Responsible Officer: Director

Responsible Unit: Cost Analysis and Compliance Research

Effective date: 02/10/2003

Last revised on: 01/05/2012

Policy Statement

The University administers Research Service Centers (“RSCs”, “cores” “recharge or service centers”) in accordance with federal costing standards, State of North Carolina and University policies and procedures. RSCs are created, operated and administered by University schools and departmental business units with central review and oversight from the Office of Cost Analysis and Compliance in the Office of Sponsored Research (“OSR”). Cores may also be subject to additional policies and procedures at the discretion of the governing/administering school or college.

Institutional Oversight

All UNC-CH fee-for-service activities are required to have relevant oversight. Before a function charges a fee to another unit at the University, the fee should be reviewed and approved by the appropriate University-designated oversight body. Each fee-charging unit falls under one of four oversight bodies for fee proposal, review and approval. The organization responsible for conducting oversight is determined by the purpose of the service and the nature of its activities, which in turn determines how the review and approval process is conducted. On an annual basis departmental management should refer to the Determination of Fee Oversight Authority flow chart – scroll down to Service Center Oversight (flow chart)) to ensure each fee charging unit is associated with the proper review authority. For example, the Oversight Authority flow chart can be followed to determine that fee-for-service activities supporting research cores under federal program projects or center grants, as well as stand-alone recharge centers (not associated with a research core) that by their nature exist primarily to support sponsored research and related activities at Carolina, are institutional research service centers subject to rate and costing compliance oversight by the OSR. The remainder of this policy pertains to the fees and rates charged by Research Service Centers, Recharge Centers and Core Facilities, for which OSR is the oversight body.

Definition

A Research Service Center provides specific services that are generally technical in nature, the costs of which are separately accounted for and recovered on a break-even basis by charging a fee to users in proportion to the services rendered. The primary purpose of Cores is to support researchers internal to the University although services may also be provided to external users, in most cases on an incidental basis. Services provided by recharge centers may not be readily available from external sources and may not be subject to external market forces. Examples of Cores include instrumentation and scientific equipment, computing centers, educational media services, as well as specialized analysis and evaluation activities. Cores vary in size, complexity, and rate structures.

Regulatory Information

Service centers fall under regulatory guidelines and cost accounting standards (“CAS”) contained in A-21. If a core facility charges sponsored projects, the recharge activity is subject to A-21. CAS addresses 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 service center rates and conduct reviews to ensure that proper accounting procedures are in place. If institutional policies and procedures are not observed, service center charging activities may be disallowed, resulting in repayment, fines and other adverse consequences.

Responsibility Hierarchy

Managing academic and research business units are responsible for determining billing rates in accordance with this policy, appropriate operating protocols, day-to-day management, fiscal accountability, business support as required in order to appropriately administer core operations, and submitting proposals to OSR for a periodic review at least every two years and more often if necessary. Ultimate responsibility for operational oversight rests with the department head/director and the dean. The school or college may provide additional supplemental guidance, policies and procedures pursuant to this oversight so long as those policies do not conflict with this policy.

The Office of Sponsored Research provides institutional oversight. The OSR approves requests for new rates, operating accounts and rate revisions. The OSR performs periodic rate reviews and is available for consulting related to rate-setting methodology and financial compliance.

The Internal Audit Department includes a selection of Cores in its work plan from time to time to ensure compliance with University policies.

General Guidelines for Cost Recovery by Institutional Research Service Centers

  • The 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.
  • RSCs are separately budgeted and accounted for in the University financial accounting system.
  • Cores should recover operating costs over an operating cycle, usually one fiscal year.
  • Cores should apply a break-even direct costing concept to develop rates for internal and sponsored projects. Operating at break-even means there is no significant profit or loss resulting from charging users for goods or services in the operating cycle and zero profit or loss over the long-term as any excess surpluses or deficits are eliminated by adjusting future rates.
  • All usage must be accounted for, documented and included in the break-even rate calculation. All rates charged must be in accordance with the OSR-approved rate schedule. Departmental and central management must ensure the federal government does not subsidize other Core users by charging rates that do not reflect all Core usage.
  • The same rate schedule should be applied consistently to all internal users (including sponsored agreements). Rates may not discriminate against federally funded accounts to the benefit of other users.
  • Cores must exclude unallowable costs in accordance with A-21 and University polices from their billing rates.
  • Cores may not charge users in advance of actual service performance. Any departure from this standard requires written sponsor approval that must be obtained, documented and approved by the OSR prior to processing any advance billing.

Reason for Policy

Research service centers support the research enterprise by providing UNC-CH researchers with access to infrastructure, technologies and services that are often 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 Federal Government Office of Management and Budget Circular A-21 (“A-21”). This policy provides guidance for RSC operational oversight and rate-setting methodology.

Exclusions/Exceptions

Any exemption request to the standards set forth in these policies and procedures should be made in writing to the Director, Cost Analysis and Compliance, and should include an explanation if the circumstances and justification for why the exemption is warranted and not inconsistent with governing regulations and policies.

Procedures and Related Policies

Related Policies include:

900.1 Procedure 1: Preparing a Rate Schedule

Operating Guidelines for Institutional Research Service Centers (RSC)

Interdepartmental Fees and Charges (IF&C) Committee

OSR Research Resources

Research Service Centers

Contacts

Office of Sponsored Research, Cost Analysis and Compliance

Revision History

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. This policy supersedes OSR Policy 13: Research Service Centers and OSR Procedure 15: Detailed Information Required for Establishing a Research Service Center.