Contents

A. Scope and Purpose

UCI engages in business enterprises that support the University’s mission and values that are known as Sales & Service Activities.

1. This policy specifies the requirements and the procedures for requesting, reviewing, and approving Sales & Services Activities between the UCI campus and a Non-University Entity.
2. This policy:
   1. Applies to campus units including Academic Support Activities, Other Income-producing Activities, and Service Enterprise Activities.
   2. Defines Sales & Service Activities and sets forth the responsibilities for campus units, Accounting & Fiscal Services, and Procurement Services for the establishment, operation, review, administration, and closure of Sales & Service Activities, as well as the process to develop, request, and include the appropriate overhead rates for these types of income-producing activities.
   3. Does not apply to:
      1. Auxiliary Enterprise, the Office of Global Engagement, and Medical Center activities, or the Health Science Compensation Plan, or Patient Care Income. Those offices follow different guidelines.
      2. Income from gifts or private contracts or grants:
         • If income involves no contractual requirements, no deliverables or reports, and is irrevocable then it is a gift.*
         • If the scope of work/project/service:
           • Involves investigation or experimentation aimed at the discovery/interpretation of facts, revision of theories, or application of new or revised theories;
           • Is customized;
           • Results in a report to the payee;
           • Involves testing proprietary products; or
           • Includes limitations on the dissemination or publication of results,
           then the transaction must be processed as a private contract or grant.*

* See Sec. 680-11: Procedures for Processing Acceptance of a Gift/Private Grant.

B. Definitions

C. Policy

1. It is the University's policy not to sell goods or services to a Non-University Entity except where such goods or services are unique or where such sales would not be in competition with commercial sources. UC Regulation No. 4 (APM-020) states:
   • University . . . facilities are not to be used for tests, studies, or investigations of a purely commercial nature . . . except when it is shown conclusively that satisfactory facilities and such services do not exist elsewhere. Those requiring such . . . services should apply to business firms or to such public agencies as the State Division of Mines, State Department of Agriculture, or the State Food and Drug Laboratory, etc.
2. Sales & Service Activities:
   1. Are subject to review and approval by their respective units/schools;
   2. Must be reviewed and require approval from the Accounting and Fiscal Services office; and
   3. Must not begin until an executed Sales & Service Agreement is in place via Procurement Services.
3. The charges established for the sale of goods and services provided by UCI campus units to Non-University Entities must recover full University costs, both Direct and Indirect. Indirect Costs shall include appropriate amounts for campus-overhead costs.

D. Responsibilities and Authorities

1. The UCI unit must:
   1. Complete the following steps before any Sales & Service Activity begins:**
      1. Submit to the Accounting and Fiscal Services office for their review and approval an Recharge / Sales & Service Activity Information Sheet which:
         • provides a scope of work and detailed description of deliverables for the proposed Sales & Service Activity;
         • provides approval of the activity and certification from the relevant Dean's or Director's office that the activity meets University Regulation No. 4. specifications; and
         • allows the unit to request an account unique to the Sales & Service Activity, if required; and
      2. Submit a rate calculation using the Rate Calculation Template or a rate justification analysis (as applicable) for a new Sales & Service Activity.
      3. Submit approved Recharge / Sales & Service Activity Information Sheet with Sales & Service Intake form to Procurement Services to prepare a Sales & Service Agreement for each Non-University Entity transaction.
   2. Submit a revised Recharge / Sales & Service Activity Information Sheet and rate calculation/justification to the Accounting and Fiscal Services office for approval if:
      • the scope of work, deliverables, or rate being charged has been altered since the original submission/approval; or
      • the Recharge / Sales & Service Activity Information Sheet was approved 5 or more years ago.
   3. If internal recharge income is involved, per Sec. 701-22: Recharge Facility and Activity Approval and Review Interim Policy, work with the Accounting and Fiscal Services office to coordinate the submission with the Recharge Rate Review Committee for approval by the Provost.
   4. Conform to approved cash-handling, credit card compliance, billings and recharge procedures.
   5. Close Sales & Service accounts when they are identified as no longer valid or in use.

   ** Any UCI unit that has any Sales & Service Activity(ies) underway, at the time this policy is issued, is responsible for bringing their activities into compliance with this policy.

2. Unit's Approving Authority (Dean, Vice Chancellor) must:
   1. Approve and sign the proposal from originating UCI unit.
   2. Be responsible for the business management functions, such as budget control and the receipt, custody, and disbursement of revenues, accounting and financial reporting; and procurement of supplies, equipment, and services.
   3. Participate in resolution of comments, questions, and objections to request.
   4. Forward requests for income assessment exceptions to the Recharge Rate Review Committee Chair or Designee.
3. The Accounting and Fiscal Services office will:
   1. Review the Recharge / Sales & Service Activity Information Sheet, and the Rate Calculation or justification;
   2. Seek Applied Innovation and Sponsored Projects review as necessary for issues associated with intellectual property and differentiation between scope of work and a research contract or grant from a non-governmental source activity;
   3. Issue final approval for the new Sales & Service Activity;
   4. Notify the UCI unit when the new Recharge / Sales & Service Activity Information Sheet is approved, and communicate to Procurement Services that the activity has been approved;
   5. Repeat the steps above as appropriate for any modified/resubmitted Recharge / Sales & Service Activity Information Sheets and/or rate calculations or justifications due to changes to the scope of work, deliverables, and/or per unit rate for previously approved Sales & Services Activities;
   6. Ensure appropriate accounts are established to record the revenue (Direct Costs, finance and administration overhead and differential income) which is received and deposited from Non-University Entities.
   7. Conduct an annual review of income deposited to Sales & Service accounts/funds, based on a sampling of approximately 1/5 of those accounts/funds:
      • confirm that an approved Recharge / Sales & Service Activity Information Sheet or equivalent is on file,
      • the purpose of the deposit is consistent with the approved activity, and
      • the activity is being appropriately charged both Direct and Indirect Costs;
   8. Run an annual report for all new Sales & Services Activities to determine those that may involve unrelated business income tax (UBIT), as indicated in BFB-A-61: Unrelated Business Income and Expenses Policy; and
   9. For Sales & Service Activities involving contracts and grants accounting, carry out account closing and unexpended fund transfers in accordance with the Contracts & Grants Accounting process and form.
4. Procurement Services will:
   1. Upon receipt of an approved Recharge / Sales & Service Activity Information Sheet and Sales & Service Agreement Intake form from a UCI unit:
      • Prepare the Sales & Service Agreement, negotiate terms, and then execute the agreement;
      • Enter the applicable data from the Sales & Service Agreement into the tracking database and assign a unique agreement number; and
      • Serve as the Records Custodian for all fully executed Sales & Service Agreements.
   2. Provide Accounting and Fiscal Services access to executed Sales & Service Agreements and assist with questions that arise during their annual review.

E. Indirect Costs and Waivers

The Income Activity Information Sheet provides a summary description allowing for campus approval of the Indirect Cost rate to be charged and ensuring that the appropriate Direct and Indirect Costs are recovered. Waivers or reductions to Indirect Costs may be permitted on a case by case basis in rare circumstances. A request from the UCI unit, endorsed by the Dean or Director, can be submitted to the Accounting and Fiscal Services office for initial review. The Accounting and Fiscal Services office may then submit the waiver or reduction request to the Provost and Executive Vice Chancellor and the Chief Financial Officer and Vice Chancellor for the Division of Finance and Administration for their approval.

F. Additional Information

Additional information about Sales & Service rates is detailed in Appendix S: Additional Information for Sales & Service Activities.