In addition to collaborating with industry on academic research, the University of Wisconsin School of Medicine and Public Health also provides routine services to industry on a fee-for-service basis. Such activities may be undertaken by UW School of Medicine and Public Health as long as they are consistent with UW-Madison policies and procedures for fee-for-service projects.
Definition of Fee-for-Service Activities
Fee-for-service work typically consists of the execution of a predefined or repetitive process, or the production of a product that meets predefined specifications. The activity is not expected to add to the body of fundamental knowledge in a given field.
Where the activity involves data generation, the data may be so specifically related to a company product or process as to have little value to anyone other than the sponsor or the sponsor’s competitors. This is in contrast to academic research, whether sponsored by government, nonprofit entities or industry, which involves the creation and dissemination of new knowledge.
Even though the performance of fee-for-service work falls outside the University of Wisconsin School of Medicine and Public Health’s core academic research mission, the value these activities have to the university can justify university involvement.
The genesis of an outside fee-for-service offering often springs from a technical capability originally developed as a research service supporting the academic research of a university investigator. Offering such a service to companies may boost the production level of the service unit to point where it becomes financially self-supporting, thus ensuring continued availability to UW School of Medicine and Public Health researchers.
The collection of data from company products not otherwise accessible may generate experience and insight in a researcher’s particular field of interest. This activity can be a true embodiment of the Wisconsin Idea, making university resources available to companies in Wisconsin and beyond, and is especially valuable when these resources are unique or of limited availability to those outside the University of Wisconsin School of Medicine and Public Health.
Competition with the Private Sector
The UW School of Medicine and Public Health must avoid establishing service offerings that compete with private sector service providers, both because of its unfair competitive advantage in pricing resulting from its nonprofit status, and because of its desire to enhance rather than to impede economic development by competing with the growth of private sector technology businesses. To this end, fee-for-service approvals are only given when private sector providers in the intended market are not impacted.
The accounting processes for fee-for-service activities differ markedly from the management of academic research accounts. Fee-for-service accounts, including invoicing and payments, are managed entirely within the departmental accounting organization. Indirect costs flow directly to departments. University of Wisconsin School of Medicine and Public Health financial oversight is therefore provided at initial account setup, and thereafter by periodic audits.
The repetitive nature of the work allows for the up-front establishment of standard price schedules, or pricing algorithms that are driven by easily defined production metrics. Even though indirect costs are not distributed according to standard university formulas and instead go directly to the department, indirect costs impact fee-for-service activities just as they do for other research, and the price buildup must include these costs.
Each fee-for-service activity should have a 136 account established to manage income flow. As part of the approval process for establishing this account, the university will verify that price buildups underlying the price schedules or algorithms have properly accounted for all costs. The approval process will also address the classification of the work for income tax purposes, and the need to cover charges for unrelated business income tax.
Since contracts for fee for service work may contain clauses that would inhibit the progress of graduate students toward their degrees and other trainees in their professional advancement, careful consideration must be given to involving such personnel in this type of work. If personnel-in-training are involved, it may indicate that the project is research rather than fee for service.
Setting Up a Fee for Service (136) Account
- Contact Andy Chen at the UW School of Medicine and Public Health Office of Industry Engagement (OIE) to determine whether the proposed activity should be considered for fee-for-service status.
- Write a detailed description of the activity to be performed as fee for service. This should include technical details and any applicable specifications for the work.
- Work with your departmental accountant to generate a cost buildup for the service, either establishing standard pricing for standard activities in the form of a price list, or a standard algorithm to be used for cost buildup for each individual project. The internal budget must include current F&A rates. The sponsor budget will not show F&A but have it shown as one fee, inclusive of F&A.
- Complete the Revenue Producing Activities Questionnaire, referring to the instructions as a guide. Attach the activity description and cost buildup.
- Submit the completed questionnaire to Andy Chen at the University of Wisconsin School of Medicine and Public Health Office of Industry Engagement.
The UW School of Medicine and Public Health dean’s office will review the application, and if it is determined to be an activity consistent with classification as fee for service, will forward to UW-Madison Business Services. Your SMPH accountant account will establish a 136 account that should be noted on the WISPER record for services related to this particular 136 scope.
Establishing Contracts for Fee for Service Projects
- Before any fee for service (FFS) project can be established, a 136 account must be in place, and the project described in the contract must match the activities described in the 136 account setup. For information on setting up a 136 account, contact Andy Chen in the UW School of Medicine and Public Health OIE at (608) 265-8969 or firstname.lastname@example.org.
- Reach agreement with the sponsor regarding the services to be provided and price.
- If a standard invoicing process was set up when the 136 account was established, proceed with the service, using the standard invoice for contracting and billing purposes. This completes the process. If a contract will be used, proceed to step 4.
- Propose to the sponsor that our standard fee for service contract be used (if one has not previously been provided to you by Andy Chen, contact him). Use of our standard contract will greatly speed the process.
- The sponsor may seek changes to our standard contract or provide its own contract. In either case, you may provide it with OIE’s contact information (below) to discuss terms. Alternatively, you can send the sponsor’s contract to the Office of Industry Relations, and it will initiate contact with the sponsor.
- Prepare a submission packet consisting of the following items and send to Andy Chen at OIE (note that fee-for-service projects should not be entered onto the WISPER system).
Once UW-Madison and the sponsor are in agreement on terms, the contract will be signed and a copy will be returned to the investigator or his/her designee. This constitutes the award, and the project may then proceed. The investigator and department are responsible for invoicing and collecting payments as provided for in the contract.