fluctuation in rates from one year to the next, achievement of a break-even balance may be extended for a reasonable period.

     

  3. PROCEDURES
    1. Establishing New Activities
      1. Requests to establish new recharge activities shall follow the procedures enumerated below.
        1. Requests shall be reviewed and approved by the VMRF Chief Executive Officer and forwarded to the VASDHS R & D Committee.
        2. Upon approval by the VASDHS R & D Committee, the VMRF Chief Executive Officer shall provide the Project Director with a written notice stating the following:
          1. The request to establish the new activity has been approved by the VASDHS R&D Committee.
          2. The effective start date of the new activity.
          3. The approved rates or rate methodology of the new activity.
    2. Revising Established Activities
      1. Requests by established activities to change rates, to change rate methodology and to add rates for new goods or services shall follow the procedures enumerated below.
        1. Requests shall be reviewed and approved by VMRF Chief Executive Officer.
        2. Upon approval by the Chief Executive Officer, a written notice stating the following:
          1. The request to change rates, rate methodology,or add rates for new goods or services has been approved by the VMRF Chief Executive Officer.
          2. The effective date of the approval.
        3. Annually after fiscal closing, the VMRF Accounting office will produce a listing of any recharge activities with a surplus or deficit balance in excess of an amount equivalent to an average two months of operating costs. For those activities that have not provided the information required by Section II.B.3. above by October 1 of the following year, Accounting will contact any such activities, and request a written assurance that the surplus or deficit will not continue, describing the basis for the assurance. Accounting will notify the VASDHS R & D Committee of any activities with an unacceptable surplus or deficit balances in three consecutive years. The Chief Executive Officer of VMRF will notify any such activities that they are required to revise their charge rates.
  4. RESPONSIBILITY
    1. Office Originating Request
      1. 1. Submits to the VMRF Chief Executive Officer to establish new recharge or other income producing activities, request to change rates or rate methodology of established activities, or request to add rates for new goods or services of established activities.
      3. 2. Participates in resolution of comments, questions, and objections to request.
      4. 3. Assures costing and pricing policies are followed.
      5. 4. Maintains supporting documentation for sales transactions.
      6. 5. Provides sales confirmations to users, including a detailed monthly statement for recharge users.
      7. 6. Conforms to approved cash-handling, billing and recharge procedures.
    2. Chief Executive Officer
      1. 1. Reviews and approves request from originating office.
      2. 2. Forwards request to the VASDHS R & D Committee.
      3. 3. Participates in resolution of comments, questions, and objections to request.
          1. Reviews and approves recharge procedures.
          2. Produce an annual listing of any recharge activities with a surplus or deficit balance in excess of an amount equivalent to an average two months of operating costs.
          3. For those activities which have not provided the information required by Section II.B.3, above, by October 1 of the following year, contact such activities and request a written assurance that the surplus or deficit will not continue, describing the basis for the assurance.
          4. Notify the VMRF Chief Executive Officer of any activities with an unacceptable surplus balance in three consecutive years.
    3. VMRF Accounting Controller
      1. 1. Reviews and approves cash handling and billing procedure