Definition of Equipment (Back to Top)
- For grantees subject to 45 CFR Part 74, an article of tangible personal property that has a useful life of more than 2 years and an acquisition cost of $5,000 or more.
- For grantees subject to 45 CFR Part 92, an article of tangible, nonexpendable, personal property having a useful life of more than 1 year and an acquisition cost of $5,000 or more per unit.
Sale of Property (Back to Top)
45 CFR Part 74.134 states that the disposition instructions of the granting agency shall be followed when real property is no longer to be used by the grantee or transferred to an eligible third party.
Sale of Equipment (Back to Top)
Grantees subject to the requirements in 45 CFR Part 74.139, Disposition of Equipment, shall report income earned from the sale of equipment on the FSR if the grantee's project or program for which equipment was acquired is still receiving grant support. If authorized by the awarding unit, grantees may use the income for allowable costs of the project. This income would be reported on lines 10c, 10r, or 10s of the FSR (Long Form) in accordance with the PHS awarding office's authorized disposition. There are no reporting requirements for nonprofit institutions of higher education or nonprofit organizations whose primary purpose is the conduct of scientific research, since they are not subject to the requirements in 45 CFR Part 74.139.
Unused Supplies (Back to Top)
Grantees subject to the requirements in 45 CFR Part 74.141, Unused Supplies, shall reflect any credit to the grant on line 10c of the FSR (Long Form). There are no reporting requirements for nonprofit institutions of higher education or nonprofit organizations whose primary purpose is the conduct of scientific research, since they are not subject to the requirements in 45 CFR Part 74.141.
Equipment and Supplies (Back to Top)
Under authority of Public Law 95-224, nonprofit institutions of higher education and nonprofit organizations whose primary purpose is the conduct of scientific research are exempted from further obligation to the Federal Government for equipment and supplies acquired under a grant for support of basic or applied scientific research, although PHS has the right to require transfer of title to certain equipment as provided in 45 CFR Part 74.136. The exemption does not apply to other types of institutions nor to other types of grants, e.g., training grants, regardless of the type of institution. All other equipment and supplies acquired under PHS grant-supported projects and activities are considered nonexempt.
For items of equipment having a unit acquisition cost of $1,000 or more (for grants subject to 45 CFR Part 74) or $5,000 or more (for grants subject to 45 CFR Part 92), PHS has the right to require transfer of the equipment, including title, to the Federal Government or to an eligible third party named by the PHS awarding office under the conditions specified in 45 CFR Parts 74.136 and 92.32, respectively. This right applies to all types of grantees, including Federal institutions, under all types of grants under the stipulated conditions.
Except in instances where PHS has exercised the right of transfer of equipment, nonexempt equipment shall be used as indicated in 45 CFR Parts 74.137 and 92.32 or disposed of in accordance with 45 CFR Parts 74.139 or 92.32, as applicable. For "other uses" as specified in 45 CFR Part 74.137(d), PHS awarding office prior approval must be obtained before a recipient may make equipment available for use part time for other purposes while it is being used in accordance with 45 CFR Part 74.137(a), (b), or (c). Income generated by such alternate uses is program income and is subject to 45 CFR Part 74.46 if it accrues afterward (see "Program Income").
Exempt property still subject to the right of transfer and nonexempt property before disposition may, if necessary, be exchanged for replacement equipment subject to the rules in 45 CFR Part 74.138.
Policies governing acquisition of equipment by for-profit grantees are contained in appendix 6.
Title to supplies acquired under a grant or subgrant will vest, upon acquisition, in the grantee or subgrantee, respectively.
For governmental grantees subject to 45 CFR Part 92, if there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the award and if the supplies are not needed for any other federally sponsored programs or projects, the grantee or subgrantee shall compensate the PHS awarding office for its share.
For nongovernmental grantees subject to 45 CFR Part 74, if the unused supplies exceed $1,000 in total aggregate fair market value and are not needed for any project or program currently or previously funded by the Federal Government, the recipient may either retain or sell the supplies and must compensate the PHS awarding office for its share. See 45 CFR Part 74.141(b) for details on computing the applicable credit.
Property acquired under a PHS grant-supported project is subject to the requirements for internal control specified in 45 CFR Part 74, Subpart H, and 45 CFR Part 92.32. States shall use, manage, and dispose of equipment acquired under a grant in accordance with State laws and procedures. All other grantees must maintain an adequate equipment management system that meets the following requirements:
- The grantee keeps records that adequately identify items of equipment owned or held by the grantee and state the current location of each item.
- At least once every 2 years, the grantee physically inventories the equipment to verify that the items covered by the records exist and are either usable and needed or listed as surplus. A statistical sampling basis is acceptable.
- The grantee keeps the equipment in good condition and has appropriate safeguards to prevent loss, damage, and theft. Equipment shall be adequately tagged.
- Equipment acquired under PHS grants is also subject to the equipment management requirements in 45 CFR Parts 74.140 and 92.32(d), with the following exemptions:
- Equipment acquired under a Federal statute that permits title to equipment to vest in the recipient without further obligation to the Federal Government. However, the Federal Government retains the right to require the transfer of equipment, including title, having a unit acquisition cost of $1,000 or more (for grants subject to 45 CFR Part 74) or $5,000 or more (for grants subject to 45 CFR Part 92) to the Federal Government or an eligible non-Federal party.
- Equipment for which only depreciation or use allowances are charged.
- Equipment donated entirely as a third-party, in-kind contribution.
- Equipment acquired primarily for sale or rental rather than for use.
- Equipment acquired under a Federal statute that permits title to equipment to vest in the recipient without further obligation to the Federal Government. However, the Federal Government retains the right to require the transfer of equipment, including title, having a unit acquisition cost of $1,000 or more (for grants subject to 45 CFR Part 74) or $5,000 or more (for grants subject to 45 CFR Part 92) to the Federal Government or an eligible non-Federal party.
A recipient's failure to establish a control system as required by 45 CFR Part 74.140(c) constitutes a material violation of the terms of the award. Therefore, the rights mentioned below are in addition to any other rights that PHS has in the event of a violation of grant terms (see particularly 45 CFR Parts 74.7 and 74.113 and "Financial Management and Non-Federal Audits" and "Suspension, Termination, and Withholding").
If nonexempt equipment with a unit acquisition cost of $1,000 or more is damaged beyond repair, lost, or stolen before disposition under 45 CFR Part 74.139, the recipient may be accountable to PHS as described below.
If, at the time of the loss, theft, or damage, the recipient does not have a control system in effect as required by 45 CFR Part 74.140(c) and the damage, loss, or theft was not due to an act of God (unless PHS waives this position), the following applies:
- If the equipment is replaced, the rules on replacement equipment (45 CFR Part 74.138) will apply except that the market value of the original equipment at the time it was damaged, lost, or stolen is used instead of the amount received for trade-in or sale.
- If the equipment is not replaced, an amount equal to the Federal share of the original equipment times the fair market value will be due PHS.
If the damage, loss, or theft occurs despite the fact that the recipient has the required control system in effect, or the damage, loss, or theft is due to an act of God, there will be no obligation to PHS for the equipment unless the recipient received compensation for the damage, loss, or theft from insurance, a reserve under a self-insurance program, or some other source. If the recipient is compensated and replaces the equipment, 45 CFR Part 74.138 applies to the replacement equipment. If the recipient is compensated but does not replace the equipment, 45 CFR Part 74.139(b) applies as though the recipient had sold the equipment. The amount received for trade-in or sale is considered the lesser value of the amount of compensation or the market value of the equipment at the time it was damaged, lost, or stolen.
Any amount due PHS upon the disposition of real property or equipment may either be in the form of a check made payable to PHS or, at the option of the PHS awarding office, may be applied to allowable costs of the project. This option may only be exercised where the original project for which the property was acquired is still receiving grant support from the same PHS program.
Governmental grantees must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services unless specifically permitted or contemplated by Federal statute.