Susan Strasser Manager, APS User Administration and Support

1
Proprietary Research Issues at the Advanced
Photon Source, Argonne National Laboratory

• Susan StrasserManager, APS User Administration
  and Support
• NUFO Annual MeetingJune 5, 2007Advanced Light
  Source, Berkeley, CA

2
Outline of Presentation

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

3
Industrial Users at the APS
4
Scope of Proprietary Research at the APS
In FY 2006, APS delivered 184,000 hours to
users, 7,000 for proprietary research
5
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)

6
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 didnt 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)

7
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 Argonnes 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.

8
IGs Take on Chicago Operations Office Reaction

• Adjustment of proprietary rates proposed by
  Argonne is NOT enough to achieve full cost
  recovery.
• Argonnes proposal to eliminate RD costs to
  optimize the beam for all users is NOT
  appropriate since proprietary users dont share
  research results.
• Full recovery of costs, including the proportion
  of RD costs that benefit proprietary users, IS
  necessary to avoid subsidy of private research.
• Recovery of funds from previous years IS
  appropriate.

9
Proprietary Rate Transition Schedule Proposed by
APS
222.91/hour
255.87/hour
10
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
• RD costs to optimize beam (related to
  accelerator or beamline instrumentation) should
  NOT be considered operating costs
• Agreed to seek a determination from DOEs Chief
  Financial Officer about Argonnes proposal to
  increase rates gradually and exclude RD costs
• IG contentions
• Reiterates that past rates were understated BUT
  agrees that Argonnes proposed rate adjustment
  and willingness for a CFO determination are good.

11
Stay Tuned

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