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Department of the Interior

Effective Date: 4/16/86

Series: Financial Management

Part 346: Cost Recovery

Chapter 1: General Policy and Responsibility

Originating Office: Office of Financial Management

1.1 Purpose. This Chapter provides basic Departmental cost recovery policy governing charges for services (such as, work, publications, reports, documents, etc.) provided the non-Federal sector under specific legislative authority.

1.2 Policy.

A. General. Departmental policy requires (unless otherwise prohibited or limited by statute or other authority) that a charge, which recovers the bureau or office costs, be imposed for services which provide special benefits or privileges to an identifiable non-Federal recipient above and beyond those which accrue to the public at large. This charge may be either: (1) a fee, rate, or price pursuant to a schedule established by the bureau or office providing the service; or (2) the cost to the performing bureau or office as accumulated in the formal accounting system. A discussion of cost recovery authority is contained in 346 DM 1.3. Guidelines to be used to determine the existence of a special benefit provided a recipient are contained in 346 DM 2.

B. Costs to be Recovered. Recovered costs will include both direct and indirect costs of the performing bureau or office in furnishing the services. A discussion of the types of direct and indirect costs to be included in the cost recovery computation is contained in 346 DM 3.

C. Cost Recovery Exemptions. Bureaus and offices may exempt certain activities from cost recovery (either partially or completely) under the conditions described below. Written standards for exemption from cost recovery must be clearly established by the bureau or office, and application of the standards resulting in an exemption in a particular instance must be adequately documented so as to leave no doubt as to the considerations which led to the exemption. This documentation is to accompany the annual report required in 346 DM 1.6. Exemptions are appropriate when:

(1) The charge is prohibited by legislation or Executive order.

(2) The incremental cost of collecting the charges would be an unduly large part of the receipts from the activity.

(3) The furnishing of the service without charge is an appropriate courtesy to a foreign country or international organization; or comparable charges are set on a reciprocal basis with a foreign country.

(4) The recipient is engaged in a nonprofit activity designed for the public safety, health, or welfare.

(5) The bureau or office has some other rational reason for exempting the program, subject to the approval of the Office of Financial Management.

D. Written Agreements. All written agreements which authorize the sale of Government services to non-Federal customers must include the cash management practices outlined in 338 DM 1.4.

1.3 Authority.

A. Specific Authority. A bureau or office may have specific statutory cost recovery authority for individual programs or services. The principles and guidelines in this Part must be used in recovering costs to the extent they are not in conflict with the specific authority. Some specific cost recovery authorities to consider are:

(1) The Mineral Leasing Act (30 U.S.C. 185) for oil and gas pipeline right-of-way application processing and grant monitoring.

(2) The Copy Fee Statute (43 U.S.C. 1460) for sale of copies of documents.

(3) The Federal Land Policy and Management Act (FLPMA) of 1976 (43 U.S.C. 1701 et seq.) for right-of-way application processing and grant monitoring (Section 1764(g)) and for applications and documents relating to the public lands (Section 1734(a)).

B. General. Title V of the Independent Offices Appropriation Act (IOAA) of 1952 (31 U.S.C. 9701) is a Government-wide authority that permits the recovery of the costs of providing services to the non-Federal sector. Bureaus and offices can use the IOAA for the recovery of costs in the absence of other specific authority. By its terms, however, the IOAA requires implementation through rulemaking.

C. Disposition of Receipts. A bureau or office with specific cost recovery authority may reimburse the financing appropriation only when so stipulated by legislation, as is the case with FLPMA and the Copy Fee Statute. Otherwise, the receipts must be deposited into the General Fund of the Treasury as Miscellaneous Receipts. Amounts collected under the IOAA authority must be deposited into the General Fund of the Treasury as Miscellaneous Receipts as required by the statute. Office of Management and Budget (OMB) Circular No. A-25, section 5c, provides guidelines for determining when legislative changes would be appropriate for having receipts reimburse the financing appropriation.

1.4 Cost-Finding Techniques.

A. Applicability. Cost-finding techniques involve the production of cost data by analytical or sampling methods rather than on the basis of formal cost accumulation in the accounting system. In determining the costs to be recovered, there are circumstances where cost-finding techniques should be used rather than the accumulation of costs in the formal accounting system. Cost-finding techniques may be appropriate for certain kinds of costs, such as indirect costs; below certain cost thresholds within programs; or for certain programs in their entirety. The following criteria are to be used in determining when such an approach may be used:

(1) The amount of work to be performed is minimal and the scope is limited; therefore, no need exists for accumulation of data in the formal system. Reasonable and accurate results can be expected by analytical or sampling techniques.

(2) The cost to develop and accumulate charges would be inordinately high with respect to the dollar amount realized.

(3) The accumulation of costs under a cost-finding technique would result in definite savings and economy.

B. Use. Bureaus and offices that use cost-finding techniques are to identify, in formal instructions supplementing this Chapter, the specific instances where this method is applicable and the specific procedures for application. Appropriate workpapers are to be maintained as part of the official accounting records to support any computations made in the application of this technique. Analytical data or sampling results used in developing factors or rates to be applied to this approach are to be reviewed and updated as often as conditions warrant, but not less frequently than annually.

1.5 Responsibility.

A. Department. The Office of Financial Management, Office of Assistant Secretary - Policy, Budget and Administration is responsible for providing cost recovery policy guidance. The Solicitor is responsible for providing legal advice on all proposed cost recovery regulations.

B. Bureaus and Offices. The responsibility for the initiation, development, and adoption of cost recovery procedures consistent with the policies contained herein rests with the head of each bureau or office. Each bureau and office will:

(1) Identify the services or activities covered by this Chapter;

(2) Determine the existence of the special benefits provided;

(3) Apply acceptable cost accounting principles;

(4) Establish written cost recovery procedures as a supplement to this Chapter, or through regulations, as appropriate, subject to the approval of the Office of Financial Management; and

(5) Where appropriate, submit legislative proposals to OMB to:

(a) Make the receipts available to the financing appropriation (OMB Circular No. A-25, section 5c); and/or

(b) Remove limitations or restrictions to cost recovery in existing laws (OMB Circular No. A-25, section 6).

1.6 Annual Review and Report.

A. Annual Review. Bureaus and offices must annually review their cost recovery activities and adjust procedures as necessary. This review is to include every program that provides any type of service to the non-Federal sector.

B. Annual Report. Each bureau or office is to provide the Office of Financial Management a narrative report (DOI-82-062), of the review process outlined in 346 DM 1.6A and quantitative data which supports cost recovery activity.

C. Reporting Requirements. Narrative reports are to be submitted on an annual basis for cost recovery activity occurring in each fiscal year. The reports are due by December 30 following the close of the fiscal year. The reports are to (a) identify all non-Federal services provided by reporting bureaus, and (b) indicate whether or not the service is subject to the Departmental cost recovery policies specified herein. For any service considered not to be subject to the Department=s cost recovery policies, the reasons therefor must be stated in the report (including appropriate references to any statute, Executive order, or other authority that prohibits or limits cost recovery). For any service considered to be subject to the Department=s cost recovery policy but where there is noncompliance with a prescribed practice, the report must state the reasons for the noncompliance, the planned corrective actions, and the target date for accomplishment thereof. The report is also to identify any previously reported activities no longer subject to cost recovery and the reasons therefor. In addition to these narrative reports, each bureau is to provide the Office of Financial Management specific quantitative data related to each cost activity. The format and content of this information are illustrated in Appendix 1.

346 DM 1

Appendix 1

ANNUAL COST RECOVERY REPORT

Fiscal Year Ending: _____

_______________________________

(Bureau or Office)

 _____________________________________________________________________________________________

*

4/16/86 #3563

Replaces 4/16/86 #2677