Financing And Service Charges

(1) The State Agency is a service organization whose function is to acquire and distribute all available Federal surplus property needed for the eligible recipients in the State. The State Agency does not receive any appropriated funds from either Federal or State sources for operation of the Agency. The total costs for operation must be absorbed by receipts from service charges assessed on items distributed and sales and compliance proceeds. Such charges will be fair and equitable in relation to the service performed and the direct and indirect costs for operation. If any appropriated funds are made available at a later date, they will become part of the capital reserve fund. In general, the assessment of service charges are related to the following factors: (a) Expenses of operation. 1. Administrative costs including salaries and fixed charges. 2. Warehouse operating expenses. 3. Transportation expenses. 4. Property screening expenses. 5. Compliance and utilization review expenses. 6. Costs for facility construction, maintenance, and repair. (b) Original government acquisition costs. (c) Condition and potential of property. (d) Costs for repair and rehabilitation of property as needed. (2) Due to the infinite variety of available property, varying condition, obsolescent factors, and potential use as an item or for parts or material content, the following chart has been developed to assure fair and reasonable service charges: CHART FOR COMPUTING SERVICE AND HANDLING CHARGES a b c PERCENT OF A/C ACQUISITION COST SERVICE CHARGE RANGE 0 - 25% Up to - $200 Up to - $50 0 - 15% $200 - $1,000 Up to - $150 0 - 10% $1,000 - $5,000 Up to - $500 0 - 5% $5,000 - $20,000 Up to - $1,000 0 - 3% $20,000 - $35,000 Up to - $1,000 DISTRIBUTION OF FEDERAL SURPLUS PROPERTY CHAPTER 0690-01-01 WITHIN THE STATE OF TENNESSEE 0 - 1% $35,000 - $100,000 Up to - $1,000 Open Over $100,000 Negotiable Direct Pick-Up - Charges on property transferred direct from Holding Agency to a donee will be approximately ½ of the percentage of column a. Exceptions: (a) Rehabilitated property - Direct costs for rehabilitating property will be added to the charge. (b) Overseas property - Additional costs for screening and returning property will be added. (c) Extraordinary and/or unusual transportation charges - Charges on property with “out-of- the-ordinary” or “unusual transportation cost” will be added. (d) Special handling - An additional charge may be made for dismantling, packing, crating, shipping, delivery and other extraordinary charges. (e) Adjustment in acquisition cost - When the acquisition cost of an item is unrealistic, an adjustment will be requested from the GSA Region Office prior to assessment of service charge. (f) Lotted property - Property issued by pound, in accordance with State Agency inventory system, will be exempt from the above schedule. Service charges will be assessed on price per pound basis. (3) The above schedule will be re-evaluated periodically for comparison of operating expenses with income receipts. When it is evident that operating costs exceed operating income, the percentage of A/C (Col. a) will be adjusted accordingly. (4) In recognition of reduced agency expenses relating to such factors as loading, unloading, transportation, and screening, recipients making direct pick-up of surplus property from the holding agency will be assessed service charges at a lower rate than property transferred from the State Agency distribution centers. Normally, as a general rule, the rates for direct pick-up will be reduced by 50 percent or more when compared to similar items transferred from the Agency distribution centers. Since the screening process is inextricably involved in the basic function of the State Agency—to make fair and equitable distribution of all available property—the savings on screener expenses would not be in as direct proportion as other factors such as transportation, loading, and unloading. A further reduction may be made for direct donee screening. (5) The funds accumulated from service charges, appropriated funds, sales and compliance proceeds, or any other source, including funds acquired prior to October 17, 1977, will be deposited with the State Treasury in a specific fund designated for the State Agency, and are to be used solely to cover direct and indirect costs of the State Agency’s operation, to purchase necessary equipment, to construct and maintain facilities as required, to rehabilitate donable property items, to purchase replacement parts for donable property items, and to maintain a reasonable working capital reserve, not to exceed $100,000 over the operating cost of the preceding year. The service charges can be spent in acquiring or improving office space or distribution facilities. The State Agency has the authority subject to the approval of the Commissioner of the Department of General Services and real property regulations of the State of Tennessee. When such facilities are sold or otherwise disposed of, funds will revert to the capital reserve fund subject to the approval of the Commissioner of the Department of DISTRIBUTION OF FEDERAL SURPLUS PROPERTY CHAPTER 0690-01-01 WITHIN THE STATE OF TENNESSEE General Services and real property regulations of the State of Tennessee. Any excess in working capital reserve will be reduced by reducing service charges to donees. The State of Tennessee does not permit the State Agency to invest funds.