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I. Procedural Statement

This document is intended to serve as formal guidance for the University of Colorado Boulder (91��ý) regarding the purchase, use,��and disposition of equipment costing $10,000 ($5,000 for Contracts governed by the Federal Acquisition Regulation (FAR)) or more and acquired with funds from sponsored projects in like circumstances. 91��ý is committed to ensuring costs incurred in support of sponsored projects are allowable, reasonable,��and allocable to a particular sponsored project as defined by U.S. Office of Management and Budget’s Uniform Guidance (); are in compliance with sponsor requirements; and are administered consistently across the campus for all sponsored projects (awards). Procedural statements support the 91��ý Cost Principles Policy by providing definitions and processes for meeting those standards in like circumstances.

II. Definitions

����ܾ��賾��Գ���is defined for Federal financial assistance awards in the U.S Office of Management and Budget’s Uniform Guidance, , as:

Tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes, or $10,000. See the definitions of capital assets, computing devices, general purpose equipment, information technology systems, special purpose equipment, and supplies in this section..

Equipment is defined for Federal procurement awards in the as:

. . . a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment, or special tooling.

General Purpose Equipment��is defined in the U.S. Office of Management and Budget’s Uniform Guidance, , as:

Equipment which is not limited to research, medical, scientific, or other technical activities. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles.

Special Purpose Equipment is defined in the U.S. Office of Management and Budget’s Uniform Guidance, , as:

Equipment which is used only for research, medical, scientific��or other similar technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments,�� spectrometers and associated software.

The University also uses the following��Definitions:

Capital (Permanent) Equipment is defined as a tangible item that is durable, non-expendable, meets��the university’s capitalization rules, and is by itself functionally complete for its intended��purpose. Permanent equipment can include both Standalone Equipment and Fabrications��that have been placed into service. Permanent equipment may also be referred to as Capital Equipment or Fixed Assets.

A Fabrication is the transformation of materials, consumable and non-consumable supplies,��and hardware into a one-of-a-kind��piece of equipment or scientific instrument that meets a unique research need, and that��cannot be commercially obtained. Fabrications are expected to be operational, have a��useful life greater than one year��and have a total value of $10,000 or greater ($5,000 for FAR Contracts). A unique��characteristic of a fabrication is that every component must be necessary and essential for the function of the entire fabrication to the extent that the removal of one component would diminish the operation of the entire fabrication.

Capital Upgrades are improvements that add to the permanent value of equipment and must��meet certain accounting standards in order to be capitalized. This includes the requirement that the total dollar��value of the improvements is greater than $10,000 ($5,000 for FAR Contracts), and they increase the useful life,��productivity��and/or efficiency of the equipment.

III. Procedures

A. Federal Financial Assistance Awards

Section of the Uniform Guidance, which regulates Federal financial assistance agreements (grants and cooperative agreements), states that expenditures for general purpose equipment, buildings, and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity.�� Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $10,000 or more have prior written approval of the Federal agency or pass-through entity. Note that while federal regulations allow these expenditures, it is important to review the terms and conditions of each individual award as specific written sponsor guidelines may be more restrictive .

When approved as a direct cost in accordance with Uniform Guidance, capital expenditures must be charged in the period in which the expenditure is incurred, or as otherwise determined appropriate, and negotiated with the Federal agency.

91��ý considers the following criteria as key elements in determining when equipment charges are allowable:

• The equipment is necessary to fulfill the research objective of the project; or
• The project will be negatively impacted by not purchasing the equipment;��and
• The cost for the equipment is reasonable and represents prudent use of the��sponsor’s funds.

B. Federal Procurement Awards

Section of the Federal Acquisition Regulations (FAR), which regulates Federal procurement agreements (contracts), defines Equipment as “a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment or special tooling.” As an institution of higher education, 91��ý FAR contracts typically include 52.245-1 Alternate II, which provides for a unit acquisition cost of $5,000 as the threshold for government titled capital equipment as well as the requirement to obtain approval from the sponsor prior to acquisition.

The Federal Acquisition Regulations (FAR) which are applicable to federal contracts do not require preapproval for purchasing equipment in general. However, contract clauses can be inserted by the federal agency to require pre-approval or limit spending to activity described in the scope of work. Best practice is to include any equipment expenditures in the budget justification(s) provided to the sponsor. Also review any specific award terms and conditions related to purchases and disposition of equipment as requirements may vary by agency, contract type, or project‑specific clauses.

C. Other Awards

Section of the Uniform Guidance requires that we apply our policies and procedures uniformly to both federally-financed and other activities of the university. Therefore, 91��ý’s Cost Principles Policy and related procedural statements are also applicable to non-federal awards and federal awards other than grants, cooperative agreements and contracts (e.g. Other Transactional Authorities (OTAs) and services). 91��ý’s business process is to apply 2 CFR 200 equipment definitions and terms to all non-FAR based awards.

The basic criteria for purchasing equipment are similar for all sponsored projects regardless of sponsor or funding mechanism, but it is important to be familiar with the particular requirements or restrictions of each sponsor and each award. When allowed by the sponsor, a written justification for the purchase of equipment should be provided to explain why the purchase is necessary to fulfill the objective(s) of the project and to ensure that the cost directly benefits the project being charged, even when the sponsor may follow more flexible spending guidelines.

D. Process

At Proposal:

Equipment should be identified in the proposal’s budget justification explaining why the equipment is necessary and allocable to the performance of the sponsored project. Inclusion in the budget justification is intended to enable the sponsor to review and concur with the need for the equipment purchases. Written justification is meant to prevent questions regarding the allowability of costs in the event of an audit.

After an Award is Funded, if Sponsor Prior Approval is Not Required:

In the event that unbudgeted equipment is required after an award is funded, and sponsor prior approval is not required for either the purchase of unbudgeted equipment or the deviation from the proposed budget, the department should follow the campus guidance for documenting budget deviations. Substantiating documentation retained by the department should fully describe the purpose and benefit of the equipment to the specific project in the justification and include the criteria listed above in III.A. to explain how this purchase is necessary and allocable to the project. The department is responsible for keeping and providing this documentation if it is not stored in CU Marketplace with other purchase documentation, in the event the costs are questioned in the future.

After an Award is Funded, if Sponsor Prior Approval is Required:

For Budgeted Items: On some awards, even equipment that has been listed in the budget must be approved specifically by the sponsor before it can be charged to the award. This is most often associated with contracts governed by but can also occur with specialized industry contracts. Prior to creating a requisition, the department should contact the OCG Compliance Officer with information on the equipment that the department would like to purchase on the sponsored award. The OCG Compliance Officer can then assist in understanding the sponsor requirements and how to request approval.

For Unbudgeted Items: In the event that unbudgeted equipment purchases require prior approval from the sponsor, the department will need to work with the OCG Grant or Contract Officer. The purpose and benefit for the equipment, a justification for the deviation from the budget, and an explanation of the other budgeted costs that will be reduced in order to compensate for the unbudgeted equipment purchase should be provided to the OCG Grant or Contract Officer who will make a formal request for approval to the sponsor. If the sponsor approves of the unbudgeted equipment purchase, the OCG Grant or Contract Officer will notify the department,��and upload the approval documentation into the Approvals folder in infoEd. The department will attach the approval to the CU Marketplace requisition.

OCG approval of purchase requisitions can be considerably delayed when the necessary sponsor prior approval has not been obtained or if adequate supporting documentation has not been provided. Therefore, contact the OCG Compliance Officer as soon as possible to avoid unnecessary delays.

E. Special Requirements for Use, Management & Disposal

of the Uniform Guidance provides requirements associated with using, managing and disposing of equipment purchased with federal funds. 91��ý’s Sponsored Projects Property Control Manual outlines specific procedures and standards by which our campus adheres to these federal regulations. The Property Control Manual standards apply to all equipment purchased with sponsored project funding, whether the funding is federal or non-federal. Refer to this document for specific campus processes and procedures for the use, maintenance��and disposal of all sponsored projects equipment.

Equipment acquired with Federal funds must be used on the project for which it was acquired and be made available on other federally sponsored projects on a non-interference basis. In addition to helping maintain adequate records for the equipment, the department is also required to perform regular maintenance to keep the equipment in good working order. When the equipment is no longer needed for the project or for other federally funded research and there are no other existing obligations to the sponsor, the department can request to dispose of the equipment by following the campus procedures for property disposal. However, OCG will always screen disposal requests for equipment that was purchased with federal funds.

F. Special Requirements for Equipment Transferring with a PI to or from CU

It is 91��ý’s practice to allow PIs to take equipment purchased on a specific award to a new educational institution only if the award terms and conditions allow for the transfer, if the PI’s 91��ý department or institute approves the equipment transfer, and if the award is being transferred to the new institution as well,. Requirements, restrictions,��and procedures for this practice are outlined in OCG’s PI Departure 91��ý.

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