The Procedure for establishing a testing project is as follows:

1. The faculty member writes a brief description of the project, clearly demonstrating that it is testing (i.e. there will be no resulting patentable or publishable work) and includes a budget with a 15% College Administrative Fee.
2. The faculty member completes a Testing Proposal From and gets the required signatures of his/her chair and the Associate Dean for Research and Graduate Studies.
3. Send the project/budget to the Company.
4. When approved by the Company, DER will set up a sub-account in one of the College testing accounts for your project.

Federal funds cannot be processed through the testing account. All Federal funds to Michigan State University need to be processed through Contract and Grant Administration.

TESTING RATES

The following information is intended to offer assistance in developing or updating your internal service billing rate(s) for services rendered.

DEVELOPMENT OF BILLING RATE(S)

1. Departments rendering services to Contract & Grant account (61-0001 - 71-4999) must adhere to the following federal regulations when developing or updating their billing rate(s):
   

   A. The billing rate must be determined with a method that does not discriminate against federally supported activities.

   
   
   

   B. Federal regulations prohibit charging billing rate(s) that recover more than the cost of the service or include a component for depreciation based on replacement costs.

   
   
   

   C. The billing rate cannot include a component for interest expense on internal University loans. Interest expense to external parties may be allowable, if the piece of equipment was purchased on or after July 1, 1982, and its cost was $10,000 or more.

   
   
   

   Any questions on allowable costs for contract & grant accounts (61-0001 - 71-4999), contact Contract & Grants Office @ 5-4727.
   

2. Departments rendering services to all other users may include a component for depreciation.

DOCUMENTATION OF BILLING RATE(S)

1. Supporting schedules documenting the development of the billing rate(s) must be sent to the Controller's Office, 305 Administration Building to be maintained in the account file. The information forwarded should include a breakdown by billing rate components, the estimated unit used to arrive at the unit cost, and the unit cost. (See example below.)
   
   
2. The rates should contain a statement to the effect that, the billing rate(s) will be reviewed at a minimum, on a biannual basis, with the rates being adjusted to reflect costs, number of units, or the projected costs/unit, etc. for the next year.
   
   
3. All revised billing rate(s) should be documented and updated copies sent to the Controller's Office.

EXAMPLE OF INTERNAL SERVICE BILLING RATE DOCUMENTATION

Department Name

Account Number

Date

The billing rate charged for services rendered is composed of the following components:

Salaries & Wages:
Principal Technician ($500/week x 52)		$26,000
Support Technicians (2@$350/week x 52)		$36,400
Administrative Assistant ($1500/mth x 30% x 12)		$ 5,400
Equipment Maintenance		$ 1,000
Supplies		$ 2,500
Total Cost of Service		$71,300

The estimated number of samples run during the year are: 10,000

The cost per sample: $71,300/10,000 = $7.13

The estimated number of samples and the costs of the service will be reviewed on a biannual basis to ensure that the estimates still reflect the current activity.