Federal Grant Equipment Policy

Responsible Office or Person: Business Office
Related Law & Policy: CFR 200.312, 200.313, 200.318

Policy Statement

The federal government through the Code of Federal Regulations Title 2: Grants and Agreements Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2CFR Part 200) requires Carroll University (University) to procure, use, and control property in accordance with Federal laws, executive orders, instructions from the Federal sponsoring agency, and any special instructions contained in the specific sponsored projects. It is Government policy, however, to rely upon the University’s internal written procedures, subject to evaluation and approval.

Definitions

Capital Equipment is defined by the University as any unit item with a life expectancy of greater than one year and having an acquisition cost of $5,000 or more. Shipping, in-transit insurance, installation charges and required training costs should be included under this category for new purchases.

Compliance

Responsibilities
The University is responsible and accountable for all Government or federally funded property in accordance with the provisions of the sponsored project, including property provided under contract, which may be in possession or control of a sub-awardee. This responsibility is shared by numerous University personnel, and is specifically delegated as follows:

The Grants Staff is responsible for reviewing equipment purchases on contracts and grants, for obtaining any sponsoring agency approvals necessary, and for notifying the Business Office of all Government titled equipment that is transferred to the University.
The Business Office maintains capital equipment records for all Government and federally funded equipment. The Business Office is also responsible for assigning property tag numbers to equipment, for performing inventories in cooperation with the departments, and for providing reports and information from equipment inventory records including Government property inventory reports.
The Principal Investigators (PIs) are authorized to initiate requests for the purchase of equipment or to request restricted or Government excess property for his/her project. PIs are also responsible for proper use, maintenance and security of all assigned property at all times. PIs are also responsible for notifying the Grants Staff of any Government or federally funded property received and any shortage, damage, loss or theft of Government or federally funded property.

Capital Equipment Non-duplication
“The non-federal entity’s procedures must avoid acquisition of unnecessary or duplicative items.” The University must assure that all purchases are necessary, beneficial and not duplicated. Prior to initiating the process of acquisition of major equipment items from federal funds, it is the responsibility of the PI originating the purchase requisition to review University capital equipment records to avoid equipment duplication.

Lease Versus Purchase
“Where appropriate, an analysis will be made of lease and purchase alternatives, and any other appropriate analysis to determine which would be the most economical approach.” In procuring equipment for federally funded sponsored projects, the PI and/or departmental personnel should perform an analysis regarding cost effectiveness of leasing versus purchasing.

The lease or rental rate should be based on the following considerations:

rental cost of comparable property, if any;
market conditions in the area;
the type, life expectancy, condition, and value of the property to be leased; and
other provisions of the lease agreement.

Documentation of this analysis must be maintained by the department for potential audit purposes. Lease decisions must be approved by the Vice President for Finance and Administration.

Equipment Acquisition
Most federal agencies require that equipment be budgeted for in the proposal. Unforeseen equipment purchases are occasionally necessary. PIs will need to work with Grants Staff to obtain sponsor approval for the purchase of unbudgeted equipment. Disallowances or negative findings resulting from non-compliance of agency guidelines will be assumed by departmental funds. All equipment purchased with federal funds must be necessary and reasonable for proper and efficient accomplishment of project or program objectives.

Ownership
All capital equipment purchased from federal funds is the property of the University unless otherwise stipulated in writing by the grant or contract sponsor. The University is bound by the sponsor’s agreement whether or not the ownership is vested in the University.

Utilization of Equipment
“Equipment must be used by the non-Federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds and shall not encumber the property without approval of the Federal awarding agency. When no longer needed for the original project or program, the recipient shall use the equipment in connection with its other federally-sponsored activities, in the following order of priority:

activities under a Federal award from the Federal awarding agency which funded the original project, then
activities under Federal awards from other Federal awarding agencies. This includes consolidated equipment for information technology systems.

During the time that equipment is used on the project or program for which it was acquired, the non-Federal entity must also make equipment available for use on other projects or programs currently or previously supported by the Federal Government, provided that such use will not interfere with work on the project or program for which it was originally acquired. First preference for other use must be given to:

other programs or projects sponsored by the Federal awarding agency that financed the equipment; and second preference must be given to
programs or projects under other Federal awarding agencies.

Use for non-federal funded program or projects is also permissible. User fees should be considered if appropriate.

The non-Federal entity must not use equipment acquired with the Federal award to provide services for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute, for as long as the Federal Government retains an interest in the equipment.

When requiring replacement equipment, the recipient may use the equipment to be replaced as trade-in or sell the equipment and use the proceeds to offset the costs of the replacement equipment subject to the approval of the Federal awarding agency.”

Care and Maintenance
The PI and departmental staff shall provide the care necessary to maintain the equipment in the condition received or better (normal wear is expected) in order that the most useful life is secured. Maintenance should be in accordance with manufacturer’s guidelines and recommendations. Records of the maintenance program shall provide the description and date of maintenance actions performed, details of inspection and deficiencies discovered or corrected.

The PI is also responsible for proper use, maintenance and security of all assigned property, and for notifying the Business Office or, as applicable, the Grants Staff of any property received indirectly and/or any shortage, damage, loss or theft of property.

Storage and Movement
When equipment is temporarily not utilized, but required for authorized use in the future, it must be adequately stored to protect it from theft, corrosion, contamination, and damage to sensitive parts. Government and federally funded equipment may be moved to off-campus storage sites only with the approval of Business Office and the Grants Staff.

Loss, Damage or Destruction
Departments must have appropriate safeguards in place to prevent loss, damage, and/or theft of equipment. However, in the event that equipment is stolen, it must be immediately reported to the department chairperson, director, or dean and to the Department of Public Safety. The department must complete a written report outlining the description of the missing or damaged items and any other relevant information.

If equipment is stolen, the University is required to promptly notify the appropriate government official of the theft. Therefore, the department must notify Grants Staff. A copy of the above referenced report must be forwarded to the Business Office. The department could be liable for the loss, damage or destruction of government property.

Equipment Disposition
Prior to disposing any equipment, it must be determined whether the equipment is:

sponsor-owned
university-owned

After determining who has title to the equipment, it must be ascertained whether the project that the equipment was purchased for is still on going. If the project is still on going, the University normally has an obligation to utilize the equipment for the purposes of the project, or perhaps to make the equipment available to other federally assisted projects.

If it is determined that the sponsored project has ended and the University retains title to the surplus property, the University may still have obligations with respect to the equipment.

Because the requirements of equipment disposition differ slightly among granting agencies, you should contact the Grants Staff prior to disposing federally funded equipment.

Equipment Sales
When the terms of the award permit the University to retain the net proceeds from the sale of University-owned equipment that is no longer needed, the property may be disposed of.

Replacement Equipment
When acquiring replacement equipment, the [University] may use the equipment to be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property.

Physical Inventory
The University has the fiduciary responsibility of maintaining proper control over all of its equipment, regardless of the location or purpose and doing a physical inventory at least every other year. The inventory records may be needed for an external audit. Adequate insurance requires accurate documentation of University owned equipment; therefore, each department must review the records and submit any changes to ensure that the records in the inventory system are correct.

The Business Office facilitates a physical inventory for departments on an annual basis. This process allows University departments to verify fixed assets and make appropriate corrections. The Business Office prepares a listing of all equipment owned by each department at the end of each fiscal year. Each department must verify the items on the list and note any corrections before returning the list to the Business Office.

Sub-awardee Control
Each sub-agreement entered into by the University where the Federal property may come under the control of a sub-awardee must contain specific provisions concerning the sub-awardee’s responsibility for the care, custody, and use of the property. This provision should require, by flowing down requirements in the prime award, that the sub-awardee assume the responsibility and obligations of the University with respect to the property while it is under the sub-awardee’s control. These obligations will include appropriate care, utilization, storage, movement, disposition, and record keeping. The sub-awardee’s approved property control system shall include procedures necessary for accomplishing this responsibility.

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