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Advance Payments for Nonfederal Work for Other ( WFO) Sponsors

    Title:

    Advance Payment for Nonfederal Work for Others (WFO) Sponsors

    Publication date:

    3/25/2013

    Effective date:

    2/21/2011

    BRIEF

    Policy Summary

    This policy addresses financial processes for estimating the required advance payment for work performed for nonfederal sponsors. Sufficient advance funds must be obtained from the sponsor prior to starting work to maintain a 90-day balance of funds during the life of the project.

    Who Should Read This Policy

    All employees with financial responsibilities for work performed for nonfederal sponsors at Berkeley Lab.

    To Read the Full Policy, Go To:

    The POLICY tab on this wiki page

    Contact Information

    Business Services Manager
    Field Operations Manager
    Office of Sponsored Projects and Industry Partnerships (OSPIP) Manager
    WFO Analyst, Budget Office

    Title:

    Advance Payments for Nonfederal Work for Others (WFO) Sponsors

    Publication date:

    3/25/2013

    Effective date:

    2/21/2011

    POLICY

    A. Purpose

    As a federal contractor, Lawrence Berkeley National Laboratory (Berkeley Lab) is required to adhere to Department of Energy (DOE) Contract 31 regulations. This policy specifically relates to the DOE Accounting Handbook, Chapter 13, which requires that sufficient advance funds be obtained from the sponsor prior to commencing work in order to maintain a 90-day balance of funds during the life of the project.

    B. Persons Affected

    Any employee who manages payments for work performed for nonfederal sponsor.

    C. Exceptions

    Exceptions to the 90-day balance-of-funds requirement include state and local governments that are precluded by law from providing an advance. Exceptions must be reviewed and approved by the Budget Office.

    D. Policy Statement

    To ensure a 90-day balance of funds is maintained, the amount of the advance should be at least equal to the four (4) highest months of estimated costs, including equipment and any other unusual start-up or operational costs, as represented in the total proposed budget. A full advance is required for proposals with a proposed budget of $25,000 or less or that will be completed in 90 days or less. Methods for calculating the advance will vary depending on the type of work.

    Types of possible calculation methodologies include:

    1. Straight-line: Advance = Total cost ⁄ Total number of months × 4
      1. Flat project burn rate
        1. Example: Dr. W is proposing work for Global International for a total cost of $525,000. The project is anticipated to begin in October of 2010 and take 12 months to complete. Spending is expected to be about the same each month.

          $525,000 ⁄ 12 × 4 = $175,000

      2. Erratic burn rate where monthly projection of cost is unknown, high start-up costs and/or large purchases are not expected (B)
        1. Example: Dr. No is proposing work for Genes R Us Ltd. for a total cost of $1,325,000. The project is anticipated to begin in January of 2010 and take 20 months to complete. It is not clear at this point what the monthly burn rate will be; high start-up costs are not expected, and the budget does not include large purchases.

          $1,325,000 ⁄ 20 × 4 = $265,000

    2. Modified Straight-line: Advance = ((Total cost – start-up costs and/or large purchase) / Total number of months × 4) + start-up costs and/or large purchase
      1. Flat project burn rate with high start-up costs and/or a large purchase
        1. Example: Dr. Y is proposing work for Query Inc. for a total cost of $1,200,000. The project is anticipated to begin in September of 2010 and take 18 months to complete. Spending is expected to be about the same each month with the exception of an equipment purchase for $100,000 as well as $50,000 for supplies and materials in the first month.

          (($1,200,000 − $100,000 − $50,000) ⁄ 18 × 4) + $100,000 + $50,000 = $383,333

      2. Erratic burn rate where monthly projection of cost is unknown, with high start-up costs and/or a large purchase
        1. Example: Dr. Z is proposing work for the Air Society for a total cost of $1,725,000. The project is anticipated to begin in June of 2010 and take 24 months to complete. The monthly burn rate is expected to fluctuate throughout the life of the project, but a detailed cost plan has not been established. Initial supplies and materials total $100,000 as well as a large equipment purchase for $125,000.

          (($1,725,000 − $125,000 − $100,000) ⁄ 24 × 4) + $125,000 + $100,000 = $475,000

    3. Known Costing Profile: Advance = 1st highest month + 2nd highest month + 3rd highest month + 4th highest month
      1. Erratic burn rate where monthly projection of cost is known (includes start-up costs and/or large purchases)
        1. Example: Dr. Q is proposing work for Money Trees Corp. for a total cost of $1,000,000. The project is anticipated to begin in December of 2010 and take 12 months to complete. Expected monthly spending is as follows per the detailed monthly spend forecast proposed to Money Trees Corp: December, $75,000; January, $94,000; February, $76,000; March, $78,500; April, $74,500; May, $79,000; June, $75,500; July, $157,000; August, $74,500; September, $74,000; October, $71,500; November, $70,500.

          $157,000 + $94,000 + $79,000 + $78,500 = $408,500

    E. Roles and Responsibilities

    Managers, supervisors, and employees have the responsibility to adhere to the provisions of this policy.

    F. Definitions/Acronyms

    Term

    Definition

    Burn Rate

    The rate at which costs are incurred

    Work for Others (WFO)

    The performance of work for non-DOE entities by DOE/contractor personnel and/or the utilization of DOE facilities that are not directly funded by DOE appropriations.

    G. Recordkeeping Requirements

    None

    H. Implementing Documents

    none

    I. Contact Information

    Business Services Manager
    Field Operations Manager
    Office of Sponsored Projects and Industry Partnerships (OSPIP) Manager
    WFO Analyst, Budget Office

    J. Revision History

    Date

    Revision

    By whom

    Revision Description

    Section(s) affected

    Change Type

    3/25/2013

    1.1

    Franier

    Review completed 2/21/2013, no changes

    Pub & next review dates

    Minor

    1/2/2012

    1

    M.Mock

    Reformat for wiki

    All

    Minor

    DOCUMENT INFORMATION

    Title:

    Advance Payment for Nonfederal Work for Others (WFO) Sponsors

    Document number

    11.02.010.000

    Revision number

    1.1

    Publication date:

    3/25/2013

    Effective date:

    2/21/2011

    Next review date:

    2/21/2015

    Policy Area:

    Budget

    RPM Section (home)

    Financial Management

    RPM Section (cross-reference)

    Section 11.15

    Functional Division

    OCFO

    Prior reference information (optional)

     

    Source Requirements Documents

    Other Driving Requirements

    Document number

    Title

    Type

    11.02.001.000

    Bridge Funding policy

    Policy

    11.02.007.000

    WN Funding Requests policy

    Policy

    11.01.001.000

    Work for Others - Special Financial Terms and Conditions

    policy

    Implementing Documents

    none

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