FY 2009 Procurement Burden Structure

Scope

To provide a method to assess procurement burden on orders consistent
with FMS capabilities and Cost Accounting Standards (CAS).

**Procurement Matrix**

+----------------------------------------+-----------------------------+
| # Purchase Type                        | # Burden Application        |
+----------------------------------------+-----------------------------+
| POs \$1 - \$500K                       | 9.5% of the cost in FMS     |
|                                        | Project Costing             |
+----------------------------------------+-----------------------------+
| \> \$500K (per PO)                     | \$47.5K (flat burden)       |
+----------------------------------------+-----------------------------+
| Genomics Procurements (POs \$1         | 3.3% (Subject to \$500K     |
| -\$500K)                               | cap)                        |
+----------------------------------------+-----------------------------+
| Project Management (POs \$1 -\$500K)   | 1.8% (Subject to \$500K     |
|                                        | cap)                        |
+----------------------------------------+-----------------------------+
| R&D Subcontracts (POs \$1 -\$300K)     | 4.0% (Subject to \$300K     |
|                                        | cap)                        |
+----------------------------------------+-----------------------------+
| Intra-University Transactions (POs \$1 | 4.3% (Subject to \$200K     |
| -\$200K)                               | cap)                        |
+----------------------------------------+-----------------------------+
| eBuy Procurements                      | 3.7% of the cost in FMS     |
|                                        | Project Costing             |
+----------------------------------------+-----------------------------+

***Application Base*** -- Procurement burden is applied to the
following:

+----------+---------------------+------+-----------------------------+
| **       | **Resource Type     | ## R | **Resource Category         |
| Resource | Description**       | esou | Description**               |
| Type**   |                     | rce  |                             |
|          |                     | Cate |                             |
|          |                     | gory |                             |
+----------+---------------------+------+-----------------------------+
| MATRL    | Material Purchases/ | 1    | Stores Issues and Returns   |
|          | Stores Issue        | 0000 |                             |
+----------+---------------------+------+-----------------------------+
| MATRL    | Material Purchases/ | 2    | Blanket Order Procurements  |
|          | Stores Issue        | 0000 | -- Material                 |
+----------+---------------------+------+-----------------------------+
| MATRL    | Material Purchases/ | 2    | Regular Procurements --     |
|          | Stores Issue        | 3000 | Material                    |
+----------+---------------------+------+-----------------------------+
| MATRL    | Material Purchases/ | 2    | Publishing Charges          |
|          | Stores Issue        | 3001 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| MATRB    | eBuy Material       | 2    | eBuy B2B Material Purchases |
|          | Purchases           | 0B2B |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| PROCD    | Procurement Card    | 2    | Procurement Card Purchases  |
|          |                     | 6000 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| SRVCS    | Service Purchases   | 2    | Blanket Order Procurements  |
|          |                     | 1000 | -- Services                 |
+----------+---------------------+------+-----------------------------+
| SRVCS    | Service Purchases   | 2    | Consultants & Personal      |
|          |                     | 2000 | Services Agreements         |
+----------+---------------------+------+-----------------------------+
| SRVCS    | Service Purchases   | 2    | Regular Procurements --     |
|          |                     | 5000 | Services                    |
+----------+---------------------+------+-----------------------------+
| SRVCS    | Service Purchases   | 2    | Advertising                 |
|          |                     | A000 |                             |
+----------+---------------------+------+-----------------------------+
| SRVCS    | Service Purchases   | 2    | Consultant Fees             |
|          |                     | C000 |                             |
+----------+---------------------+------+-----------------------------+
| SRVCS    | Service Purchases   | 2    | Recruiting -- Job Fairs     |
|          |                     | F000 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| SRVPM    | Project Management  | 5    | R&D Subcontracts            |
|          | R&D Subcontracts    | 9100 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| SRVRD    | R&D Subcontracts    | 5    | R&D Subcontracts            |
|          |                     | 9000 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| UCMNS    | UC Materials &      | 2    | UC Materials & Services     |
|          | Services            | 1200 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| UCRND    | UC R&D Subcontracts | 5    | UC R&D Subcontracts         |
|          |                     | 9200 |                             |
+----------+---------------------+------+-----------------------------+
|          |                     |      |                             |
+----------+---------------------+------+-----------------------------+
| UTILY    | Utilities           | 2    | Other Utilities             |
|          | (non-electricity)   | U000 | (non-electricity)           |
+----------+---------------------+------+-----------------------------+

-   R&D Subcontract Procurement Rate applies to resource category 59000

-   Intra-University Transactions Procurement Rate applies to resource
    categories 21200 and 59200

-   Project Management Procurement Rate applies to resource category
    59100

### Application of the Procurement Burden

In general, procurement burden is automatically applied to appropriate
projects within FMS based on costs charged to specific resource
categories. However, if notified, the Indirect Budget group will
manually enter the PO number into an exclusion list in FMS for POs with
a single modification greater than \$500K. For R&D POs with actual costs
greater than \$300K and IUT POs with actual costs greater than \$200K,
the Indirect Budget group will enter the PO number into an exclusion
list in FMS based on a monthly review of cumulative recorded costs from
10/1/2006. FMS will then automatically remove all procurement burdens
charged for that fiscal year (prior year burdens will not be affected)
and will not allow any future procurement burdens to be applied during
the current fiscal year and in future years.

Once the appropriate cap has been established, the Indirect Budget group
creates a manual resource adjustment in the amount of the cap to be
charged to the appropriate project or projects. The maximum procurement
burden charged to the project is the cap threshold multiplied by the
corresponding procurement burden rate.

### *Prior Period Adjustments --* Procurement burden in excess of the cap charged in prior years will not be reversed. However, if the total procurement charges in the prior years were less than the corresponding procurement burden cap, then it will be credited toward the POs' procurement burden in the current fiscal year.

### 

### 

### Application of \$500K Cap

***Purchase Orders above \$500K*** -- Purchase Orders (POs) with single
incremental award amounts (or modifications) greater than \$500K will
have procurement burden applied only to \$500K in costs. All costs in
excess of \$500K will not be charged.

***Notification --*** In order for the procurement burden to be capped
at \$500K, the Resource Analyst must notify the Indirect Budget group.
The PO number is then manually added to an exclusion list in FMS. FMS
does **not** automatically identify capped POs.

***Purchase Orders above \$500K charged to multiple Project IDs*** -- In
general, Institutional POs that are blanket orders for the convenience
of the institution (such as copy machine repair, freight expense,
journals and subscriptions, chemicals, etc.) [do not]{.underline}
qualify for the \$500K cap. Institutional POs are charged the normal
procurement rate regardless of the amount.

Non-Institutional POs with a single modification greater than \$500K
that are charged to multiple project IDs are subject to the \$500K cap.
For POs with costs against multiple project IDs, the procurement burden
amount will be pro-rated based on supporting documentation provided by
the Division. Documentation must contain projected actual costs by
Project ID listed on the PO, as well as rationale for which projects are
being used. Please include the reason for splitting the PO among
different projects. Please see the following example.

  ----------- -------- ----------- ----------- --------- ------ ------------ -------- ------------------
  PO \#       Vendor   Current PO  Initial     Project   B&R    PO Cost      Proc     Comments
                       Value       Value       ID               Allocation   Burden   
                                                                Basis        Cost     

                                                                                      

  1234567     Vendor A 2,000,000   2,000,000   PROJ A    KP01   1,000,000    25,000   \$1M costs
                                                                                      expected for
                                                                                      Project A

                                               PROJ B    KJ02   1,000,000    25,000   \$1M costs
                                                                                      expected for
                                                                                      Project B

                                                                                      

  Reason for                                                                          
  splitting                                                                           
  PO:                                                                                 

                                                                                      

                                                                                      
  ----------- -------- ----------- ----------- --------- ------ ------------ -------- ------------------

***Application of LDRD and IGPP Burden Rates*** -- The LDRD and IGPP
burdens are automatically applied to the direct cost of procurements
(i.e., there is no cap amount) on appropriate projects within FMS, based
on the costs charged to specific resource categories. In addition, LDRD
and IGPP burdens are automatically applied to procurement burden.

***Changes to Purchase Order Amounts*** -- Incremental increases to a PO
amount will be subject to the \$500K cap only if the specific increase
is greater than \$500K. The \$500K cap is not determined by accumulating
the individual amounts. For example, if there were four individual
increases of \$200K (for a total of \$800K), the full procurement burden
would be charged for all costs. Alternatively, if a PO was originally
written for \$200K, and then increased by \$600K to \$800K, the entire
amount would then be subject to the \$500K cap.

### *Examples of \$500K Cap Applications (based on a procurement burden rate of 10.0%, which yields a cap amount of \$50K)*

  ----------- -- ----------- ---------- -- -- ----------- ---------- -- ----------- ---------- -- ----------- ----------
  **Yr**         **Example                    **Example                 **Example                 **Example   
                 1**                          2**                       3**                       4**         

                 **PO**      **Burden         **PO**      **Burden      **PO**      **Burden      **PO**      **Burden
                             (\$K)**                      (\$K)**                   (\$K)**                   (\$K)**

  1              800         50               200         20            200         20            400         40

  2              800         0                200         20            200         20            300         30

  3              0           0                200         20            700         10            200         20

  4              200         0                200         20            200         0             700         0

  **Total**      **1,800**   **50**           **800**     **80**        **1,300**   **50**        **1,600**   **90**
  ----------- -- ----------- ---------- -- -- ----------- ---------- -- ----------- ---------- -- ----------- ----------

### 

***Purchase Order costs applied to multiple fiscal years*** -- It is
strongly encouraged to fully allocate the entire cap amount in the first
fiscal year that costs are incurred. However, if the PO is issued late
in the fiscal year, actual costs may be less than \$500K and the
procurement burden would be disproportional to costs incurred. The
application of the manual entry into FMS may be delayed until the PO
cost of \$500K has been reached. The Indirect Budget group will manually
do a resource adjustment to charge the appropriate project(s).

Once a PO becomes subject to the \$500K cap, all future additions,
regardless of size, are also subject to the original \$500K cap.

### 

### Application of R&D Subcontracts - \$300K Cap

***Purchase Orders above \$300K*** -- Purchase Orders (POs) related to
R&D Subcontracts with cumulative costs greater than \$300K will have the
R&D subcontract procurement burden applied only to \$300K in costs. All
costs in excess of \$300K will not be charged procurement burden.

***Notification*** -- In order for the R&D subcontract procurement
burden to be capped at \$300K, the Indirect Budget group will identify
the qualifying POs on a monthly basis. The PO number is then manually
added to an exclusion list in FMS.

***Application of LDRD and IGPP Burden Rates*** -- LDRD and IGPP burdens
are only applied to the R&D subcontract procurement burden. Direct R&D
subcontract costs are exempt from LDRD and IGPP burdens.

### Application of Non-Labor Intra-University Transactions (IUT) - \$200K Cap

***Purchase Orders above \$200K*** -- Purchase Orders (POs) related to
non-Labor IUTs with cumulative costs greater than \$200K will have the
IUT procurement burden applied only to \$200K in costs. All costs in
excess of \$200K will not be charged.

***Notification*** -- In order for the IUT procurement burden to be
capped at \$200K, the Indirect Budget group will identify the qualifying
POs on a monthly basis. The PO number is then manually added to an
exclusion list in FMS.

***Application of LDRD and IGPP Burden Rates*** -- LDRD and IGPP burdens
are automatically applied to the IUT procurement burden. They are also
applied to the direct cost of IUT Materials & Services. However, LDRD
and IGPP burdens are not applied to the direct cost of IUT R&D
subcontracts.

# 

#  [Special Procurement Burden Rates]{.underline}

***Genomics Procurement (GNP) -*** A special procurement burden is
established for Genomics off-site projects. It is the responsibility of
the Genomics Resource Analyst to enter the special procurement burden
code (GNP) during project setup in FMS. Failure to include the special
procurement burden code in FMS will result in the projects being charged
the normal procurement burden. Genomics is subject to all Procurement
caps.

***Molecular Foundry (MFP) -*** A special procurement burden is
established for Molecular Foundry equipment purchases. It is the
responsibility of the Molecular Foundry Resource Analyst to enter the
special procurement burden code (MFP) during project setup in FMS.
Failure to include the special procurement burden code in FMS will
result in the projects being charged the normal procurement burden.
Molecular Foundry is subject to all Procurement caps. Operating projects
performed at the Molecular Foundry are subject to the general
procurement rate.

***eBuy Procurement (EBY) -*** A special procurement burden is
established to meet LBNL's low value procurement needs by allowing end
users the freedom to directly access supplier websites through a lab
portal. Initial subcontract pricing with eBuy vendors is established by
specific buyers in the Small Business Supplier and Strategic Sourcing
Management Group within Procurement, while actual purchases are made
directly by employees who have authorized access.

***Project Management Rate (PMR) -*** A special procurement burden is
established specifically for large collaborative equipment projects
where LBNL acts as lead laboratory with overall project management
responsibilities and where the majority of the project funds will be
subcontracted to others. The project work is intended to be performed at
other sites and with no end-products being sent back to LBNL.

The Budget Office will enter the special procurement burden code (PMR)
to the project during FMS project setup once a Project Management
Procurement Rate Request Form has been completed by the Division and
approved by the Budget Office. Failure to receive approval from the
Budget Office will result in the projects being charged the normal
procurement burden. Project Management is subject to all Procurement
caps.

***Project Management Rate Criteria --*** The rate can only be used if
equipment projects meet the following criteria:

a.  Subject to DOE Order 413.3 or \$5M threshold for non-DOE sponsor.

b.  LBNL given lead lab status -- defined as institution ultimately
    responsible for the project planning, execution and management
    required to deliver project's final objective.

c.  LBNL given project funding with the understanding that a material
    amount of funding will be allocated to other collaborators by LBNL.

d.  Subcontracts made to other DOE labs and educational institutions.
    Subcontracts to commercial entities would not qualify since these
    will require unique contract terms and conditions and hence will
    require more effort to execute.

***Application of LDRD and IGPP Burden Rates*** -- LDRD and IGPP burdens
are automatically applied to the direct cost of procurements (i.e.,
there is no cap amount) on appropriate projects within FMS, based on the
costs charged to specific resource categories. In addition, LDRD and
IGPP burdens are automatically applied to procurement burden.

###