Circular No. A-25
Memorandum No. 1)
FOR HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
6. General Policy
8. Agency Repsonsibility
9. Disposition of Collections
10. New Activities
1. Purpose: The Circular establishes Federal policy regarding
fees assessed for Government services and for sale or use of Government
goods or resources. It provides information on the scope and types
of activities subject to user charges and on the basis upon which
user charges are to be set. Finally, it provides guidance for agency
implementation of charges and the disposition of collections.
2. Rescission: This rescinds Office of Management and Budget
Circular No. A-25, dated September 23, 1959, and Transmittal Memoranda
1 and 2.
3. Authority: Title V of the Independent Offices Appropriations
Act of 1952 (31 U.S.C. 9701); 31 U.S.C. 1111; and Executive Orders
No. 8248 and No. 11,541.
a. The provisions
of this Circular cover all Federal activities that convey special
benefits to recipients beyond those accruing to the general public.
The Circular does not apply to the activities of the legislative
and judicial branches of Government, or to mixed-ownership Government
corporations, as defined in 31 U.S.C. 9701.
b. The provisions
of the Circular shall be applied by agencies in their assessment
of user charges under the IOAA. In addition, this Circular provides
guidance to agencies regarding their assessment of user charges
under other statutes. This guidance is intended to be applied only
to the extent permitted by law. Thus, where a statute prohibits
the assessment of a user charge on a service or addresses an aspect
of the user charge (e.g., who pays the charge; how much is the charge;
where collections are deposited), the statute shall take precedence
over the Circular. In such cases (e.g., sale or disposal under Federal
surplus property statutes; or fringe benefits for military personnel
and civilian employees), the guidance provided by the Circular would
apply to the extent that it is not inconsistent with the statute.
The same analysis would apply with regard to executive orders that
address user charges.
c. In any
case where an Office of Management and Budget circular provides
guidance concerning a specific user charge area, the guidance of
that circular shall be deemed to meet the requirements of this Circular.
Examples of such guidance include the following: OMB Circular No.
A-45, concerning charges for rental quarters; OMB Circular No. A-130,
concerning management of Federal information resources; and OMB
Circular No. A-97, concerning provision of specialized technical
services to State and Local governments.
5. Objectives: It is the objective of the United States Government
a. ensure that
each service, sale, or use of Government goods or resources provided
by an agency to specific recipients be self-sustaining;
efficient allocation of the Nation's resources by establishing charges
for special benefits provided to the recipient that are at least
as great as costs to the Government of providing the special benefits;
c. allow the
private sector to compete with the Government without disadvantage
in supplying comparable services, resources, or goods where appropriate.
6. General policy: A user charge, as described below, will
be assessed against each identifiable recipient for special benefits
derived from Federal activities beyond those received by the general
public. When the imposition of user charges is prohibited or restricted
by existing law, agencies will review activities periodically and
recommend legislative changes when appropriate. Section 7 gives
guidance on drafting legislation to implement user charges.
a. Special benefits
when special benefits exist. When a service (or privilege) provides
special benefits to an identifiable recipient beyond those that
accrue to the general public, a charge will be imposed (to recover
the full cost to the Federal Government for providing the special
benefit, or the market price). For example, a special benefit
will be considered to accrue and a user charge will be imposed
when a Government service:
enables the beneficiary to obtain more immediate or substantial
gains or values (which may or may not be measurable in monetary
terms) than those that accrue to the general public (e.g.,
receiving a patent, insurance, or guarantee provision, or
a license to carry on a specific activity or business or various
kinds of public land use); or
provides business stability or contributes to public confidence
in the business activity of the beneficiary (e.g., insuring
deposits in commercial banks); or
is performed at the request of or for the convenience of
the recipient, and is beyond the services regularly received
by other members of the same industry or group or by the
general public (e.g., receiving a passport, visa, airman's
certificate, or a Custom's inspection after regular duty
the amount of user charges to assess.
Except as provided in Section 6c, user charges will be sufficient
to recover the full cost to the Federal Government (as defined
in Section 6d) of providing the service, resource, or good
when the Government is acting in its capacity as sovereign.
Except as provided in Section 6c, user charges will be based
on market prices (as defined in Section 6d) when the Government,
not acting in its capacity as sovereign, is leasing or selling
goods or resources, or is providing a service (e.g., leasing
space in federally owned buildings). Under these business-
type conditions, user charges need not be limited to the
recovery of full cost and may yield net revenues.
User charges will be collected in advance of, or simultaneously
with, the rendering of services unless appropriations and
authority are provided in advance to allow reimbursable
Whenever possible, charges should be set as rates rather
than fixed dollar amounts in order to adjust for changes
in costs to the Government or changes in market prices of
the good, resource, or service provided (as defined in Section
- In cases
where the Government is supplying services, goods, or resources
that provide a special benefit to an identifiable recipient and
that also provide a benefit to the general public, charges should
be set in accordance with paragraph (2) of Section 6a. Therefore,
when the public obtains benefits as a necessary consequence of
an agency's provision of special benefits to an identifiable recipient
(i.e., the public benefits are not independent of, but merely
incidental to, the special benefits), an agency need not allocate
any costs to the public and should seek to recover from the identifiable
recipient either the full cost to the Federal Government of providing
the special benefit or the market price, whichever applies.
- No charge
should be made for a service when the identification of the specific
beneficiary is obscure, and the service can be considered primarily
as benefiting broadly the general public.
to the direct recipient. Charges will be made to the direct recipient
of the special benefit even though all or part of the special benefits
may then be passed to others.
- Agency heads
or their designee may make exceptions to the general policy if
the provision of a free service is an appropriate courtesy to
a foreign government or international organization; or comparable
fees are set on a reciprocal basis with a foreign country.
- Agency heads
or their designee may recommend to the Office of Management and
Budget that exceptions to the general policy be made when:
the cost of collecting the fees would represent an unduly
large part of the fee for the activity; or
any other condition exists that, in the opinion of the agency
head or his designee, justifies an exception.
- All exceptions
shall be for a period of no more than four years unless renewed
by the agency heads or their designee for exceptions granted under
Section 6c(1) or the Office of Management and Budget for exceptions
granted under Section 6c(2) after a review to determine whether
conditions warrant their continuation.
for exceptions and extensions under paragraphs (2) and (3) of
Section 6c shall be submitted to the Director of the Office of
Management and Budget.
full cost and market price
- ``Full cost''
includes all direct and indirect costs to any part of the Federal
Government of providing a good, resource, or service. These costs
include, but are not limited to, an appropriate share of:
Direct and indirect personnel costs, including salaries and
fringe benefits such as medical insurance and retirement.
Retirement costs should include all (funded or unfunded) accrued
costs not covered by employee contributions as specified in
Circular No. A-11.
Physical overhead, consulting, and other indirect costs
including material and supply costs, utilities, insurance,
travel, and rents or imputed rents on land, buildings, and
equipment. If imputed rental costs are applied, they should
depreciation of structures and equipment, based on official
Internal Revenue Service depreciation guidelines unless
better estimates are available; and
(ii) an annual rate of return (equal to the average
long- term Treasury bond rate) on land, structures,
equipment and other capital resources used.
The management and supervisory costs.
The costs of enforcement, collection, research, establishment
of standards, and regulation, including any required environmental
Full cost shall be determined or estimated from the best
available records of the agency, and new cost accounting
systems need not be established solely for this purpose.
price" means the price for a good, resource, or service that
is based on competition in open markets, and creates neither a
shortage nor a surplus of the good, resource, or service.
When a substantial competitive demand exists for a good, resource,
or service, its market price will be determined using commercial
practices, for example:
(i) by competitive bidding; or
(ii) by reference to prevailing prices in competitive
markets for goods, resources, or services that are the
same or similar to those provided by the Government
(e.g., campsites or grazing lands in the general vicinity
of private ones) with adjustments as appropriate that
reflect demand, level of service, and quality of the
good or service.
In the absence of substantial competitive demand, market
price will be determined by taking into account the prevailing
prices for goods, resources, or services that are the same
or substantially similar to those provided by the Government,
and then adjusting the supply made available and/or price
of the good, resource, or service so that there will be
neither a shortage nor a surplus (e.g., campsites in remote
a. The general
policy is that user charges will be instituted through the promulgation
b. When there
are statutory prohibitions or limitations on charges, legislation
to permit charges to be established should be proposed. In general,
legislation should seek to remove restraints on user charges and
permit their establishment under the guidelines provided in this
Circular. When passage of this general authority seems unlikely,
more restrictive authority should be sought. The level of charges
proposed should be based on the guidelines in Section 6. When necessary,
- define in
general terms the services for which charges will be assessed
and the pricing mechanism that will be used;
fees will be collected in advance of, or simultaneously with,
the provision of service unless appropriations and authority are
provided in advance to allow reimbursable services;
where collections will be credited (see Section 9). Legislative
proposals should not normally specify precise charges. The user
charge schedule should be set by regulation. This will allow administrative
updating of fees to reflect changing costs and market values.
Where it is not considered feasible to collect charges at a level
specified in Section 6, charges should be set as close to that
level as is practical.
taxes are another means of charging specific beneficiaries for the
Government services they receive. New user charges should not be
proposed in cases where an excise tax currently finances the Government
services that benefit specific individuals. Agencies may consider
proposing a new excise tax when it would be significantly cheaper
to administer than fees, and the burden of the excise tax would
rest almost entirely on the user population (e.g., gasoline tax
to finance highway construction). Excise taxes cannot be imposed
through administrative action but rather require legislation. Legislation
should meet the same criteria as in Section 7b; however, it is necessary
to state explicitly the rate of the tax. Agency review of these
taxes must be performed periodically and new legislation should
be proposed, as appropriate, to update the tax based on changes
in cost. Any excise tax proposals must be approved by the Assistant
Secretary for Tax Policy at the Department of the Treasury.
d. When developing
options to institute user charges administratively, agencies should
review all sources of statutory authority in addition to the Independent
Offices Appropriations Act that may authorize implementation of
e. In proposing
new charges or modifications to existing ones, managers of other
programs that provide special benefits to the same or similar user
populations should be consulted. Joint legislative proposals should
be made, and joint collection efforts designed to ease the burden
on the users should be used, whenever possible.
f. Every effort
should be made to keep the costs of collection to a minimum. The
principles embodied in Circular No. A-76 (Performance of Commercial
Activities) should be considered in designing the collection effort.
proposals must be submitted to the Office of Management and Budget
in accordance with the requirements of Circular No. A-19. To ensure
the proper placement of user fee initiatives in the budget account
structure, agencies are encouraged to discuss proposals with OMB
at an early stage of development.
8. Agency responsibility: Agencies are responsible for the
initiation and adoption of user charge schedules consistent with
the policies in this Circular. Each agency will:
the services and activities covered by this Circular;
the extent of the special benefits provided;
c. Apply the
principles specified in Section 6 in determining full cost or market
price, as appropriate;
d. Apply the
guidance in Section 7 either to institute charges through the promulgation
of regulations or submit legislation as appropriate;
the user charges for agency programs biennially, to include: (1)
assurance that existing charges are adjusted to reflect unanticipated
changes in costs or market values; and (2) a review of all other
agency programs to determine whether fees should be assessed for
Government services or the user of Government goods or services.
Agencies should discuss the results of the biennial review of user
fees and any resultant proposals in the Chief Financial Officers
Annual Report required by the Chief Financial Officers Act of 1990;
that the requirements of OMB Circular No. A- 123 (Internal Control
Systems) and appropriate audit standards are applied to collection;
readily accessible records of:
- the services
or activities covered by this Circular;
- the extent
of special benefits provided;
- the exceptions
to the general policy of this Circular;
- the information
used to establish charges and the specific method(s) used to determine
- the collections
from each user charge imposed.
adequate records of the information used to establish charges
and provide them upon request to OMB for the evaluation of the
schedules and provide data on user charges to OMB in accordance
with the requirements in Circular No. A-11.
9. Disposition of collections:
a. Unless a
statute provides otherwise, user charge collections will be credited
to the general fund of the Treasury as miscellaneous receipts, as
required by 31 U.S.C. 3302.
proposals to permit the collections to be retained by the agency
may be appropriate in certain circumstances. Proposals should meet
the guidelines in Section 7b.
allow agency retention of collections may be appropriate when a
fee is levied in order to finance a service that is intended to
be provided on a substantially self-sustaining basis and thus is
dependent upon adequate collections.
the authority to use fees credited to an agency's appropriations
should be subject to limits set in annual appropriations language.
However, it may be appropriate to request exemption from annual
appropriations control, if provision of the service is dependent
on demand that is irregular or unpredictable (e.g., a fee to reimburse
an agency for the cost of overtime pay of inspectors for services
performed after regular duty hours).
- As a normal
rule, legislative proposals that permit fees to be credited to
accounts should also be consistent with the full-cost recovery
guidelines contained in this Circular. Any fees in excess of full-
cost recovery and any increase in fees to recover the portion
of retirement costs which recoups all (funded or unfunded) accrual
costs not covered by employee contributions should be credited
to the general fund of the Treasury as miscellaneous receipts.
10. New activities: Whenever agencies prepare legislative
proposals for new or expanded Federal activities that would provide
special benefits, the policies and criteria set forth in this Circular
11. Inquiries: For information concerning this Circular, consult
the Office of Management and Budget examiner responsible for the agency's
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