# 600.1 - ADP Cost Accounting, Cost Recovery, and Sharing

This chapter establishes policies, assigns responsibilities, and prescribes requirements for cost accounting, cost recovery, and sharing of certain information technology facilities.

7/11/88

OPR: Information Systems Division

1. Purpose. This chapter establishes policies, assigns responsibilities, and prescribes requirements for cost accounting, cost recovery, and sharing of certain information technology facilities.

2. Policy. This chapter applies to information technology facilities meeting all of the following conditions:

A. Are operated by, or on behalf of, the U.S. Geological Survey.

B. Provide service to more than one organizational or programmatic user.

C. Operate one or more general management computers.

D. Exceed $100,000 per year for the full cost of operation. 3. Authority. The authority for Departmental ADP cost accounting, cost recovery, and sharing policies and procedures is derived primarily from Appendix 11 of OMB Circular 130 on Federal Information Resources. Authority is also derived from applicable public laws, Federal regulations, and Executive Orders, including the Paperwork Reduction Act of 1980 (44 U.S.C. Sections 3501-3520) and OMB Circulars Nos. A-11 (Section 43) and A-76, which deal explicitly with the need to identify and control information resources costs. 4. Definitions. As used in this chapter: A. Information Technology Facility. The personnel, hardware, software, and physical facilities of an organizational entity whose primary function is the operation of one or more computers. An information technology facility includes: (1) All mainframe and minicomputers that meet the conditions of paragraph 2 above. (2) The personnel who operate computers or telecommunications systems; develop or maintain software; provide user liaison and training, schedule computers, prepare and control input data; control, reproduce, and distribute output data; maintain tape and disk libraries, provide security, maintenance, and custodial services, and directly manage or provide direct administrative support to personnel engaged in these activities. (3) The owned or leased computer and telecommunications hardware, including central processing units; associated peripheral equipment such as disk drives, tape drives, drum storage, printers, card readers, and consoles, data entry equipment; data reproduction, decollation, booking, and binding equipment; telecommunications equipment used for the transfer of data between remote sites and the facility including telecommunications control units, terminals, modems, and dedicated telephone lines. (4) The software, including operating system software, utilities, sorts, language processors, access methods, data base processors, and other similar multi-user software required by the facility for support of the facility and/or for general use by users of the facility. All soft ware acquired or maintained by users of the facility is excluded. (5) The physical facilities, including computer rooms; tape and disk libraries; stockrooms and warehouse space; office space; physical fixtures. B. Full Costs. All significant expenses (including direct and indirect) incurred in the operation of an information technology facility. The following cost elements are included: (1) Personnel including salaries, overtime, and fringe benefits (both funded and unfunded) of all personnel; training, and travel. (In situations where personnel perform data processing functions on a part-time basis, only that proportionate amount of their salaries, benefits, etc., relating to data processing activities should be included in determining the full costs of operation.) (2) Equipment including depreciation for owned, capitalized equipment; rental costs; leased costs; and direct expenses for non-capitalized equipment. (3) Software - including depreciation 1/ for capitalized costs of developing, converting, or acquiring software; rental costs for software, and direct expenses for noncapitalized acquisition of software. (4) Supplies - including office supplies; data processing materials; and miscellaneous expenses. (5) Contracted services - including technical and consulting services, equipment maintenance; data entry support; operations support; facilities management; maintenance of software, telecommunications network services; and data processing timesharing services. (6) Space occupancy - including rental and lease of buildings, general office furniture and equipment; building maintenance; heating, air conditioning, telephone services, and other utilities; building security; and custodial services. (7) Intra-bureau services and overhead including the costs of normal bureau support services, that are paid by the installation. (8) Inter-bureau and inter-agency services including the costs of services provided by other bureaus and departments that are paid by the installation. C. User. An organizational or programmatic entity that receives service from an information technology facility. A user may be either internal or external to the bureau or bureau organization responsible for the facility. In situations where two or more programmatic entities are supported (e.g., administrative applications as well as one or more mission applications), the facility will be regarded as providing multi-user support even though these programmatic entities are performed in a single organization. D. General Management Computer. A digital computer that is used for any purpose other than as a part of a process control system, space system, mobile system, or a system meeting one of the exclusions identified in the Department of Defense Authorization Act of 1982. E. Application System. An information system composed of one or more units of software supported by ADPE and automating work methods and procedures to collect, store, process and disseminate information to support specific agency missions. 5. Responsibilities. A. The Information Systems Council will exercise oversight responsibility for coordination and compliance with the policies of this chapter. B. The Assistant Director for Information Systems is responsible for establishing, as part of the Bureau Information Resources Management (IRM) program, a process for cost accounting, cost recovery, and sharing of information technology facilities under his direction. Specifically, the Assistant Director for Information Systems will: (1) Assign responsibility, and establish policies and procedures to implement the requirements of this chapter. (2) Conduct annual reviews of chargeback systems. (3) Validate equipment inventories, installations, and costs subject to chargeback. (4) Provide ADP users with regular timely cost and utilization reports for monitoring their ADP use and cost. (5) Ensure that contracts awarded for the operation of information technology facilities include provisions for compliance with the requirements of this chapter. (6) Develop cost accounting procedures and cost finding techniques, and: (a) Assure that cost accounting procedures are consistent with the Federal Government Accounting Pamphlet No. 4, "Guidelines for Accounting for Automatic Data Processing" (U.S. General Accounting Office, 1978), for the operation of information technology facilities where estimated full costs exceed$3 million per year.

(b) Make annual estimates, using cost finding techniques, of the full costs of operating facilities where estimated costs are less than $3 million per year. (7) Establish a user cost distribution system to distribute the full cost of providing services. The user cost system will: (a) Be consistent with guidance provided in the Federal Government Accounting Pamphlet No. 4 and in the Federal Information Processing Standards Publication No. 96, "Guidelines for Developing and Implementing a Charging System for Data Processing Services" (National Bureau of Standards, Department of Commerce, 1982). (b) Price each service provided by the facility to the users of that service on an equitable cost sharing basis commensurate with the amount of resources required to provide that service and the priority of service provided. The cost of individual transactions may be estimated provided that they are periodically reconciled to assure that the full costs of operations are equitably allocated among all users. Fixed price arrangements for services during a specified period of time are permissible provided that such prices are periodically adjusted to assure an equitable allocation of costs. (c) Directly distribute to the recipient of the services the full costs of dedicated services, including application systems developed and maintained; software unique to a single application; and remote terminals and modems. (8) Ensure cost recovery, by the following actions: (a) Submit periodic statements to all users of agency information technology facilities specifying the costs of services provided. (b) Recover full costs from Federal users of the facility. (c) Recover costs from nonfederal users of the facilities consistent with OMB Circular No. A-25. (9) Account for reimbursements that are received, by the following actions: (a) Reduce agency budget and appropriation requests by the amount of planned reimbursements from shared information technology facilities. (b) Prepare, at the close of each fiscal year, a report for retention in the agency's official records that documents the full cost of operating information technology facilities that recover more than$500,000 per year from sharing reimbursements. The report should document past year costs and provide estimates for the current and budget years.

(c) Deposit to the U.S. Treasury as miscellaneous receipts the excess of reimbursements over full costs in any fiscal year.

(d) Use, at agency discretion, the portion of reimbursements arising from equipment and software depreciation for the replacement and augmentation of information technology capital assets, provided such usage is specifically approved as part of the budget and appropriation.

(10) Apply interagency sharing, by the following actions:

(a) Share their information technology facilities with users from other divisions and other bureaus to the maximum extent feasible.

(b) Document sharing arrangements, where the total annual reimbursement exceeds $500,000, with individual written agreements that identify: (i) Services available for sharing. (ii) Service priority procedures and terms (e.g., quality performance standards) to be provided to each user. (iii) Prices to be charged for providing services. (iv) Reimbursement arrangements for services provided. (v) Arrangements for terminating the sharing agreement. (c) Provide standard terms and conditions to users obtaining similar services insofar as possible. (d) Use such sharing arrangements in justifications to OMB for resource requests and allocations only where exceptional circumstances preclude the user agency from using alternative sources. 6. Selection of Information Technology Facilities to Support New Applications. A. The USGS Information Systems Council review the Survey division recommendations to determine which USGS data processing facility will be used to support major new applications as required in 376 DM 6.4E. B. The Survey definition of a major new application is either one which serves only one division and has a capital investment or annual cost exceeding$1,000,000 or one which serves more than one division and has a capital investment or annual cost exceeding \$300,000. This definition corresponds to a type 111 information system as defined in the policy on Information System Life Cycle Management (SM 501.1.4).

C. In the case that concurrence of the Information Systems Council cannot be obtained, the Assistant Director for Information Systems will be the management official designated to decide any appeals resulting from the nonconcurrence.

D. The procedures in paragraph C will ensure that:

(1) All alternative facilities are considered, including other Federal agency and nonfederal facilities and services.

(2) Rules do not require that priority be given to the use of in-house facilities.

(3) The user of the application has primary responsibility for selecting the facility.

(4) Each selection decision is documented in the official records.

7. Reporting Requirements.

A. Within 5 days after the close of each fiscal year, the Assistant Director for Information Systems will submit a report to the Office of Information Resources Management on the bureau's compliance with this chapter. The report will include:

(1) The name of the official responsible for overseeing the implementing of the chapter requirements.

(2) A listing of all applicable information technology facilities.

(3) A summary of the annual review of the division's chargeback system.

B. The control number assigned to this report is DOI-85-090.

1/ GAO's Accounting Principles and Standards (GAO Manual, Title 2, Section D 20.02) requires each agency to adopt procedures to account for depreciation of capital assets whenever a periodic determination of all resources consumed in performing services is needed.