Subpart V - Procedures for determining reimbursement expenses and concep...

United States
Department of
Agriculture

FEDERAL CROP
INSURANCE
CORPORATION
BOARD OF DIRECTORS

Federal Crop
Insurance
Corporation

FCIC-17040 (06-2017)

APPROVED
PROCEDURES FOR
REIMBURSEMENTS &
DETERMINATION OF
REASONABLENESS
RELATED TO
REIMBURSEMENT
EXPENSES
FOR
CONCEPT PROPOSALS,
508(h) SUBMISSIONS &
USER FEE REQUESTS

RISK MANAGEMENT AGENCY
KANSAS CITY, MO 64133
TITLE: APPROVED PROCEDURES NUMBER: FCIC-17040
FOR REIMBURSEMENTS &
DETERMINATION OF
REASONABLENESS RELATED TO
REIMBURSEMENT EXPENSES FOR
CONCEPT PROPOSALS, 508(h)
SUBMISSIONS & USER FEE
REQUESTS

EFFECTIVE DATE: Upon Publication ISSUE DATE: June 13, 2017
SUBJECT:

OPI: Product Management

Provides guidance for submitters, RMA, APPROVED:
and the Board regarding reimbursement
RICHARD
requests and the determination of
/s/
FLOURNOY
reasonableness.
Deputy Administrator for Product
Management
Digitally signed by RICHARD FLOURNOY
DN: c=US, o=U.S. Government,
ou=Department of Agriculture,
cn=RICHARD FLOURNOY,
0.9.2342.19200300.100.1.1=12001002203
518
Date: 2017.06.13 14:57:03 -05'00'

REASONS FOR ISSUANCE
Based on experience with reimbursements, the Board identified the need to clarify and enhance the
requirements for reporting costs for the purposes of determining reasonableness of expenses in
accordance with 7 C.F.R. § 400.712. This revised version incorporates feedback received from two
public comment periods.

June 2017

FCIC-17040

TP1

APPROVED PROCEDURES FOR REIMBURSEMENTS & DETERMINATION OF
REASONABLENESS RELATED TO REIMBURSEMENT EXPENSES FOR CONCEPT
PROPOSALS, 508(h) SUBMISSIONS & USER FEE REQUESTS
CONTROL CHART
Approved Procedures for Reimbursements & Determination of Reasonableness Related to
Reimbursement Expenses For Concept Proposals, 508(H) Submissions & User Fee Requests
TP
TC
Text
Exhibit
Exhibit
Directive
Date
Page(s)
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Page(s)
Number
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Entire Handbook
April 2017
FCIC-17040
Insert
1-2
Current
Index

Entire Handbook
1-2
1-11
1
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12-14
15-18
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20-21

June 2017

FCIC-17040

June 2017

FCIC-17040

FILING INSTRUCTIONS
This handbook replaces FCIC-17040, Approved Procedures for Reimbursements and Determination of
Reasonableness Related to Reimbursement Expenses for Concept Proposals, 508(H) Submissions and
User Fee Requests, dated April 2017. This handbook is effective upon publication.

June 2017

FCIC-17040

TP2

APPROVED PROCEDURES FOR REIMBURSEMENTS & DETERMINATION OF
REASONABLENESS RELATED TO REIMBURSEMENT EXPENSES FOR CONCEPT
PROPOSALS, 508(h) SUBMISSIONS & USER FEE REQUESTS
TABLE OF CONTENTS
PAGE NO.
PARAGRAPH
1
2
3
4

Basis, purpose and applicability ............................................................................................. 1
Format ..................................................................................................................................... 1
Timing of Advance Payment Requests, Reimbursement Requests and User Fee Requests .. 1
Budget Requirements for Reimbursements and User Fees: Estimated Costs and
Actual Costs ............................................................................................................................ 4
5
User Fee Requests................................................................................................................. 10
6
Appeal Process...................................................................................................................... 11
7-10 (Reserved)

EXHIBITS
1 Requests for Reimbursement or Fees:
2 Requests for Reimbursement or Fees:
3 Requests for Reimbursement or Fees:
4 Requests for Reimbursement or Fees:

June 2017

Expected Cost Budgets ............................................ 122
Actual Cost Budgets ................................................ 155
Other Costs ................................................................ 19
Tracked Costs ............................................................ 20

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PAGE INTENTIONALLY LEFT BLANK

June 2017

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1

2

Basis, purpose and applicability
(1)

The Federal Crop Insurance Corporation Board of Directors (Board) will determine the
“reasonableness” of requests for: (1) advance payments for Concept Proposals; (2)
reimbursement of research and development costs; (3) reimbursement of maintenance costs;
and (4) user fees approved by the Board in accordance with section 522(b) of the Federal
Crop Insurance Act (Act) and 7 C.F.R. part 400, subpart V - Submission of Policies,
Provisions of Policies, Rates of Premium, and Non-Reinsured Supplemental Policies
(Submission Regulations), and these Reasonableness Procedures.

(2)

The Board will approve the amount of reimbursement, advance payment, or user fee that it
determines to be reasonable.

(3)

Based on experience with various reimbursement requests related to policies and products
submitted for approval by the Board under section 508(h) of the Act, the Board has
identified the need to clarify the requirements for reporting costs for the purposes of
determining the reasonableness of reimbursement requests, in accordance with section
400.712 of the Submission Regulation. These procedures are issued to provide
transparency and consistency for both the submitter and the Board.

Format
All budgets for estimated costs and actual costs must be submitted in Excel sheet formats
consistent with the requirements of the Exhibits and these procedures. Submissions that do not
include required information in accordance with these Reasonableness Procedures will be
returned to the submitter.

3

Timing of Advance Payment Requests, Reimbursement Requests and User Fee Requests

(1)

Requests for advance payments are part of the submission of a Concept Proposal, which
can be made during any submission window. Submission windows are the first five
business days of January, April, July, or October, in accordance with section 400.703(a).

(2)

In accordance with section 400.712(b)(1)(i), requests for reimbursement of research and
development costs must be made on or before August 1 immediately following the date the
508(h) product was released to approved insurance providers (AIPs) through publication of
the policy materials on the RMA website.
Example 1:

June 2017

A new product was released to the public through publication on RMA’s
website on July 15, 2016. A request for research and development costs
should be made by August 1, 2016 so reimbursement can be considered by
the Board in September 2016.

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Timing of Advance Payment Requests, Reimbursement Requests and User Fee Requests
(Continued)

Example 2:

(3)

In accordance with section 400.712(b)(1)(ii), requests for reimbursement of maintenance
costs, if such costs are incurred, may be made for up to four years, beginning the year after
the research and development costs are paid, and requests must be submitted on or before
August 1.
Example:

(4)

A new product was released to the public through publication on RMA’s
website on September 15, 2016. A request for research and development
costs should be made by August 1, 2017 so reimbursement can be
considered by the Board in September 2017.

Research and development cost reimbursement was paid to a private product
submitter in September 2017. A reimbursement request for the first year’s
maintenance costs would be made by the submitter by August 1 of 2018 for
payment in September 2018. This process would be repeated August 1,
2019 for the 2nd year’s maintenance payment, August 1, 2020 for the 3rd
year’s maintenance payment, and August 1, 2021 for the 4th year’s
maintenance payment.

If a submitter misses the August 1 deadline for submitting a request for reimbursement or
the request for reimbursement is returned for failure to comply with these Reasonableness
Procedures, there will be insufficient time to review an untimely or resubmitted request
prior to the September Board meeting. In accordance with section 400.712(b)(2), no
reimbursement may be made in any year before September 15. Therefore:
(a)

If the submitter missed the August 1 deadline or had the request for reimbursement of
research and development returned, the submitter may request reimbursement for
research and development costs incurred as of the original August 1 deadline by the
August 1 deadline for the following year. This request may separately include the
costs incurred after the original August 1 deadline. However, the submitter will only
be entitled to an additional three years of maintenance.
Example:

June 2017

A submitter submits a request for reimbursement for research and
development costs on August 1, 2017. The request is incomplete and is
returned to the submitter. The Board cannot consider this request in the
September 2017 Board meeting and no research and development
reimbursement can be made before September 2018. However, research
and development costs incurred by August 1, 2017 and not reimbursed in
September 2017 must be accounted for separately from the maintenance
costs incurred after August 1, 2017. The payment will be considered
reimbursement for research and development but the submitter will only
be eligible for three more years of maintenance.

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Timing of Advance Payment Requests, Reimbursement Requests and User Fee Requests
(Continued)

(5)

(b)

If the submitter missed the August 1 deadline or had the request for reimbursement of
maintenance costs for the first, second or third year of the maintenance period
returned, the submitter may request reimbursement of the missed year’s maintenance
costs by August 1 the following year and this request may separately include costs
incurred, or include both years of the maintenance period. This maintenance payment
will be considered two years of maintenance.

(c)

If the submitter missed the August 1 deadline or had the request for reimbursement of
maintenance costs in the last year of the maintenance period returned, the submitter
may request reimbursement of the last year’s maintenance costs by August 1 the
following year, but this request may only include costs incurred as of the original
August 1 deadline for the last year of maintenance.

If a submitter wishes to continue maintenance of the product after the fourth year of
maintenance reimbursement, the submitter must provide FCIC notification, within the time
frame stated in this subsection, indicating their intent to continue ownership and
maintenance of the product. Included with the notification, the submitter must submit a
request for a proposed user fee to be charged to the AIPs for maintaining the product, if
applicable. The user fee is paid by AIP’s on a per policy or percentage of premium basis,
and they will reimburse the submitter for costs directly related to maintenance of the
product.
(a)

RMA will send submitters a certified letter, no later than 60 days prior to the deadline
specified in this subsection, reminding them of their obligation to provide FCIC
notification of their intent to maintain the product and their user fee request.

(b)

In accordance with section 400.712(l), notification of continued maintenance and a
proposed user fee must be provided by the submitter in writing to FCIC no later than
180 days prior to the end of the last reinsurance year in which maintenance costs will
be paid (December 31st of the prior calendar year if the reinsurance year is July 1June 30).
Example:

(c)

June 2017

The fourth maintenance cost reimbursement will be considered by the
Board in September 2017, and the reinsurance year is July 1, 2016, to
June 30, 2017. The 180 day notice requirement means that the submitter
must notify the Board by December 31, 2016, if the submitter intends to
continue to maintain the policy. The information necessary to determine
a reasonable user fee in accordance with section 5 must be submitted at
the same time.

In accordance with section 400.712(l)(1)(ii)(2), if notification: (1) is not provided by
the time required in subsection (4)(b); or (2) the submitter provides notice of intent to
transfer ownership of the product to RMA, then product ownership will automatically
transfer to RMA beginning with the next reinsurance year. In accordance with section
522(b)(5) of the Act, all previous research, development, and maintenance payments
constitute payment in full for the property rights to the product, and no additional
funds will be owed to the submitter if the product transfers to RMA.
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Timing of Advance Payment Requests, Reimbursement Requests and User Fee Requests
(Continued)
(d)

(e)
4

Beginning August 12, 2016, in accordance with section 400.712 (l)(11), user fee
amounts must be reviewed by the Board every two years, and at any time a significant
change is made to the approved 508(h) product. Submitters must meet the same
deadline provided in subsection (4)(b). If the submitter fails to provide timely
notification, the Board may take such actions as authorized under section 400.712 and
these procedures. If a product had a user fee in place for the 2015 or prior crop years,
the submitter is required to bring their user fee back to the Board for review by:
(i)

Dec 31, 2017, if the fee amount approved did not include a maximum dollar
amount; or

(ii)

Dec 31, 2018, if the fee amount approved did include a maximum dollar
amount.

RMA will provide the user fee information to AIPs under its normal distribution
process not later than April 1.

Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs
Unless otherwise specified, this section applies to: (1) Concept Proposals; (2) 508(h)
submissions; (3) reimbursement requests for research and development costs; (4) reimbursement
requests for maintenance costs; and (5) requests for User Fees.
(1)

June 2017

In accordance with section 400.712(f), submitters are required to support all costs claimed
with itemized statements including supporting documentation (copies of contracts, billing
statements, time sheets, travel vouchers, accounting ledgers, etc.). Further, section
400.712(f)(1) requires that actual costs be submitted and that only those costs directly
related to research and development, or maintenance will be reimbursed. Within these
regulatory requirements, the following procedures provide guidance to submitters.
(a)

Allowable costs are limited to those specified in section 400.712(f)(2).

(b)

Each submitter must provide detailed information regarding the work done for the
hours worked for each person and for each work category.

(c)

The supporting documentation for actual costs claimed must be verifiable and may be
subject to audit at the request of the Board. Submitters are required to certify to the
accuracy of their submitted costs. In accordance with section 400.705(k), submission
of false information for reimbursement could subject the submitter to administrative,
civil or criminal actions.

(d)

The submitter will be provided the opportunity to explain to the Board the wage rates,
classifications, costs, hours, and other pertinent information submitted to support their
estimated or actual costs for reimbursement.

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Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs (Continued)
(e)

Consistent with section 400.712(f)(2)(i)(C), wages and benefits are capped at two
times the hourly wage rate plus benefits as provided by the Bureau of Labor Statistics
(BLS) for that year. If actual wage rates exceed that amount, actual wage rates should
be shown in the Actual Cost Budget that matches the submitter’s records, and any
capping will be handled at a later step. If wage rates are less than the capped amount,
they should be reported at the actual wage rate.

(f)

If benefits are not paid to the person conducting the work on the product, they cannot
be claimed for reimbursement.

(2)

In accordance with section 400.712(f)(1), actual costs submitted may be adjusted at the sole
discretion of the Board. In addition, section 522(b)(6) of the Act and section 400.712(f)
provide that reimbursements will be adjusted based on the complexity of the policy or plan
of insurance and scope.

(3)

Under section 400.712, the Board must assess whether the concept or submission will likely
produce a viable and marketable product throughout the approval process (See sections
400.701, 400.705(a), 400.706(a), 400.706(b)(2)(ii)(G) and (K), 400.706(c)(4),
400.706(k)(1)(ii), and 400.706(l)(1)).

(4)

(a)

The Board has determined that excessive or recurring cost overruns, where actual
costs exceed the estimated costs, are a legitimate factor in determining the viability of
a product as well as the reasonableness of the claimed costs.

(b)

To assess costs and cost overruns, budgets providing future estimated costs are
necessary in addition to the reporting of actual costs incurred to date.

(c)

Cost overruns do not necessarily mean that a product is not viable or the costs are not
reasonable. Submitters will have the opportunity to explain to the Board the basis for
the cost overruns, and why a cost overrun is not indicative that the product is not
viable or the costs reasonable.

To assist in its assessment of viability and reasonableness, the Board is requiring
standardized budgets in the form of Estimated Cost Budgets and Actual Cost Budgets based
on the following and in accordance with the attached Exhibits:
(a)

Section 400.712(f)(2)(i)(A) requires that costs per employee be listed separately with
one line per employee. The submitter should list each person on a separate line.
Example: Mary works primarily on pricing data analysis but also completes the
travel arrangements, which make up de minimis amount of her total
duties. Mary is an economist so the work will be listed on one line along
with her economist wage classification, wage rate including benefits,
hours worked, etc. as required by these procedures.

(b)

June 2017

In accordance with section 400.712(f)(2)(i)(B), wage rates must be commensurate
with the primary tasks performed.
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Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs (Continued)

(5)

(c)

Section 400.712(f)(2)(i)(C) states that the maximum wage rates and benefits cannot
exceed two times the hourly wage rates and benefits provided by the BLS for that
year.

(d)

The following is a listing of the typical BLS job classifications for the research,
development, and maintenance of a product as specified in the Submission
Regulation.

(e)

The Board may change the job classification designated by the submitter if it
determines it is not appropriate for the work performed.

The submitter must provide separate Estimated Cost Budgets and Actual Cost Budgets
within the following specified timeframes:
(a)

(b)

With a Concept Proposal, the submitter shall separately provide:
(i)

An Actual Cost Budget showing the actual costs incurred as of the date when the
Concept Proposal is submitted to the Board; and

(ii)

An Estimated Cost Budget showing the costs expected to complete the
submission, including the full 508(h) submission package

If applicable, after receipt of comments from RMA and the Board regarding the
Concept Proposal, a separate accounting must be provided of the actual costs incurred
to make the needed corrections or revisions resulting in a Concept Proposal that is
complete and of sufficient quality to send for expert review.

.
June 2017

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Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs (Continued)
(c)

With a 508(h) submission to the Board, the submitter shall provide:
(i)

An Actual Cost Budget showing the actual costs incurred to date in the research
and development of the 508(h) submission; and

(ii)

An Estimated Cost Budget showing the costs needed to implement the
submission.

(d)

If applicable, after receipt of comments from RMA and the Board regarding the
508(h) submission, the submitter shall separately account for the actual costs to make
the corrections or revisions necessary to make the 508(h) submission complete and of
sufficient quality to send for expert review. These actual costs must be provided in
the revised Actual Cost Budget submitted with the revised 508(h) submission.

(e)

At the Board meeting where the submission is considered for approval by the Board,
the submitter shall provide:

(f)

(i)

An Actual Cost Budget showing the actual costs incurred as of the Board
meeting, including the amount of time spent responding to reviews from expert
reviewers, RMA, and the Board; and

(ii)

An Estimated Cost Budget showing the revised budget of the estimated costs to
implement the submission.

As a prerequisite for the Board’s consideration, with the request for reimbursement of
research and development, the submitter shall provide:
(i)

An Actual Cost Budget showing the actual costs incurred to date in the research
and development of the 508(h) submission, including all supporting
documentation requested in section 4(1);

(ii)

An Actual Cost Budget showing the actual costs incurred to implement the
508(h) submission; and

(iii) An Estimated Cost Budget showing the estimated costs for maintenance of the
product, including any costs related to:
(A) Any anticipated expansion;
(B) Anticipated changes or updates to policy materials;
(C) The generation of premium rates;
(D) The determination of prices; and
(E) Any other costs that the applicant anticipates will be requested for
reimbursement of maintenance costs or expenses.

June 2017

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Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs (Continued)
(g)

(h)

As a prerequisite for the Board’s consideration, with each year’s request for
maintenance reimbursement, the submitter shall provide:
(i)

An Actual Cost Budget showing the actual maintenance costs incurred,
including a separate break out and identification of any tasks for maintenance
that are one-time costs and will not be repeated the subsequent year, such as an
expansion, major policy change, etc., including all supporting documentation
requested in section 4(1).; and

(ii)

An Estimated Cost Budget showing the estimated costs for the next year of
maintenance.

To assist the Board and the submitter in tracking costs and determining
reasonableness of costs, the submitter is required to notify the Board in writing when
90 percent of the estimated costs in the Estimated Cost Budget provided with the
Concept Proposal, submission, or maintenance request have been expended, and
actual costs are expected to be incurred that will exceed the original Estimated Cost
Budget.
(i)

The written notice provided by the submitter must include:
(A) A new Estimated Cost Budget for completion of the work; and
(B) A detailed explanation and justification as to why the total costs will be
higher than the budgeted amount.

(ii)

The Board will review the notice and provide feedback as appropriate.

(iii) Any costs exceeding the original estimate of costs does not mean those costs are
not reasonable or justified. In the Board meeting, the submitter will be provided
an opportunity to explain to the Board the basis for the increased estimated
costs. After discussion with the submitter, the Board may take actions it deems
appropriate regarding the necessity of additional expenditures and the viability
of the product.
(iv) The Board understands that during the development process, unexpected issues
may arise causing costs to escalate, so this requirement is not intended to
discourage the efforts of submitters in bringing products to fruition. Reasonable
cost overruns generally involve expenses that could not be anticipated at the
time the budget was submitted, or improvements that are discovered during the
research or review process.

June 2017

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Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs (Continued)
Example 1: A product relies on NASS data. During the development process
NASS announces that it will no longer collect the data. The
submitter must do additional research to discover an alternative
data source. The research will increase the budget for the project
to an amount higher than the Board approved amount so the
submitter takes a revised actual and estimated budget to the Board
for discussion.
Example 2: The product proposal was to offer the new product in 3 states.
However, after consultation with the growers, the submitter
believes it will be prudent to add two more states to better serve
producers and test the product. Additional listening sessions will
be needed in the added states to gain the necessary underwriting
information. The research will increase the budget for the project
to an amount higher than the Board approved amount so the
submitter takes a revised actual and estimated budget to the Board
for discussion.
(v)

(6)

In accordance with section 400.705(j) of the submission regulation, failure of
the submitter to provide the required notice to the Board may result in the denial
of reimbursement in amounts that exceed the amount contained in the original
Estimated Cost Budget.

If RMA, expert reviewers, or the Board identify specific mistakes, errors or flaws within
the submission that require correction, these mistakes, errors or flaws are not reimbursable
in accordance with section 400.712(f)(3)(xii). The final determination as to what is
considered a mistake, error or flaw requiring a correction that may not be reimbursable will
be made by the Board. Before such a decision is made, the submitters will be made aware
of any mistake, error or flaw and have an opportunity to respond.
(a)

The following types of changes will not be considered to be mistakes, errors or flaws
and are expected to occur in the normal research, development and maintenance
process:
(i)

Minor or regular adjustments to the policy, premium rates, prices, or any other
part of the submission;

(ii)

Adoption of suggested reviewer improvements, although the original proposal,
submission, or methods were correct, but the suggested changes or
modifications would result in an improved product;

(iii) Changes due to RMA or Board requests to meet the needs of FCIC; and
(iv) Similar changes, as determined by the Board.

June 2017

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Budget Requirements for Reimbursements and User Fees: Estimated Costs and Actual
Costs (Continued)
(b)

The following changes will be considered to be mistakes, errors or flaws and may not
be reimbursable:
(i)

Changes made to correct the use of a method or methodology for which the
Board has previously not approved or which is not supported by the available
data;

(ii)

Changes made to correct mathematical or other obvious errors to the extent that
would not normally be expected with professional quality work;

(iii) Changes made to correct incorrect calculations or use of calculations that do not
match the policy or data, or that does not match the policy coverage;
(iv) Changes incurred to make a Concept Proposal or 508(h) submission complete
and of sufficient quality for review;
(v)

Incorrect materials provided to RMA for the maintenance of a product; and

(vi) Similar errors, as determined by the Board.
(c)

5

Costs to correct mistakes, errors or flaws identified by RMA, the expert reviewers, or
the Board should be contained in the Actual Cost Budget, but the amount attributable
to the identified mistake, error or flaw must be noted separately in the Tracked Items
Exhibit.

User Fee Requests
In accordance with the requirements of section 400.712(l) and section 3(4)(b) of these
procedures:
(1)

Initial user fee and two year user fee requests must include:
(a)

An Estimated Cost and an Actual Cost Budget for the upcoming year with the budget
information required in the Exhibits;

(b)

The amount of historical maintenance reimbursements:

(c)

June 2017

(i)

For initial user fee requests provide the historical maintenance reimbursements
received each year along with information showing any one-time costs that
would not be repeated or expected to occur within each of those years; and

(ii)

For the two year user fee requests provide the maintenance costs for the
previous two years along with information showing any one-time costs that
would not be repeated or expected to occur within each of those years.

The insurance experience for the product, including the number of policies earning
premium, liability, premium, indemnity, and loss ratio for all years the policy has
been in effect;
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User Fee Requests (Continued)

(2)

6

(d)

A dollar amount per policy, or a percentage of premium, proposed as a user fee to be
charged to the AIPs; and

(e)

A maximum dollar amount of user fees, covering only allowable maintenance costs in
accordance with section 400.712, to be collected from all AIPs for costs for each year
the user fee is in place. The maximum amount is to reflect the expected total
estimated maintenance costs for the year.

For review of user fee requests required to be submitted two years after the prior review:
(a)

If the expected budget submitted in accordance with subsection (1) is at least 80
percent of the anticipated fees (the previous year’s number of policies earning
premium multiplied by the user fee per policy, or the previous year’s amount of
premium times the approved percentage of premium), the user fee will not need to be
reviewed by the Board unless the submitter expressly requests review; and

(b)

If the expected budget submitted in accordance with subsection (1) is less than 80
percent of the anticipated fee or the submitter expressly requests reconsideration of
the user fee, then the Board will review the user fee amount.

(3)

Submitters may request the number of policies earning premium and premium dollars by
AIP once per year from RMA, no earlier than the premium billing date for the product.

(4)

Submitters are responsible for the billing and collection of user fees from AIPs in
accordance with section 400.712(l)(10). Costs associated with the collection of user fees is
an allowable expense.

Appeal Process
The Reasonableness Procedures are matters of general applicability and not appealable to the
National Appeals Division. Any decision made by the Board under the Reasonableness
Procedures is appealable to the National Appeals Division in accordance with 7 C.F.R. part 11.

7-10 (Reserved)

June 2017

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Exhibit 1
Requests for Reimbursement or Fees: Expected Cost Budgets
The Expected Cost Budget should be used for any estimated budget, including expected Research and
Development Costs (including for Advance Payment), Expected Maintenance Costs, or User Fee
Requests. Expected costs are those that have not yet occurred but are expected to occur.
Use the following format and incorporate it directly into the submission document. General categories
will assist the Board in determining reasonableness and more clearly allow additions or subtractions to
the work to be identified by the submitter.
Expected Cost Budget:
Worksheet
Label on Worksheet
Item
(a)
Stage of development

(b)

Work Category

(c)
(d)

Detailed Description of
Work
Expected Hours

(e)

Expected Wage Rate

(f)

Estimated Cost

June 2017

Instructions
Enter, in the yellow space, the applicable stage of the
work from the list below for the estimated costs.
1. Research & Development
2. Maintenance
3. Implementation
Use any category that applies to the project and add any
item that is needed for the submission. Use multiple
lines if BLS job classifications and wage rates will vary.
Categories simply give the Board an idea of the work
planned for the submission. Work categories can be
anything pertinent. Suggested categories are:
1. Policy Materials
2. Rate Methodology & Rates
3. Price Methodology & Prices
4. Data Collection
5. Consultation/Listening sessions
6. Research
7. Expansion
8. Travel
9. Other (Specify)
Provide a detailed description of the work to be done.
Provide the number of hours expected to be needed to
complete the work described in (c) and allowed by
section 400.712.
Provide the actual wage rate including benefits expected
to be paid, for the work allowed in section 400.712. If
multiple workers with different wage classifications or
levels of a classification (I, II, III, etc), that have
different wage rates will be working on a project, use
separate lines to calculate expected costs.
Enter the estimated cost for the work category. These
should equal (d) multiplied by (e) and rounded to 2
decimals.

FCIC-17040

12

Exhibit 1
Requests for Reimbursement or Fees: Expected Cost Budgets (Continued)
Reporting Format for Expected Cost Budget:
(a) Stage of Development

(b) Work Category
Policy Materials
Rate Methodology & Rates
Price Methodology & Rates
Data Collection
Consultation/Listening Sessions
Research
Expansion
Travel
Other (Specify)

June 2017

Expected Cost Budget
(c) Detailed Description of
Work

(d) Expected
Hours

(e) Expected Wage
Rate
(f) Estimated Cost

Total Cost:

FCIC-17040

$0.00

13

Exhibit 1
Requests for Reimbursement or Fees: Expected Cost Budgets (Continued)
Example of Expected Cost Budget:
Example: Note how some lines are repeated for more than one wage classification to be used.
Research & Development
(a) Stage of Development
Expected Cost Budget
(c) Detailed Description of
(d) Expected (e) Expected Wage
(b) Work Category
Hours
Rate
Work
(f) Estimated Cost
Writing of policy,
underwriting handbooks,
indemnity examples, and
options/endorsements.
Consultation w/ universities,
grower groups, AIPs, and
producers for underwriting
information to develop
insurance product.
$25,800.00
Policy Materials
$172.00
150
Research and testing to
select between three
methods of rating, including
sensitivity analysis with
respect to the primary
assumptions underlying each
method. Running data
through the selected method
to calculate proposed rates.
Rate Methodology & Rates
$227.00
$52,210.00
230
Development of a pricing
methodology including
reviewing timelines between
data availability and product
Price Methodology & Prices
timing
$26,730.00
$243.00
110
Research into price data that
Price Methodology & Prices
$129.00
$12,900.00
is available
100
Collect data on producer
interest, loss occurrence,
Data Collection
common marketing contracts
Consult with producer
groups. Anticipate X listening
sessions, held across X states
Consultation/Listening Sessions (list states).
Consult with producer
groups. Anticipate 12
listening sessions, held across
Consultation/Listening Sessions four states (list states).
Research
None
Expansion
None

Travel

Travel
Other (Specify)

Other: Project Management

June 2017

Listening sessions in X states,
consultation w/ industry in X
states, FCIC Board Meetings
Listening sessions in X states,
consultation w/ industry in X
states, FCIC Board Meetings

Oversee personnel, establish
timelines, consult with RMA

50

$129.00

$6,450.00

175

$129.00

$22,575.00

80

$243.00

$19,440.00

243

$243.00

$59,049.00

129

$243.00

$31,347.00

100

FCIC-17040

Total Cost:

243

$24,300.00
$280,801.00

14

Exhibit 2
Requests for Reimbursement or Fees: Actual Cost Budgets
The Actual Cost Budget should be used for any costs that have already been incurred for Research and
Development, (including for Advance Payments), Maintenance Costs, or User Fee Requests. Actual
costs are those that have already occurred.
Use the following format and incorporate it directly into the submission document. General categories
will assist the Board in determining reasonableness and more clearly allow additions or subtractions to
the work to be identified by the submitter.
Worksheet
Item
(a)

Label on Worksheet
Stage

(b)
(c)

Name of Person
Job Classification

(d)
(e)

Actual Wages and
Benefits (hourly)
Total Hours Worked

(f)

Total Dollars Requested

(f)-(x)

Hours for various work
categories
And Detailed
Descriptions of the
Work for each category

June 2017

Instructions
Enter the applicable stage of the work in the yellow box.
Costs for each stage should be kept on different
worksheets.
1. Development of Concept Proposal
2. Corrections to make a Concept Proposal
Complete/Sufficient Quality
3. Time Responding to Concept Proposal Reviews
4. Development of 508(h) submission
5. Corrections to make 508(h) Submission
Complete/Sufficient Quality
6. Time Responding to 508(h) Reviews
7. Implementation work
8. Maintenance work
9. Expansion work
10. Other work (track major types)
Enter the name of the person working.
Classification of the Work Performed Based on the Type
of Work and the BLS Classifications. See section 4.
Enter the hourly actual wage rate for the employee or
contractor in accordance with section 4.
Enter the total hours worked.
Enter the total actual dollars. This must equal (d)
multiplied by (e).
Of the hours worked in (e), the number spent on each
category of work.
Enter a detailed description of the work performed within
each work category.

FCIC-17040

15

Exhibit 2
Requests for Reimbursement or Fees: Actual Cost Budgets (Continued)
Reporting Format for Actual Cost Budget:
(a) Stage of Development (Enter Applicable Stage)
Actual Budget

(b) Name of
Person

(c) Job Classification

Continuation of spreadheet
Policy and Materials
Detailed
Hours
Desciption

June 2017

(d) Actual
Wages and
Benefits

Development of Concept Proposal

(e) Total
Hours
Worked

(f) Total
Dollars
Requested

Research
(h) Detailed
Description
(g) Hours

Prices (and methodology)
Rates (and methodology)
Detailed
Detailed
Desciption
Hours
Desciption
Hours

FCIC-17040

Consultation
Detailed
Desciption
Hours

Data Collection
Detailed
Desciption
Hours

Project Management
Detailed
Hours
Desciption Hours

Clerical
Detailed
Desciption

Marketability Assessment
Detailed
Desciption
Hours

Hours

Other
Detailed
Desciption

16

Exhibit 2
Requests for Reimbursement or Fees: Actual Cost Budgets (Continued)
Example of Actual Cost Budget:
(a) Stage of Development (Enter Applicable Stage)
Actual Budget
(d) Actual
(b) Name of
Wages and
Person
Benefits
(c) Job Classification

Development of Concept Proposal
(e) Total
Hours
Worked

(f) Total
Research
Dollars
(h) Detailed
Reimbursed (g) Hours
Description

Clark Kent

Economist

$179.00

150

$26,850.00

Louis Lane
Totals

Actuary

$322.00

75
225

$24,150.00
$51,000.00

June 2017

0

FCIC-17040

Consultation
Data Collection
Detailed
Detailed
Desciption Hours
Desciption
Hours
Consulted
with Industry
Group AZY,
BTX, and
YZN.
Demonstrate
d how policy
could work,
resulting in
minor
changes to
policy.
Wrote
summaries
15 of results.

15

0

Marketability Assessment
Detailed
Desciption
Hours

0

17

Exhibit 2
Requests for Reimbursement or Fees: Actual Cost Budgets (Continued)
Continuation of spreadheet: Name was repeated for clarity
Policy and Materials
Prices (and methodology)
Rates (and methodology)
(b) Name of
Detailed
Detailed
Detailed
Person
Hours
Desciption
Hours
Desciption
Hours
Desciption

Clark Kent

Louis Lane
Totals

June 2017

Wrote APH
policy for crop
Z, using
template of
crop Y. Wrote
63 FAQs.

63

Project Management
Detailed
Hours
Desciption Hours

Clerical
Detailed
Desciption

Other
Detailed
Desciption

Hours

Ran three
models to
determine if
pricing
methodology
model was
72 appropriate.

72

Worked with
data to find
the best fit
model for the
product.
Reviewed
external
reivews and
assisted w/
actuarial
75 responses.
75

FCIC-17040

0

0

0

18

Exhibit 3
Requests for Reimbursement or Fees: Other Costs
Costs other than wages are reimbursable according to section 400.712. Enter the non-wage costs in the following spreadsheet.
Other Expenses:
(a)
Expense Item
(b)
(c)

Cost
Name if Travel

(d)

Notes/Comments

List any other actual costs allowed under section
400.712.
Record the actual dollar amount.
Provide the name of the traveler if the actual expense is
travel
Provide notes regarding the expense if needed.
Specifically include notes for any costs that exceed
Federal travel limits.

Reporting Format for Other Costs:
Other Costs:
(a) Expense Item

(b) Cost

(c) Name of Person, if
Travel

(d) Notes/Comments

Example of Other Costs:
Other Costs:
(a) Expense Item
Office Supplies
Postage
Travel
Travel
Travel

June 2017

(b) Cost
$540.00
$233.00
$340.00
$223.00
$223.00

(c) Name of Person, if
Travel

Sam Hill
Sam Hill
Sam Hill

(d) Notes/Comments
Materials for listening sessions
Letters for listening sessions
Plane ticket to Moretown, OR for listening session
Meals at Moretown, OR-Listening session
Rental Car at Moretown, OR-listening session

FCIC-17040

19

Exhibit 4
Requests for Reimbursement or Fees: Tracked Costs
Some costs may require special handling. These include costs incurred because RMA or the Board has asked a submitter to do a task, or if errors
that may be non-reimbursable have occurred. Additionally, one-time costs need to be tracked to allow them to be removed from maintenance
costs for the calculation of reasonable user fees. These costs WILL SHOW UP in the Actual Cost and Other Cost spreadsheets but are also
tracked in the following spreadsheet.
Tracked Costs: Anything listed in this section would also be accounted for within the two sections above.
(a)
Work Project Item
List any specific work item that meets the needs for tracking as (1) RMA/Board
requested work, (2) a one-time expense, or (3) a correction of an error.
(b)
Detailed Description of work
Describe the work listed in (a). Provide details so it is recognizable for
discussion.
(c)
Dollar Amount of RMA or Board
Enter the dollar amount of work completed at the request or direction of RMA or
Requested Work
the Board, and that is outside the work that would have normally been done for
the submission.
(d)
Dollar Amount of One-Time Cost
Enter the dollar amount of any work that would not need to be repeated to
maintain the product (For example, reports that are no longer required, collection
of data that will not need to be repeated, or expansions that are complete.).
(e)
Dollar Amount of Error
Enter the dollar amount of any work that classifies as being for a correction of an
error. These can be found in section 4 or will be noted by the Board.
(f)
Actual Budget Work Category
Report the column the costs are reported in on the Actual Budget:
Including: Research, Consultation, Data Collection, Marketability Assessment,
Policy & Materials, Prices & Methodology, Rates & Methodology, Project
Management, Clerical, or Other Categories that were added.

June 2017

FCIC-17040

20

Exhibit 4
Requests for Reimbursement or Fees: Tracked Costs (Continued)
Reporting Format for Tracked Costs:
Tracked Costs

(a) Work Project Item

(c) Dollar Amount of (d) Dollar
(f) Actual
(b) Detailed Description RMA or Board
Amount of One- (e) Dollar Amount Budget Work
Requested Work
Time Cost
of Error
Category
of Work

Example of Other Costs:
Tracked Costs

(a) Work Project Item

Implemented Product Error

Policy language

June 2017

(c) Dollar Amount of (d) Dollar
Amount of One- (e) Dollar Amount
(b) Detailed Description RMA or Board
Requested Work
Time Cost
of Work
of Error
Calculation errors when
providing prices to RMAwork was redone
$3,000.00
used endorsement
instead of putting
language in policy per
RMA
$1,500.00

FCIC-17040

(f) Actual
Budget Work
Category
Prices &
Methodology

21