Sale of Goods and Services
- Responsible Office: University Controller’s Office
- Current Approved Version: 01/13/2020
- Policy Type: Administrative
Policy Statement and Purpose
The purpose of this policy is to set forth the requirements for university units to engage in revenue generating activities and the rates those units can charge for such activities.
Units may engage in the sale of goods and services only when the production of those goods or services is consistent with the normal activities of the unit and is substantially related to the mission of the university and that unit. The sale of goods and services must conform to all university policies and procedures. The provision of services must not duplicate services already performed or provided by another unit at the university.
This policy does not apply to instructional programs listed on the VCU Bulletin or sponsored program activities reviewed by the Office of Sponsored Programs. If the sale or service is provided to a federal agency, the proposed activity must be reviewed by the Office of Sponsored Programs.
This policy is not intended to address service centers. Service center activities must follow the Financial Management of Service Centers policy.
This policy does not apply to circumstances in which the provision of services results in compensation directly to an individual VCU employee. In those cases, the employee should comply with the relevant Outside Professional Activity and Employment Policy, Research and Continuing Education (Faculty Specific).
Noncompliance with this policy may result in disciplinary action up to and including termination. VCU supports an environment free from retaliation. Retaliation against any employee who brings forth a good faith concern, asks a clarifying question, or participates in an investigation is prohibited.
Who Should Know This Policy
Vice presidents, vice provosts, deans, directors, and department heads are responsible for knowing this policy and familiarizing themselves with its contents and provisions.
Financial business plan
Plan that details the anticipated revenue streams and quantifies annual revenue as well as all cost components including administrative overhead, space, and equipment.
Sale of goods and services
The exchange of property or services by the university with external customers for monetary consideration.
A university unit that provides goods or services primarily to other university departments on an ongoing basis at cost.
The Office of the Senior Vice President and CFO officially interprets this policy. The Office of the Senior Vice President and CFO is responsible for obtaining approval for any revisions as required by the policy Creating and Maintaining Policies and Procedures through the appropriate governance structures. Please direct policy questions to the Controller’s Office in the Office of the Senior Vice President and CFO.
Policy Specifics and Procedures
1. Initial Recommendation by the Dean or Department Head: The sale of goods and services must be initially reviewed by the dean or non-academic department head who will consider the following factors prior to recommending direct sale activity for approval by the provost, senior vice president of health sciences or senior vice president and chief financial officer:
- The goods or services represent the transfer of knowledge or expertise from the university to the public.
- The provision of goods or services substantially support the mission of the university and the applicable unit.
- The prices charged for the goods or services capture all direct and indirect costs of providing the goods or services.
- The goods or services are not commonly available or otherwise easily accessible in the public market.
2. Approval by the Office of the Vice President for Research and Innovation: The proposed sale of goods and services must be reviewed and approved by the Office of the Vice President for Research and Innovation before being reviewed by the Office of the Provost, Office of the Senior Vice President for Health Sciences or Office of the SVP and CFO. This review will evaluate whether it is more appropriate for this transaction to be processed through the Division of Sponsored Programs as a sponsored program. The following are circumstances in which the transaction should be processed as a sponsored program. These circumstances include but are not limited to:
- The university performs research for a third party under a fixed price or cost-reimbursement contract;
- The contract is for the performance of a clinical trial;
- The university performs services for the federal government or a department thereof (e.g., Department of Health and Human Services);
- The contract for the transaction is a sub-award;
- The contract is for services and requires the university to account for and return unspent funds;
- The university performs services that require prior approval or monitoring by a university institutional review board or committee;
- The contract provides funds for a training grant;
- The contract for services requires the university to provide cost sharing or matching funds.
- The university performs services for the Commonwealth of Virginia (or a department thereof) and the Commonwealth of Virginia desires that the contract be administered through DSP; or
- The contract provides federal funds to the university for a building or capital equipment project.
Other types of agreements that do not fall into the above categories may be recommended for processing through the Division of Sponsored Programs at the discretion of the Office of the Vice President for Research and Innovation. If a dean or department head disagrees with a recommendation, the final determination will be made by the Provost, SVP of Health Sciences and/or SVP and CFO after consulting with the dean or department head and the VPRI.
3. Approval by the Provost, SVP of Health Sciences or SVP and CFO:For agreements that are determined by the VPRI or his/her designee, not to be sponsored programs, if the requesting unit is an academic unit, the dean must seek approval by the Provost or the SVP of health sciences for the activity prior to requesting review of the rate proposal by the controller. If the requesting unit is a non-academic unit, it must seek approval to conduct the activity from the SVP and CFO.
4. Accountability and Operating Plans: The requesting unit must provide the following information when requesting a rate approval:
• Approval Form for New Revenue Generating Activities
• Financial business plan
• Demonstrate compliance with the Export Compliance and Research Security policy
• Controller initial review followed by subsequent reviews of rates every two years
5. Pricing and Tax Requirements
• The requesting unit and approving entities must take into account all direct and indirect costs of providing the goods and services as well as competitive price of such items in the public market.
• The activities cannot be conducted for the purpose of carrying on a trade or business and cannot be conducted in competition with taxable organizations. The only exception is activities conducted for the convenience of faculty, staff and students.
• As part of the review by the controller’s office, a determination will be made if the revenues from the activity are subject to unrelated business income tax (UBIT). If UBIT does apply the department chair or person responsible for the activity must provide annual financial reports to the controller for tax reporting purposes. Any taxes owed will be charged to the applicable unit.
• Generally, sales tax must be collected and remitted for sales of goods. This will be part of the tax review that is conducted.
6. Use of Contracts
• After the activity has been approved by the provost, VP of health sciences, or SVP and CFO, the unit must draft a contract that articulates the parties, activity, and fees. If the external entity provides the contract it still must follow the same reviews outlined in this policy.
• For recurring activities, units must work with the Office of University Counsel to develop a template. The unit must contact the Office of University Counsel at least four weeks prior to the first transaction. Once approved, this template may be utilized without additional legal review if the terms have not been substantially changed.
• For one-time or infrequent activities, units should work with the Office of University Counsel to develop an appropriate contract. The unit must contact the Office of University Counsel at least four weeks prior to the anticipated transaction.
7. Billing and Receipt of Funds (cashiering, accounts receivable, receipts)
• Billing must be based upon documented utilization in units that can be measured. Revenue generating units must maintain a published price list of all services or products available. All billing must be processed on timely basis, but no less frequently than monthly.
• Billing and receipt of funds must comply with the Cash Receipting policy.
• For external sales that will exceed $50,000 per year, the unit should consult with the controller’s office for assistance with the miscellaneous accounts receivable module in Banner and instructions for collections.
• The SVP and CFO may grant exceptions to the policy based on written justification.
1. VCU Policy: Financial Management of Service Centers
2. VCU Policy: Export Compliance and Research Security
3. VCU Policy: Cash Receipting
This policy supersedes the following archived policies:
|February 1991||Sale of Goods and Services|
|August 04, 2015||Sale of Goods and Services|
There are no FAQ associated with this policy and procedures.