Regent Policy Documents

SECTION 12: COMPETITION WITH THE PRIVATE SECTOR

12-1 COMPETITION WITH THE PRIVATE SECTOR

(Formerly 89-1)

The University has a responsibility to consider very carefully any decision to provide products and services to students, faculty, staff, private organizations, or the public at large, particularly when the products and services to be provided might compete with similar products or services offered by the private sector. Some degree of competition between the University and the private sector may be unavoidable, even when the University is engaged in the narrowest pursuit of its instructional, research and public service missions. However, in all cases where a potentially competitive situation exists, the University must consider the concerns of affected private businesses and act with sensitivity and good faith regarding those concerns.

This policy establishes a competition review committee at each institution composed of representatives of the University, private sector, and public-at-large. In addition, the policy defines criteria to be used in evaluating the appropriateness of University sales activities and establishes principles for pricing those products and services that University of Wisconsin System Institutions may offer.

1. Protocol for Monitoring Institutional Competitive Activities:

(a) Each institution is to establish a committee to review specific issues of competition using the criteria and pricing principles defined in this policy. The chancellor will appoint the committee composed of representatives of the university, the private sector, and the general public. Faculty, student, and staff appointments should be made upon the recommendation of the appropriate University governance structures.

(b) The chancellor will refer to the institutional competition review committee all major new competitive activities. In addition, s/he shall also refer all ongoing activities whose appropriateness or pricing has been questioned. Under normal circumstances, the chancellor's referral to the competition review committee's chairperson will be made within two weeks after the chancellor is first informed of a complaint or proposal brought forward by a member of the private sector or general public. The chancellor will send a letter to the person making the proposal or complaint that states the issue has been referred to the competition review committee and which includes as an enclosure a copy of the Board of Regents' policy.

(c) Upon referral from the chancellor, the chairperson of the competition review committee will schedule a meeting of the committee at the earliest possible convenience of the committee's members. The committee's charge will be to:

i. Examine the issues involved in the institution offering major new competitive activities and ongoing activities whose appropriateness has been questioned.

ii. Review the pricing structure of major new competitive activities and ongoing sales activities whose appropriateness or pricing has been questioned.

iii. Recommend to the chancellor, in a timely manner, a course of action which specifically addresses (a) whether the activity should be implemented or continued and (b) whether the pricing of the products and services is appropriate.

(d) The chancellor will determine whether the institution will become involved with the new activity or continue an ongoing activity and whether changes should be made to the pricing of products and services. Under normal circumstances, the chancellor will announce his/her decision within two weeks after receiving the recommendation of the committee. The chancellor will send a letter explaining his/her decision to the person making the proposal or complaint. The chancellor's decision may be appealed to the University of Wisconsin System President. If a satisfactory resolution cannot be developed, an appeal can be made to the Board of Regents by addressing a letter to the Secretary of the Board.

2. Criteria for Judging the Appropriateness of Competitive Activities: All activities competitive with the private sector must be integral to the fulfillment of the institution's instructional, research, or public service missions or must meet one of the following four criteria:

(a) There are compelling reasons of economic efficiency. Economic efficiency implies that University resources can be made available to the broader community at relatively little additional cost to the institution. For example, the use of underutilized University facilities such as stadiums and auditoriums for non-university functions such as high school graduation ceremonies and sporting or other entertainment events may benefit the University as well as the private sector and the community.

-or-­

(b) The product or service is unavailable elsewhere in the community. Unavailability may be defined in terms of quality or quantity of the product or service. For example, the sale of research by-products that would otherwise be unavailable in the community may benefit both the University and the community.

-or-­

(c) Providing the product or service is a major convenience to the campus community including students, faculty, staff, and other members of the public participating in institutional activities. Convenience would typically be defined in geographic terms, although other factors could also be considered (e.g., hours of operation or private sector providers). Familiar examples of operations conducted primarily to support campus life are on-campus recreational facilities and bookstores.

-or­

(d) The University's offering of the product or service is of major importance to maintaining the quality of the institution. Most crucial to maintenance of quality are efforts that impact positively on student, faculty, and staff recruitment and retention. For example, the operation of quality cultural and health facilities such as art museums and the clinical cancer center are important for the maintenance of quality.

Where required by a federal or state mandate, other activities that compete with the private sector are also permitted.

3. Pricing Policies: Products or services offered by the University of Wisconsin System Institutions shall normally be priced to recover, at a minimum, all costs related to producing the product or service, including all applicable direct and indirect costs as determined by basic cost accounting principles. Exceptions to full cost recovery pricing are permitted (or are required) under the following circumstances:

(a) If the activity is integral to the fulfillment of the institution's instructional, research or public service missions, prices may be established at less than full cost recovery upon approval by the chancellor.

(b) If underutilized University facilities are made available for non-university events primarily for the benefit of the private sector or the community, prices may be set below full cost recovery.

(c) If underutilized University facilities are made available for non-university events primarily for fund-raising purposes, prices may be set to include a profit above the full recovery of costs.

(d) If products and services are offered for the convenience of students, faculty, staff or prices, unless a higher price is required to ensure full cost recovery.

In addition, if subsidized pricing is mandated or permitted by federal law or state statute, prices should be set accordingly.

For any new activity presented to the competition review committee, full documentation of costs and pricing determinations must be included. The committee will review the pricing structure for compliance with the above criteria, taking into consideration the impact of the competition with the private sector. For purposes of implementing these pricing policies, direct costs include, but are not limited to, all salaries, fringe benefits, supplies, and capital directly attributable to the sale of the product or service. Indirect costs include, but are not limited to, depreciation, utilities, municipal services charges, interest, support services, custodial services, etc., allocable to the sale of the product or service. As an alternative to calculating indirect costs for individual sales operations, the federal indirect cost rate may be used.

4. This policy and its implementation should be reviewed after it has been operational for three years.

History: Res. 5153 adopted 2/10/89; amended by Res. 5404, 2/90.


Return to the policy index

The Regent Policy Documents were adopted and are maintained pursuant to the policy-making authority vested in the Board of Regents by Wis. Stats. § 36. The Regent Policy Documents manifest significant policies approved by the University of Wisconsin System Board of Regents. This document is a ready reference for those charged with carrying out these policies. Unless noted otherwise, associated documents and reports may be obtained from the Office of the Secretary of the Board of Regents, 1860 Van Hise Hall, 1220 Linden Drive, Madison, WI 53706, ph 608-262-2324. http://www.uwsa.edu/bor/policies/