CNA Fee Ceiling Effective
October 1, 2011
The ceiling is applicable to all additions, renegotiated contracts other than those with predetermined annual price change provisions, and contracts with follow-on year pricing that provide for adjustments to reflect a fee ceiling change.
Memorandum for Chief Acquisition Officers Senior Procurement Executives
Date: September 22, 2006
From: Leon A. Wilson, Jr., Executive Director
Subject: AbilityOne Program 2007 CNA Fee Ceiling
Effective: October 1, 2006
The purpose of this memorandum is to update and clarify policy regarding the Central Nonprofit Agency (CNA) Fee applied to AbilityOne Program contracts. As you know, the AbilityOne Program creates employment opportunities for people who are blind or who have other significant disabilities through the fulfillment of federal requirements for a wide range of products and services. The Commission is the federal agency that administers the Program. The purpose of the CNA Fee is to provide funding for the operations of the Commission-designated CNAs - National Industries for the Blind and NISH (serving people with significant disabilities).
The Commission has approved a policy clarifying that the CNA Fee is neither an add-on to the AbilityOne Program's fair market price nor a pass-through to the government. The CNA fee is an inherent part of the fair market price, and is paid by each participating nonprofit agency to its CNA. Each year, the Commission reviews the CNA Fee ceiling and determines the appropriate level for the following year.
Contracting officers have a right and responsibility to negotiate recommended fair market prices for AbilityOne products and services. The Commission's policy is that price analysis should be used for any AbilityOne product or service that has equivalent or similar counterparts in the commercial market. Changes in the CNA Fee ceiling will not affect existing fair market prices, as AbilityOne fair market prices are validated with market price indicators, and the CNA Fee is a business cost for the nonprofit agency. Where there are no commercial equivalents, and cost analysis must be used, the CNA Fee will be included in overhead costs, not as a separate line item. This fee is similar to those paid by commercial firms to belong to trade and industry associations related to their government contracts, and is considered an allowable cost. Specific disclosure of this cost element is not required of commercial firms and is not specifically addressed in negotiations.
The attached questions and answers are intended to provide further edification on this issue. Please contact Patricia Briscoe at 703-603-2100 for more information.
Frequently Asked Questions
What is the CNA Fee?
The purpose of the CNA Fee is to provide funding for the operations of the Central Nonprofit Agencies (CNAs) - National Industries for the Blind and NISH (serving people with significant disabilities) - designated by the Commission in accordance with the provisions of the Javits-Wagner-Day (JWOD) Act. The fee is a percentage of the revenue of each contract on the AbilityOne Program Procurement List. The Commission establishes the Fee Ceiling annually for each CNA.
Who pays the CNA Fee?
The CNA Fee is paid by AbilityOne-participating nonprofit agencies to their Central Nonprofit Agency, either National Industries for the Blind or NISH, to fund CNA operations. The CNA Fee is not an add-on to the AbilityOne Fair Market Price, nor is it a pass-through to the government.
When is the updated CNA Fee Ceiling effective, and is this rate permanent?
The FY 2009 CNA Fee Ceiling is effective on October 1, 2008, for the entire Fiscal Year. Each year, the Commission reviews the CNAs' budgets and planned activities, and determines the fee ceiling for the following year. The Commission's web site will show the CNA Fee Ceiling in effect for the current Fiscal Year on our General Policy Web page.
What does the new CNA Fee Ceiling for 2009 mean to federal customers?
The CNA Fee should be invisible to federal customers. The Commission has clarified that the fee is paid by the nonprofit agencies, and is not added on to the cost of contract performance to achieve a Fair Market Price. The AbilityOne Fair Market Price is to be validated in the commercial marketplace through price analysis. As the price is market-driven, any change in the CNA Fee (a nonprofit agency cost of doing business) does not affect customers' existing prices. Customers will continue to pay the Fair Market Price.
What if the AbilityOne product or service does not have a commercial equivalent, then how is the price validated?
The Commission recognizes that for truly government-unique requirements, it is necessary to use cost analysis to evaluate pricing proposals. In these cases, the CNA Fee will not be a separate line item, but included in overhead costs. This fee is similar to those paid by commercial firms to belong to trade and industry associations related to their government contracts. Specific disclosure of this cost element is not required of commercial firms, is considered an allowable cost, and is not specifically called out in price negotiations.
What impact will the new CNA Fee level have on existing contract prices?
Any change in the CNA Fee level does not change or affect existing contract prices. A Fair Market Price on Sept. 30, 2008 remains a Fair Market Price on October 1, 2008.
If the CNA Fee is now the responsibility of the nonprofit agency, not the government, will the government receive a discount or rebate on our contract pricing?
No, there will be no discounts or rebates to Commission-established Fair Market Prices as a result of the CNA Fee Ceiling change. The CNA Fee has always been sent to NIB or NISH by the nonprofit agency from their contract revenues. The Commission's addition and price change procedures have always required Contracting Officers' concurrence that the proposed Fair Market Price is reasonable. With firm, fixed prices established, the variations in the nonprofit agency's costs are not applicable to the government.
Is the CNA Fee negotiable like other cost elements in order to reach a price agreement?
No. The CNA Fee will no longer be a stand-alone cost element in AbilityOne pricing proposals. First, AbilityOne pricing proposals will focus on market price indicators, not cost elements, unless there is no equivalent market for the government requirement. In these cases, the CNA Fee will not be a separate line item, but included in overhead costs. As noted above, this fee is similar to those paid by commercial firms to belong to trade and industry associations related to their government contracts. Specific disclosure of this cost element is not required of commercial firms, is considered an allowable cost, and is not specifically called out in price negotiations.
Who may I contact for more information?
Federal customers may contact the Commission staff at firstname.lastname@example.org or 703-603-2100 for more information. Nonprofit agencies may contact their Central Nonprofit Agency.