Cost Accounting Standard (CAS) Rules, Recharge Policy, Staff Training

The Client

As a major medical center and academic research institution, the University of California at San Francisco (UCSF) is a business-centered organization that provides education, research, and patient care.

“The cost of the contracts we put in place with (BearingPoint) was significantly lower than the cost of hiring would have been—approximately three times lower. As we like to say, it saved lives: mostly ours!”

— Eric Vermillion, Director for Budget and Financial Analysis, UCSF

The Challenge

Because UCSF relies heavily on federal contracts and grants to support its activities, there was cause for concern when the school found itself undergoing federal costing policy changes in the early 1990s. First, UCSF received the government mandate to implement new Cost Accounting Standard (CAS) rules. At the same time, the Department of Health and Human Services’ Office of the Inspector General uncovered several deficiencies in UCSF’s recharge service centers. To complicate matters, funding reductions had spurred a large number of staff departures from the campus’ Budget Office, depleting the office’s experienced cost accounting personnel.

UCSF needed help protecting the institution’s financial integrity for its federal grants and contracts, but had very limited resources to do so. In the end, UCSF decided to outsource, and asked BearingPoint to help with five tasks:

• Revise and implement a recharge policy.
• Create and implement CAS compliance policies and guidelines.
• Identify the entire universe of recharge service centers.
• Analyze and review each recharge service center.
• Train campus personnel on the recharge service centers.

The Solution

After narrowing their search for an outsourcing consultant to two of the “Big Six,” UCSF chose BearingPoint to help. We worked with campus personnel to form a CAS Team and a Recharge Team—each made up of BearingPoint and UCSF personnel.

Two years later, each of UCSF’s goals had been met. The recharge policy was rewritten and updated, and classes were taught to familiarize personnel with CAS. Management was pleased to find not only new policies written and implemented, but all personnel trained to a level of comfort.

The Benefits

According to Eric Vermillion, UCSF’s Director for Budget and Financial Analysis, “The cost of the contracts we put in place with (BearingPoint) was significantly lower than the cost of hiring would have been—approximately three times lower. As we like to say, it saved lives: mostly ours!” In addition to cost savings, Vermillion says having BearingPoint on board for these projects “allowed us to come out of this with no hangover. Once everyone was educated on what they have to do, I don’t need a lot of cost accounting experts on my staff. After the recharge review is complete, I need only one cost accounting expert and one business management expert on staff. Without (BearingPoint) providing that knowledge, I would have had to hire—and now lay off—at least six or seven people. This way, there are no layoffs and no hard feelings.”
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