Standards and Technology:

Impact of Fee Increases on Measurement Services

RCED-89-135: Published: Jun 22, 1989. Publicly Released: Jun 22, 1989.

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Pursuant to a congressional request, GAO analyzed the potential impact of the National Institute of Standards and Technology's (NIST) proposed fee increases on sales of calibration services and standard reference materials used by businesses and laboratories to precisely measure materials' physical and chemical properties.

GAO found that NIST: (1) during fiscal year (FY) 1988, charged from less than $100 to over $50,000, with an average of $471, for calibration services; (2) during FY 1988, charged from $39 to $3,536, with an average of $144, for standard reference materials; (3) based its calibration service charges on the actual costs to perform services, an operations surcharge to cover administrative expenses, and a development surcharge to support the development of new and improved calibration services; (4) based its standard reference materials charges on direct production and certification costs, an operations surcharge, and a development surcharge; (5) set the calibration service development surcharge at 8 percent of actual performance costs for FY 1988 and planned to increase it by 8 percent annually until it reached about 40 percent of the actual service cost; (6) increased the development surcharge in December 1987 from 15 percent to 20 percent of direct production costs and planned to increase it by 5 percent annually until it reached about 40 percent of direct production costs; (7) did not fully explain the nature or the likely impact of the fee increases on service and material demand in its required justification to Congress; and (8) believed that such factors as general economic conditions, market conditions for products and services NIST provided, and the availability and price of alternative services, in addition to price factors, affected the demand for services and materials it provided.

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