Q: Under Conference Grants (R13 or U13), may grant funds be used for the rental of equipment?

A: Grant funds may be used for the rental of necessary equipment under a conference grant. Funds may not be used for the purchase of equipment. (GPS, p. A7-2)

Q: How may equipment be used after the end of a grant?

A: Exempt grantees hold title and are exempted from further obligation to the Federal Government for equipment acquired under a PHS grant for support of basic or applied scientific research, except for the HHS right to require transfer as described above. Nonexempt grantees hold title and shall use the equipment in the project or program 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 HHS 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, if any, in the following order of priority:

• program, projects, or activities sponsored by the HHS awarding agency;
• program projects, or activities sponsored by other HHS awarding agencies;
• program, projects, or activities sponsored by other Federal agencies.

If the grantee no longer needs the equipment for the above purposes, the grantee may retain the equipment for other uses, provided that compensation is made to the original HHS awarding agency or its successor. If the recipient has no further need for the equipment, it shall request disposition instructions from the HHS awarding agency. See 45 CFR Part 74.34(g) for additional information

Q: May grantees use equipment acquired with HHS funds to provide services to non-federal organizations?

A: Yes. However, nonexempt grantees are specifically prohibited from doing so for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute, for so long as the Federal Government retains an interest in the equipment. For both exempt and nonexempt grantees, user charges will accrue as program income and must be reported on the Financial Status Report (SF 269). (45 CFR Part 74.34(b)(1) and 74.24)

Q: Are depreciation or use charges on equipment an allowable cost on a grant?

A: Depreciation or use charges on equipment are an allowable cost, but not normally allocable as a direct cost to a grant. Such charges are usually included in the organization's indirect cost base for determination of its indirect cost rate. Depreciation or use charges on equipment acquired under a federally supported project are unallowable. (GPS, p. 7-6)

Q: Are costs of insuring equipment purchased with project funds an allowable expense?

A: Normally these costs are included in the organization's indirect cost base, but may be allocable as a direct cost if this manner of charging is the normal organizational policy, consistently applied regardless of the source of funds. (GPS, p. 7-8)

Q: What should a grantee do if a piece of equipment is lost, damaged, or stolen?

A: The grantee is responsible for maintaining an internal control system to insure adequate safeguards to prevent loss, damage, or theft of equipment purchased with PHS grant funds. If such a system does not exist or is lacking in any way, the grantee must implement any necessary corrective actions.

For non-exempt grantees, if damage, loss, or theft occurs despite the fact that the recipient has the required control system in place, there will be no obligation to PHS for the equipment, unless the recipient receives compensation for the damage, loss, or theft from insurance or some other source. If the grantee is compensated for the damage, loss, or theft, but does not replace the equipment for use on the grant, the rules regarding sale of equipment apply (45 CFR Part 74.34(g)).

Following is a list of government property to be classified as sensitive equipment regardless of dollar value. The purchase of any of these items requires prior agency approval on any federal contract:

• Barcode Reader/Scanners
• Binoculars
• Buffers, Micro
• Calculators, programmable and scientific
• Photographic Equipment
• Carpenter and Mechanics Tool Kits
• Computer Software and Documentation (commercially leased only)
• Laboratory Balances
• Medical Equipment
• Microwaves
• Personal Computer Components
  • CPU
  • Keyboards
  • Monitors
  • Modems
  • Printers
• Physicians Emergency Kits
• Portable Two Way Radios
• Recorders/Players (Tape/Video/Stereo/Compact Disc/etc) — value over $50.00
• Television Sets
• Weapons (including tranquilizer guns)
• Training Aids and Devices
• General Purpose ADP Equipment, Software, Supplies and Support (excluding 7045-ADP Supplies and Support Equipment)
• Furniture
• Household and Commercial Furnishings and Appliances
• Office Machines and Visible Record Equipment
• Musical Instruments, Phonographs, and Home-type Radios
• Recreational and Athletic Equipment

Controllers office official authorization letters are always subject to relinquishment of the associated grant to the recipient institution. The grant relinquishment process is defined by the Office of Sponsored Programs (OSP). OSP has no authority to authorize the transfer of the State property, only to authorize transfer of the grant itself. The grant relinquishment process usually includes completion of a grant relinquishment form, which lists at least the major equipment items being transferred. Therefore, as soon as the authorization is obtained, the PI should submit the grant relinquishment form to OSP. Only after OSP's approval may the equipment be transferred to the recipient institution. If OSP denies transfer of the associated grant, then the equipment must not be transferred. OSP is responsible for promptly notifying both the PI and Controllers office of the grant transfer denial.

Commonly asked questions about equipment purchased from federal grants and contracts.

Equipment Definitions

Q: What is the definition of equipment?

A: The definition for equipment, as stated in 45 CFR Parts 74 and 92, is an article of tangible nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. However, consistent with recipient organizational policy, lower limits may be established. Grantees may implement the new definition (provided they do so consistently on an organization-wide basis) even though the definition in the cost principles may not yet correspond. (45CFR Part 74.2 and 74.34)

Ownership

Q: Does equipment purchased under a grant belong to the principal investigator/program director?

A: PHS research grants are made to an organization on behalf of the Principal Investigator (PI) or Program Director. Title to equipment acquired with HHS funds vests in the organization receiving financial assistance directly from an HHS awarding agency to carry out a project or program, subject to certain restrictions described at 45 CFR Part 74.34 (see next question). Whereas in the past, title to equipment, property, and supplies purchased under a research grant to a for-profit organization vested in the Federal Government, the revised HHS regulations now permit for-profit grantees to retain title. (45 CFR Part 74.34)

Q: Does the grantee organization have an obligation to the government for equipment after a grant has ended?

A: Non-profit institutions of higher education and nonprofit organizations whose primary purpose is the conduct of scientific research (hereinafter referred to as exempt grantees) hold title and are exempted from further obligation to the Federal Government for equipment acquired under a PHS grant for support of basic or applied scientific research (except for the HHS right to require transfer as described above). Nonexempt grantees (hospitals, for-profit organizations, and non-profit organizations whose primary purpose is other than scientific research) hold title and must follow the requirements described in 45 CFR Part 74.34 and the PHS Grants Policy Statement, pp. 8-10 through 8-14.

Transfers

Q: Can HHS require the transfer of equipment from the grantee to another party?

A: Yes, HHS has the right to require equipment (including title) purchased with grant funds to be transferred to the Federal Government or to an eligible third party named by the HHS awarding office, under the conditions specified in 45 CFR Part 74.34(h). Although it is seldom necessary to do so, this right may be invoked in cases where a grant is transferring to a new organization and the equipment purchased with grant funds is needed to continue the research at the new grantee organization. (45 CFR Part 74.34; GPS, p. 8-13)

Q: What happens to equipment when the PI moves to another organization?

A: The grantee organization is the legal entity to which a grant is awarded. When the PI moves to another organization, the following options apply in the order listed. (45 CFR Part 74.34 and GPS, p. 8-13)

1. The grantee organization may request continuation of the project under the direction of an alternate PI. If the alternate PI is approved by PHS, the grant will continue and thus title to the equipment purchased under the grant will remain with the original grantee organization.
2. The organization may relinquish its interests and rights in the grant to the PI's new organization. If the new organization is approved by the PHS awarding component to continue the grant activity, then the grant will be awarded and any equipment purchased with grant funds and still needed for the grant project would be expected to transfer to the new grantee organization, which would assume title. If the original grantee does not voluntarily agree to relinquish equipment with the grant, HHS may require transfer of the equipment as specified in 45 CFR Part 74.34(h).
3. If an alternate PI is not accepted by the PHS awarding component (or no alternate is nominated), and the original grantee refuses to relinquish its rights in the grant to the new component to continue the research), then the grant will be terminated. Title to equipment will remain with the original grantee organization, subject to disposition or use as described below. The PI's new organization may submit a new application through the regular NIH peer review process to request support for the research. It is important to reiterate that a change of grantee may not take place where it will involve the transfer of a grant to or between foreign institutions or international organizations. (GPS, p. 8-3)