# Presentation: 686304

## Susan StrasserManager, APS User Administration and Support
NUFO Annual MeetingJune 5, 2007Advanced Light Source, Berkeley, CA

*NUFO Annual Meeting**June 5, 2007**Advanced Light Source, Berkeley, CA*

***Proprietary Research Issues***
***at the Advanced Photon Source,***
***Argonne National Laboratory***

## Outline of Presentation

- The issues:  Why are we talking about this?
- What happened? (APS audit in 2006; audit report 1/07)
- What comes next?

## Industrial Users at the APS

## Scope of Proprietary Research at the APS

- In FY 2006, APS delivered ~184,000 hours to users, ~7,000 for proprietary research

## Why are we talking about this?

- In late 2005, APS notified that an DOE Inspector General (IG) audit was being scheduled
- Audit began in January 2006
- Topics of interests were
- Beam time usage
- General finance
- Proprietary research (became primary concern)
- Report released January 2007 (DOE/IG-0753) - Directed to the Chicago Operations Office of DOE (Manager of Argonne National Laboratory)

## Executive Summary of Audit

- Argonne did not recover operating costs properly for proprietary research:
- Charged hourly rates insufficient to recover costs
- Could not be assured that correct number of hours were charged
- Delayed billings and didn’t establish advance accounts in timely manner
- Auditor recommendations to Chicago Site Office:
*Establish appropriate proprietary usage rates*
- Establish controls to accurately record proprietary usage
- Bill and establish advance accounts in a timely manner
*Recover lost collections (~$3M from FY2004-through first quarter of FY2006)*

## Chicago Site Office (and APS) Reaction

***Agreed*** to adjust proprietary rates, institute controls to record proprietary usage accurately, and ensure that advance payments and billings are received and issued in a timely manner.
***Disagreed*** that Argonne’s proprietary rates for FY2006 and before were understated.  (Rates in place for 10 years were appropriate for a growing facility, not yet at full capacity.  However, some graded adjustment now may be appropriate.)
***Disagreed*** that lost collections should be recovered.

## IG’s Take on Chicago Operations Office Reaction

- Adjustment of proprietary rates proposed by Argonne is NOT enough to achieve full cost recovery.
- Argonne’s proposal to eliminate R&D costs to optimize the beam for all users is NOT appropriate since proprietary users don’t share research results.
- Full recovery of costs, including the proportion of R&D costs that benefit proprietary users, IS necessary to avoid subsidy of private research.
- Recovery of funds from previous years IS appropriate.

## Proprietary Rate Transition Schedule Proposed by APS

- = $222.91/hour

- = $255.87/hour

## Now What?

- Stalemate?
- Chicago Operations Office contentions (Pat Dehmer-BES-agrees)
- Supports concept that since 1996, proprietary rate has been based on optimal number of beamlines rather than actual number of operating beamlines
- No official definition exists for full cost recovery for a growing, rather than fully used, user facility
- R&D costs to optimize beam (related to accelerator or beamline instrumentation) should NOT be considered operating costs
- Agreed to seek a determination from DOE’s Chief Financial Officer about Argonne’s proposal to increase rates gradually and exclude R&D costs
- IG contentions
- Reiterates that past rates were understated BUT agrees that Argonne’s proposed rate adjustment and willingness for a CFO determination are good.

## Stay Tuned:

- As of June 1, 2007, no decision has been made by the DOE’s Chief Financial Officer.
- Current rates at the APS are based on the proposed transition formula for FY 2007.