(a) A schedule of fees, charges, payment guarantees and payments for inspection services shall be made in accordance with the applicable provisions of the regulations in this part and the Financial Policy provided in the SIP Manual.

(b) The Schedule of Fees to be charged and collected for any inspection service performed under the regulations of this part will be determined annually, or as required, and published as a Notice in the Federal Register.

(c) Fees for inspection under a cooperative agreement with any State or person shall be transferred and collected in accordance with the terms of such agreement. Such portion of the fees collected under a cooperative agreement as may be due the United States shall be remitted in accordance with this section and the Financial Policy as provided in the SIP Manual.

(d) Charges may be made to cover the cost of travel and other expenses incurred in connection with the performance of any inspection service, including appeal inspections, as provided in the SIP Manual.

(e) Inspection services may be made on a contract basis or via a memorandum of understanding with other Federal and State entities pursuant to the Agricultural Marketing Act of 1946, provided the Agency is reimbursed for the full cost of such service.

(f) For each calendar year, SIP will calculate the rate for services, per hour per program employee, using the following formulas:

(1) Regular rate. The total SIP inspection program personnel direct pay divided by direct hours, which is then multiplied by the next year's percentage of cost of living increase, plus the benefits rate, plus the operating rate, plus the allowance for bad debt rate. If applicable, travel expenses may also be added to the cost of providing the service. The regular rate shall be the contract rate.

(2) Overtime rate. The total SIP inspection program personnel direct pay divided by direct hours, which is then multiplied by the next year's percentage of cost of living increase and then multiplied by 1.5 plus the benefits rate, plus the operating rate, plus an allowance for bad debt. If applicable, travel expenses may also be added to the cost of providing the service.

(3) Holiday rate. The total SIP inspection program personnel direct pay divided by direct hours which is then multiplied by the next year's percentage of cost of living increase and then multiplied by 2, plus benefits rate, plus the operating rate, plus an allowance for bad debt. If applicable, travel expenses may also be added to the cost of providing the service.

(g) For each calendar year, based on previous fiscal year/historical actual costs, SIP will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:

(1) Benefits rate. The total SIP inspection program direct benefits costs divided by the total hours (regular, overtime, and holiday) worked, which is then multiplied by the next calendar year's percentage cost of living increase. Some examples of direct benefits are health insurance, retirement, life insurance, and Thrift Savings Plan (TSP) retirement basic and matching contributions.

(2) Operating rate. The total SIP inspection program operating costs divided by total hours (regular, overtime, and holiday) worked, which is then multiplied by the percentage of inflation.

(3) Allowance for bad debt rate. Total allowance for bad debt divided by total hours (regular, overtime, and holiday) worked.

(h) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.

(1) When an inspection is delayed because product is not available or readily accessible, a charge for waiting time shall be determined using the formulas in this section.