I agree with Norm.  A fee can be collected by any type organization;
however, usually State universities and colleges have provisions whereby
they cannot collect a fee.  A fee on a contract is negotiated between the
contracting officer of the sponsor and the contractor.  Once that fee is
determined, an auditor cannot question it or audit it.

Houston Advanced Research Center is a 501(c)(3) organization and we have
been collecting fees, where possible for the last ten years.  My background
was with at State University, so it was foreign to me at first.  Now it is a
breeze (except for the negotiations with the contracting officers).

>Brian, there are several issues here.  First, the fact that an organization
>is a non-profit organization has nothing to do with their ability to
>receive a fee or earn a profit. Their non-profit status only requires
>that no amount of the fee or profit or  whatever "inure to the
>individual benefit of any individual officer, director, or stockholder".
>  Second, the fee is not a cost and A-21 / A-122 generally are geared
>toward addressing cost principles. Generally, most federal activities do
>look at the cost priniple and infer that a fee is not permitted because no
>mention is made of a fee.  In fact, when I did a review of the procurement
>regulations several years ago, the only regulation that I found at that
>time that speciffically addressed fees and educational institutions (not
>non-profits as I recall) was the Energy Department procurement regs; a fee
>was not permitted. A good number (most????) of non-profits can and do
>receive fees.  In fact, there are a number of universities that have earned
>fees under contracts (not grants or cooperative agreements that I am aware
>of); some of these contracts restrict the uses to be made of the fees but
>there are fees nontheless.
>
>Yes, probably a CPFF contract.
>
>
>Good Luck.
>
>
>Norm Meeks
>GLCC
> On Wed, 14 Jun 1995, Brian Prindle wrote:
>
>> For Group Discussion:
>>
>> Recently I have received two subcontract proposals from Non-Profit
>> Organizations who are under the cost principles outlined in OMB Circular
A-122
>.
>> Both subcontractors have negotiated rate agreements with the feds. The
>> subcontractors budgets are comprised of the traditional Direct Costs and
>> Indirect Costs, but then a "Fee" is charged as a percentage of the Sub-total
>> (in this case subtotal is the Direct Costs + Indirect Cost).
>>
>> I have had discussions with the subcontractors about the allowabilty of a Fee
>> as a non-profit and both say it is allowable, there auditors have approved
>> this, and its normal practice to include a fee in most propsoals going to a
>> federal or non-federal source.
>>
>> My question for the group is:
>>
>> Can a Non-profit under OMB Circular A-122 include a Fee above and beyond
Direc
>t
>> and Indiect Costs? Is this reasonable? If yes, why?. I see no where in A-122
>> that indicates this is allowable, nor do I see where A-122 states is is not
>> allowable.
>>
>> Certainly Non-Profits such as a University or Colleges which are covered
by OM
>B
>> Circular A-21 cannot include a fee. So what is the difference here? The
>> language of A-122 is very similar to A-21.
>>
>> If an award is made, and the fee remains would a cost plus fixed fee type
>> subcontract be appropriate?
>>
>> Any feedback would be great.
>>
>> Brian Prindle
>> Sponsored Programs
>> Boston University
>>
>>
>>
>>
>>
>> -------
>
>
Anne

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