02 - 070 Creating a New Service Center

A. SUMMARY OF ADMINISTRATIVE PROCEDURE

This policy documents the process involved in establishing the need for and creating a Service Center at USNH.

Rates are developed to distribute direct and indirect costs associated with the service. The purpose of these rates is to recover the costs of providing the service. There are two types of Service Centers, as described below.

1. Definition of a Service Center: A Service Center is an entity that performs or provides, for a fee, specific technical or operational services primarily for internal users. A Service Center may provide services to external users, as long as this is not its primary purpose. USNH entities that do not charge a fee, or whose customer base is largely external users (excluding the Federal government), are not considered Service Centers for the purposes of this policy. Service Centers vary in size and complexity, as well as in the composition of costs included in their rate structures.

a. A normal Service Center provides services to a broad range of users throughout the campus. Examples are Telecommunications and the University Instrumentation Center. Operating costs include salaries and benefits of Service Center employees, materials costs, and all or part of the associated facilities and administrative (F&A) costs. See Procedure 2-071, Establishing a Service Center Billing Rate, for details on the development of Service Center billing rates.
b. A Recharge Center is a type of Service Center that reallocates materials costs only (excluding salaries and wages) within a department or limited area of accounts. Recharge Centers simply recoup, through a redistribution method, the materials costs relating to a particular activity. An example of a Recharge Center is a departmental copier. Please see Procedure 2-072, Creating a New Recharge Center, for the correct handling of this particular kind of Service Center.

2. Why is a Service Center policy necessary? It is good business practice to review internal costing and charging practices. USNH must use consistent and equitable cost accounting practices to ensure compliance with federal regulations and cost accounting standards. This is essential to ensure continued funding of federal programs. These federal regulations are outlined in detail in Procedure 2-071, Establishing a Service Center Billing Rate.
3. Responsibility: Departments make the initial determination that a Service Center is needed. The department forwards the request to the Controller's Office. The Controller's Office is responsible for approving the establishment of a new Service Center.

B. DETAILED OPERATING PROCEDURES

1. Deciding if a new Service Center needs to be created: The following should be considered in assessing the need to set up a new Service Center.

a. Is the service primarily for USNH departments? If a unit such as the New England Center is principally for "external" customers (non-USNH departments) this activity does not constitute a Service Center.
b. Is it cost effective to perform the service in-house? A cost/benefit analysis must be completed to see if the Service Center is cost effective. It is unallowable per federal regulations to charge a federally sponsored program for a service that would have cost less if purchased from an outside vendor.
c. Will the Service Center bill most users for the service? Before a Service Center is established, a decision must be made that all the costs are going to be billed to all customers. If a Service Center is not going to bill for services to all users, adjustments must be made to the institutional indirect cost proposal, and cost sharing must be recorded for the unbilled portion of the service. See the University of New Hampshire Policy, Cost Sharing on Externally sponsored Programs, for a more detailed discussion of the handling of total costs of projects and centers.
d. F & A cost proposal: Some costs are traditionally charged as indirect costs rather than as direct costs through a Service Center. Before they are moved to direct charging, federal approval is required. An assessment must be performed to determine if the campus-wide cost reimbursement would be more appropriate via direct or indirect charging. Please contact the Asset Management and Cost Analysis group, at 862-3466, for guidance on any such change.

2. Service Center accounts: The development of a new Service Center requires the creation of a new Banner account to capture all costs associated with the Service Center. See Procedure 2-039, Account Coding Conventions, for detailed instructions on requesting new accounts.
3. Service Center rates: The development of a new Service Center requires the creation of Service Center rates. See Procedure 2-071, Establishing a Service Center Billing Rate, for the steps involved in developing rates.


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