Fee Guidelines Still Needed for Government-Sponsored Nonprofit Organizations

Pursuant to a congressional request, GAO assessed the reasonableness of fees paid by Federal agencies to Government-sponsored, nonprofit organizations that are dependent on Federal contracts. Because these entities are organized by Federal agencies to support the missions of their sponsors, opponents of fees argue that these organizations are quasi-governmental and therefore should not receive a fee. Proponents believe that fees are necessary to meet certain financial obligations not covered under contracts.

GAO reviewed three Government-sponsored, nonprofit organizations and found that fees were no longer needed to accumulate reserves for working capital. The current reserves of these three organizations exceeded estimated working capital requirements by more than $18 million. Further, it was discovered that several agencies that sponsor nonprofit organizations use methods to determine fees which are not based on need. GAO concluded that Government-wide guidelines are needed for those organizations. The recommended guidelines would limit fees to the amount necessary to provide operational stability and to cover certain nonreimbursable costs. Furthermore, as part of such guidelines, GAO believes that agencies should consider how they may best provide for termination and nonrenewable contingencies.