Competition with the Private Sector

SCOPE

This policy applies to the sales activities of University of Wisconsin institutions that compete with the sale of products or services in the private sector.

PURPOSE

This policy defines criteria to be used in evaluating the appropriateness of University sales activities and establishes principles for pricing products and services that compete with the private sector. The policy also establishes a competition review committee at each institution composed of representatives of the University, private sector, and public-at-large.

POLICY STATEMENT

The University has a responsibility to carefully consider any decision to provide products and services to students, faculty, staff, private organizations, or the public at large, particularly when the products and services to be provided might compete with similar products or services offered by the private sector. Some degree of competition between the University and the private sector may be unavoidable, even when the University is engaged in the narrowest pursuit of its instructional, research and public service missions. However, in all cases where a potentially competitive situation exists, the University must consider the concerns of affected private businesses and act with sensitivity and good faith regarding those concerns.

Each institution shall convene a committee to review specific issues of competition when they are raised under this policy. The chancellor will appoint the committee composed of representatives of the university, the private sector, and the general public. Faculty, student, and staff appointments should be made upon the recommendation of the appropriate University governance structures.
The chancellor will evaluate major new competitive activities proposed by campus units, and at the chancellor’s discretion request a review by and a recommendation from the committee if the chancellor determines the new proposed activities or pricing are not clearly appropriate under this policy.

If the chancellor receives a complaint from the private sector or a member of the general public regarding a major new or ongoing activity whose appropriateness or pricing has been questioned, the complainant shall be provided with a copy of the Board of Regents’ policy and efforts shall be made to resolve the complaint. If the chancellor is unable to resolve the concerns of the complainant in an informal manner, the complainant may request that the chancellor convene the committee and refer the complaint for review. Under normal circumstances, the chancellor’s referral to the competition review committee’s chairperson will be made within two weeks after the chancellor is first informed of a request to convene the committee. The chancellor will communicate in writing with the person requesting the committee review and confirm the date on which the committee has been empaneled and the expected time frame for review.

Upon referral from the chancellor, the chairperson of the competition review committee will schedule a meeting of the committee at the earliest possible convenience of the committee’s members. The committee’s charge will be to:

Examine the issues involved in the institution offering major new competitive activities or the issues involved in ongoing activities whose appropriateness has been questioned.
Review the pricing structure of major new competitive activities or the ongoing sales activities whose pricing has been questioned.
Recommend to the chancellor, in a timely manner, a course of action which specifically addresses:
1. whether the activity should be implemented or continued; and/or
2. whether the pricing of the products and services is appropriate.

The chancellor will determine whether the institution will become involved with the new activity or continue an ongoing activity and whether changes should be made to the pricing of products and services. Under normal circumstances, the chancellor will announce the decision within two weeks after receiving the recommendation of the committee. The chancellor will communicate in writing explaining the decision to the person making the proposal or complaint.

The chancellor’s decision may be appealed to the University of Wisconsin System President.

Criteria for Judging the Appropriateness of Competitive Activities

All activities competitive with the private sector must be integral to the fulfillment of the institution’s instructional, research, or public service missions or must meet one of the following four criteria:

There are compelling reasons of economic efficiency. Economic efficiency implies that University resources can be made available to the broader community at relatively little additional cost to the institution. For example, the use of university facilities such as stadiums and auditoriums for non-University functions such as high school graduation ceremonies and sporting or other entertainment events may benefit the University as well as the private sector and the community.
The product or service is unavailable elsewhere in the community. Unavailability may be defined in terms of quality or quantity of the product or service. For example, the sale of research by-products which would otherwise be unavailable in the community may benefit both the University and the community.
Providing the product or service is a major convenience to the campus community including students, faculty, staff, and other members of the public participating in institutional activities. Convenience would typically be defined in geographic terms, although other factors could also be considered (e.g., hours of operation of private sector providers). Familiar examples of operations conducted primarily to support campus life are on-campus recreational facilities and bookstores.
The University’s offering of the product or service is of major importance to maintaining the quality of the institution. Most crucial to maintenance of quality are efforts which impact positively on student, faculty, and staff recruitment and retention. For example, the operation of quality cultural and health facilities such as art museums and the clinical cancer center are important for the maintenance of quality.
The activity is conducted according to a federal or state mandate, such as rules governing the sale of surplus university property.

Examples of activities that are generally considered to inappropriately compete with the private sector include:

Print services by a print shop on campus doing outside work for community members or campus faculty/staff/students;
Technical services by licensed campus computer technicians doing repair work for community members;
Craft workers employed by the campus being hired to do work by the community;
Catering services by university dining being hired by community members for events occurring off-campus.

Pricing Policies

Products or services offered by the UW System Institutions to the general public must normally be priced to recover, at a minimum, all costs related to producing the product or service, including all applicable direct and indirect costs as determined by basic cost accounting principles.

For purposes of implementing these pricing policies, direct costs include, but are not limited to, all salaries, fringe benefits, supplies, and capital directly attributable to the sale of the product or service. Indirect costs include, but are not limited to, depreciation, utilities, municipal services charges, interest, support services, custodial services, etc., allocable to the sale of the product or service. As an alternative to calculating indirect costs for individual sales operations, the federal indirect cost rate may be used. Exceptions to full cost recovery pricing are permitted (or are required) under the following circumstances:

If the activity is integral to the fulfillment of the institution’s instructional, research or public service missions, prices may be established at less than full cost recovery upon approval by the chancellor;
If University facilities are made available for non-University events primarily for the benefit of the private sector or the community, prices may be set below full cost recovery;
If University facilities are made available for non-University events primarily for fund-raising purposes, prices may be set to include a profit above the full recovery of costs;
If products and services are offered for the convenience of students, faculty, staff or participants in University activities, prices must be set so as to be competitive with private sector prices, unless a higher price is required to ensure full cost recovery.

In addition, if subsidized pricing is mandated or permitted by federal law or state statute, prices should be set accordingly.

For any new activity presented to the competition review committee, full documentation of costs and pricing determinations must be included. The committee will review the pricing structure for compliance with the above criteria, taking into consideration the impact of the competition with the private sector.

OVERSIGHT, ROLES, AND RESPONSIBILITIES

UW chancellors are responsible for complying with the provisions including establishing and appointing members to an institutional competition review committee, referring all major new competitive activities and ongoing activities for which appropriateness or pricing has been questioned. Chancellors are also responsible for implementing the pricing provisions described in this policy.

Individuals appointed to the institutional competition review committee are expected to apply the criteria described in this policy when evaluating the appropriateness of new and ongoing competitive activities.

RELATED REGENT POLICY DOUCMENTS AND APPLICABLE LAWS

Section 16.72(4)(b), Wis. Stats., Purchasing, duties
UWS 21.04, Use of facilities by persons or organizations not associated with an institution
ADM 11, Surplus State Property

History: Res. 5153, adopted 02/10/1989, created Regent Policy Document (RPD) 89-1. Res. 5404, adopted 02/02/1990, amended RPD 89-1, subsequently renumbered as RPD 12-1. Res. 11713, adopted 10/08/2021, amended RPD 12-1.

Regent Policy Document 12-1 (formerly 89-1)