Responsible Officer: Director

Responsible Unit: Cost Analysis and Compliance

Effective date: February 10, 2003

Last revised on: October 31, 2017



Research Service Centers (RSCs), also known as cores or core facilities, recharge or service centers, support the research enterprise by providing researchers and scientists with access to infrastructure, scientific technologies, and services that are normally beyond the technical or financial capability of individual investigators. Universities that perform Federally funded research are required to have costing policies that are in compliance with the 2 CFR §200 Subpart E. This document describes the process for creating RSCs that will provide services to sponsored projects and gives guidance for fiscal operations and administrative procedures.


RSCs provide specialized services for University users for a predetermined fee. The costs are separately accounted for and recovered on a break-even basis by charging a fee to users in proportion to services rendered. The RSC’s primary purpose is to support University researchers; however, services may also be provided to external users. Examples of RSCs include instrumentation, scientific equipment and computing centers and educational media services. RSCs vary in size, complexity, and rate structures. Services provided may not be readily available from external sources or be subject to external market forces.

Regulatory Information

Cost Accounting Standards Board (CASB) regulations referenced in 2 CFR §200 Subpart E apply to RSCs that charge sponsored projects. Cost Accounting Standards address consistency in estimating, accumulating, and reporting costs, as well as consistency in allocating costs incurred for the same purpose. Federal auditors may review procedures for establishing and monitoring RSC rates to ensure that proper accounting procedures are in place. If procedures are not observed, reimbursements may be disallowed and may result in repayment, fines, and other adverse consequences.

Policy Statement

The University administers RSCs according to Federal costing standards, as well as State and University policies. RSCs are created, operated, and administered by University business units with central review and oversight from Cost Analysis and Compliance in the Office of Sponsored Research (OSR). RSCs may also be subject to additional policies and procedures at the discretion of the business units’ school or college. This policy provides institutional guidance and procedures for rate-setting methodology, equipment replacement and upgrades, University subsidies, treatment of unallowable costs, use of cash reserves, and equipment depreciation.

Responsibility Hierarchy

  • Academic and Research Business Units
  • These campus units are responsible for determining appropriate billing rates and operations, submitting rate proposals to OSR for rate reviews at least once every two years, fiscal accountability, and subsidies as required. Ultimate responsibility for operational oversight rests with the department head and the dean. The school or college may provide additional supplemental guidance, policies, and procedures pursuant to this oversight so long as those guidelines do not conflict with this policy.

  • Office of Sponsored Research
  • OSR provides institutional oversight by approving operating and reserve account requests, rates, and rate-setting methodology. It also performs periodic rate reviews, monitors charge-back operations, and reviews fund balances. OSR provides consultation on rate-setting methodologies and financial compliance.

  • University Internal Audit
  • RSCs are subject to selection by University Internal Audit in its work plan to ensure compliance with University policies.

Guidelines for Cost Recovery


  • RSCs are separately budgeted and accounted for in the University’s financial accounting system.
  • RSCs should recover operating costs over an operating cycle, generally a single fiscal year.
  • RSCs should apply a break-even costing concept to develop rates for Federal sponsored projects.
    • Operating at break-even means there is no significant profit or loss resulting from charging for usage in an operating cycle, zero profit or loss over the long-term as any excess surpluses, and deficits are eliminated by adjusting future rates.
    • All usage must be included in the break-even rate calculation and charged out or subsidized in accordance with the OSR-approved rate schedule.


  • OSR performs the institutional review, approval, and oversight function that allows RSCs to charge fees for services.
  • Departmental management must submit proposals to OSR for a periodic rates and financial compliance review every two years and more often if necessary.
  • OSR-approved rate schedule should be applied consistently to all sponsored projects and departmental users, and rates may not discriminate against Federally funded projects to the benefit of other users.
  • Federal government must not subsidize other RSC users through rates that do not reflect all RSC usage. RSCs may elect not to charge a University user, but this usage must be subsidized by internal University sources.


  • RSC services must not be incurred after the end date of the sponsored project being charged.
  • RSCs must exclude unallowable costs from their Federal billing rates and may not charge Federal sponsored agreements in advance of the performance of any services (advance charges or pre-billings).
  • RSC should bill customers on a monthly basis since charges are unallowable on a sponsored award if not billed in a timely manner.
    • Charges incurred during the performance period of an ending project must be billed within 60 days of the end date of a project.
    • The department that owns the sponsored project will not be responsible for the charges if the RSC has not billed their customers in a timely manner.
    • The lost revenue related to the unallowable charge must be covered by the RSC’s owning department.

Procedures and Related Policies

Office of Sponsored Research: Policy 900.1, Pro.1 – Developing a Core Rate & Establishing the Operating Account


For questions regarding this policy and its related procedure, please contact For questions regarding Pre-Award management or Post-Award administration, please contact the assigned Sponsored Programs Specialist. For invoicing, reporting and other financial matters, please contact the assigned Sponsored Projects Accountant. OSR Staff assignments may be found in RAMSeS or on the OSR website.



  • 10/31/2017 Policy updated to reflect updated Guidelines for Cost Recovery and Contacts.
  • 04/27/2010 Policy updated to reflect revised Guidelines for Cost Recovery.

The policies in the Office of Sponsored Research Policies & Procedures Manual supersede any OSR policies, procedures and appendices previously included in the University Business Manual, a publication of UNC Chapel Hill’s Division of Finance.