Equipment and Property

Equipment is defined as a non-expendable capital item of movable or personal property with the following characteristics:

• costs $5,000 or more per unit
• has a useful life expectancy of one year or more
• is complete in itself and will retain its identity as a separate item
• will not be expended or consumed in research

Delivery as an end-item or incorporation into a system to be delivered as an end-item does not change this definition as long as all of the previously stated criteria are met.

Note: The term property is often used in project administration to denote ownership of equipment; e.g., federal property, sponsor property, state property, institutional property (property under the administrative oversight of The Ohio State University).

Federal regulations require that federal funds not be used to acquire certain capital equipment unless it is first determined through a screening process that similar equipment is not available for use on campus. The federal government’s rationale for these regulations has been that shared use of existing equipment promotes availability of equipment on college and university campuses and reduces unnecessary duplication of equipment. This frees up federal funds to be used for other expenses or projects.

This process requires that a screening for availability be undertaken prior to the purchase of equipment items costing $100,000 or more. Use Equipment Screening Certification form (PR-030A). A Office of Sponsored Programs property administrator conducts equipment screening.

• Purchases for Department of Energy contracts for equipment in excess of $25,000 require screening of equipment available for use from federal sources through the Defense Automation Resources Information Center (DARIC) by using DARIC form 1851.
• Purchases for equipment on NASA contracts costing in excess of $1,000 require screening through the NASA Equipment Visibility System (EVS) by using form DD1419.

If the screening process fails to identify like, or substantially similar, equipment that is available for shared use, the procurement file will be documented appropriately and the requisitions will be processed without contacting the principal investigator. If the screening procedure identifies like or substantially similar equipment that is represented on the inventory as available for shared use, the principal investigator must inspect the equipment. Outcomes of the inspections could be:

• the identified equipment is not satisfactory. The Equipment Not Available for Shared Use form (PR-030b) will be completed. The principal investigator certifies that the equipment is not satisfactory for project use, in which event the procurement file will be documented and the requisitions processed.
• the identified equipment is satisfactory. The Shared Use Agreement form (PR-030c) will be completed

It is possible that these additional requirements may cause delay in individual procurement actions; it is imperative however that these regulations are complied with. Office of Sponsored Programs procurement will continue to respond to unusual and emergency situations within the context of these procedures.

Property management includes activities and documentation associated with movement and control of equipment used by projects. The property administrator authorizes all changes in equipment status and location. To maintain current property records, the property administrator must be notified of any changes in property status using the following methods of equipment documentation and forms. The property management system is comprised of the following definitions, approval processes, procedures, notifications, and forms. The sponsor may require an accounting and disposition of equipment purchased under the project. This type of report should be coordinated with Office of Sponsored Programs Procurement.

Equipment Accountability and Control

Office of Sponsored Programs Procurement maintains a federally approved property system that is routinely audited by an agency of the federal government to ensure compliance with the federal acquisition regulations and other property regulations as required by individual sponsors.

All equipment items purchased with project funds or furnished to a project by the sponsor are assigned an inventory number and a Office of Sponsored Programs identification tag. Inventory control records are created and maintained by the property administrator. The continued maintenance of accurate records for all research equipment furnished to a project or purchased with sponsored agreement funding is the shared responsibility of the principal investigator, equipment coordinator, and department head.

Property purchased on sponsored project accounts may not be disposed of without prior authorization from the property administrator or director of Procurement. Losses are an unallowable project expense. The principal investigator’s department therefore will be held liable in the event any equipment is lost, stolen, or destroyed.

Equipment Title

Certain sponsors retain title to equipment purchased under their programs and reserve the right to recall the equipment upon completion of the project. Most sponsored agreements from the federal government provide for the transfer of equipment title to nonprofit educational institutions when the conditions of the appropriate contract clauses have been met.

Although these conditions vary with agencies and individual contractual agreements, generally the university receives title to items costing less than $5,000. Title to the remaining equipment is determined at a later date or at contract completion. The Office of Sponsored Programs will attempt to obtain title or permission to retain equipment if it is desirable to keep the property.

Upon termination or completion of a sponsored project, an inventory will be conducted of all federal, state, or sponsor-owned property items acquired during the life of the project. Following the inventory and after the principal investigator has determined which items should be retained, the project administrator will request a transfer of title from the government or industrial sponsor.

Furnished Equipment

Projects receiving property for project-use directly from the government or sponsoring agency should forward all receipts or shipping documents immediately to the property administrator. This permits property to be tagged and inventoried to ensure accountability and responsibility to the government or sponsoring agency in accordance with the Office of Sponsored Programs property control procedures.

Fabricated Equipment

When the principal investigator contemplates construction of equipment or system, the project supervisor completes a Fabricated Equipment Request and Completed Property Notification form (PR-014). Completion of this form identifies the equipment item, assists in cost determination of the item, requests a subproject number, initiates property records, and facilitates all approvals.

Upon approval, a property identification number and subproject number are created under the master project number specified for the amount shown in the total budgeted estimated cost column on part one of the form. The form is then returned to the principal investigator authorizing the purchase of items and services required to fabricate the item. The identification numbers indicated on this form must be used on all Ohio State Requisition form (1303) requisitions submitted to Office of Sponsored Programs Procurement for all items or services requested. All purchases must be processed through Procurement which will issue standard purchase orders when buying materials and services for the fabrication of equipment or property.

Any lease or rental is subject to the same policies, reviews, and approvals as a purchase.

• Competitive bidding is required for agreements of $25,000 or more
• Pre-acquisition screening is required for equipment items costing $100,000 or more

The total amount of the lease may not exceed the current purchase price at the time the lease was entered into. This includes any taxes or insurance required by the lease agreement.

The lease period may not extend beyond the end date of the project period. Longer lease agreements beyond the project period may be entered only if the lease contains an escape clause so that the lease may be either continued or canceled without charge at the end of each project budget period in the event the project is prematurely terminated or funding is reduced. These terms are generally agreeable only with manufacturers or their suppliers, not to financial institutions.

The purchase of maintenance agreements, service contracts, or repair services is an allowable charge to a project only if it can be shown as a direct, allocable cost. In order to provide a consistent method for showing that these costs are directly allocable to a sponsored project, principal investigators must complete and submit a Maintenance and Repair Cost Allocation form (PR-040) with an Ohio State Requisition form (1303) requesting the purchase of a maintenance agreement, service contract, or repair.

If the cost of a maintenance agreement or repair benefits two or more projects or university departments proportionately or, if the repair benefits activities that cannot be initially determined because of the interrelationship of the work, the initial cost charged to each project should be based on estimated usage. For maintenance agreements or repair, actual usage should be documented (e.g., by keeping a log book) during the period of use. The cost of that usage should then be transferred to the benefited project(s) at the end of the usage period. This transfer must be based on the actual, documented usage costs. This transfer may be accomplished by revising the Maintenance and Repair Cost Allocation form and using the expenditure transfers procedures.