Research Administration Policies
RA70 Property and Equipment
Subject Matter Expert:
Policy Steward:Senior Vice President for Research and Corporate Controller >
- General Policy
- University Capitalization Criteria
- Equipment Owned/Provided by Sponsor
- Export Control
- Specific Policy - Source of Funding
- Further Information
- Cross References
To outline policy regarding the management of property and equipment obtained through sponsored awards.
Property and equipment purchased or fabricated with funding from external sponsors must be managed in accordance with the sponsor's wishes and may remain under the ownership, either wholly or conditionally, of the sponsor. Principal investigators and others must be aware of the specific conditions regarding property and equipment purchased or fabricated with sponsored funding, especially when property or equipment is purchased with multiple sources of funding (Federal, Commonwealth, University).
Property: Per the Uniform Guidance 2 CFR 200.1 "property" means real property or personal property. "Real property" means land, including land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment. "Personal property" means property other than real property. It may be tangible, having physical existence, or intangible.
Equipment: Per the Uniform Guidance 2 CFR 200.1 "equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000."
Fabrication: A fabrication is the creation of an individually separate and distinct item, assembled by PSU and/or subcontractors from individual parts or components. The completed fabrication will not be part of a leasehold or capital building improvement. The item has a total per unit acquisition cost which equals or exceeds $5,000.
The University has established the following criteria for capitalization of property (buildings/land), equipment, and software:
Buildings/Land: All new purchases of buildings, facilities, and land are capitalized. (No dollar threshold applies.) Renovations are capitalized if they extend the life of the asset and exceed $500,000. Normal, routine repairs are treated as non-capital.
Equipment: All stand-alone tangible items with a useful life or one year or more and a value of $5,000 or more are capitalized. This includes equipment fabricated by a department for which the amount capitalized would include the actual costs of materials. See Procedure CR2019 – Accounting for Capital Equipment for more detail on fabricated equipment.
Software: Software purchases over $500,000 with a useful life of more than one year are capitalized.
Data: Data purchases are not subject to capitalization.
Additional detailed information regarding equipment capitalization is available from Property Inventory. See also Procedure CR2019 – Accounting for Capital Equipment.
Sponsor provision of equipment on consignment should be reported to Property Inventory on Report of Tangible Property Obtained by Consignment or Loan and Procedure CR2019 to ensure:
- Adequate insurance coverage is provided,
- Property control is maintained during project period,
- Project is closed out properly in accordance with all reporting and property disposition requirements.
See RA40 - Compliance with Federal Export Regulations for detail regarding property and equipment to be used outside the U.S. Principal Investigators are responsible for understanding and complying with export control regulations. The University Export Compliance Officer can be contacted for assistance.
The Federal government will sometimes grant title of equipment to Penn State. In other cases, the Federal government will grant "conditional" title to Penn State, which means Penn State must request disposition instructions from the Federal government when the "equipment acquired under a Federal award is no longer needed for the original project or program or for other activities currently or previously supported by a Federal awarding agency" (Uniform Guidance 2 CFR 200.313). In yet other cases, the Federal government will retain title to the equipment. Penn State must submit annually an inventory listing of federally owned property in its custody to the Federal awarding agency.
Title to equipment purchased under federal contracts is typically defined in conjunction with FAR 52.245-1. Title to equipment purchased under federal grants and cooperative agreements is defined by Uniform Guidance 2 CFR 200.313, unless otherwise defined by agency-specific terms and conditions.
FABRICATION OF EQUIPMENT:
The US Government expects PSU to complete a Fabrication Expenditure Questionnaire (FEQ) for each and every fabrication that will be funded with Federal dollars, to ensure it is being priced correctly per Federal regulations. ARL needs to complete the FEQ at the proposal stage. All other university business areas need to complete an FEQ at the award stage. Additional details are provided at CR2020 - Property Fabrication.
"OTHER USE" DURING PROJECT:
If the equipment is owned by the Federal Government, use on other activities not sponsored by the Federal Government shall be permissible if authorized by the Federal awarding agency.
If Penn State has title to the equipment (including conditional title), Penn State is expected to make such equipment available for use on other projects or programs currently or previously supported by the Federal government if such other use will not interfere with the work on the project or program for which the equipment was originally acquired. First preference for such other use shall be given to other projects or programs sponsored by the Federal awarding agency that financed the equipment; second preference shall be given to projects or programs sponsored by other Federal awarding agencies. Use for non-federally funded programs or projects is also permissible. User fees should be considered if appropriate (Uniform Guidance 2 CFR 200.313(c)(2)).
USE AFTER PROJECT PERIOD:
If Penn State has title to the equipment (including conditional title), then Penn State shall continue to 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 Federal awarding agency. If Penn State's title to the equipment is conditional, and Penn State no longer needs the equipment for the original project or program or for other activities currently or previously supported by a Federal awarding agency, then Penn State must request disposition instructions from the Federal awarding agency, unless the terms and conditions of the Federal award state otherwise (2 CFR 200.313(e)).
USE TO PROVIDE SERVICES AFTER PROJECT PERIOD:
Per the Uniform Guidance, the recipient shall not use equipment acquired with Federal funds to provide services to non-Federal outside organizations 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 (Uniform Guidance 2 CFR 200.313(c)(3). This applies to all equipment purchased through federal funding which is retained after the project period and its use is being charged out through a fee or rate.
This means that federally funded equipment used in Research Service Centers or other units charging fees for the use of the equipment, must assure that an appropriate fee, based on federal costing standards, must be charged, in compliance with FN27 - Establishing and Billing Service Center User Rates.
ADDITIONAL REQUIREMENTS FOR FEDERALLY OWNED EQUIPMENT:
Federally owned equipment requires sponsor or Administrative Contracting Officer approval to:
At the end of the project period, the University must take one of two actions:
- Request permission from the sponsor to transfer to another agreement.
- Request from the sponsor disposition instructions.
All Federally owned equipment has special annual and closeout reporting requirements, especially for contracts under FAR which are overseen by Property Inventory.
Department of Defense (DoD) Government furnished equipment exceeding $5,000 must be tagged with an Item Unique Identification (IUID) tag and entered into the DoD IUID Registry by Property Inventory.
"USE FEES" AS PROGRAM INCOME:
During the project period, all user charges shall be treated as program income and treated in accordance with Procedure CR2068 - Property Inventory Depreciation and Usage Fee Guidelines and Policy RA66 – Program Income.
Commonwealth Master Agreement Property Clauses
The following requirements are included in the current Commonwealth Master Agreement, which ends June 30, 2026. Commonwealth of Pennsylvania-sponsored awards which are not under the Master Agreement may have the same or similar clauses and should be reviewed closely to ensure compliance.
Commonwealth of Pennsylvania (COP) will retain ownership of all capital equipment (over $5,000) and expendable property (between $500 and $5,000). Capital equipment (including purchase vs. rental costs) and expendable items shall be included in the University budget as presented to the COP agency.
Expendable Property. Expendable property includes, but is not limited to, such items as global positioning systems (GPS), computers, microscopies, tractors, and all-terrain vehicles (ATV). Expendable property does not include such items as office supplies, safety gear, ATV parts, laboratory supplies, etc.
Capital Good and Capital Equipment. Goods or equipment that exceeds $5,000 per item.
Equipment Options. The Commonwealth has two equipment options in Attachment 2: 1) Commonwealth determines up‐front they will retain ownership, therefore a Report of Personal Property form (Attachment 3) is to be submitted at conclusion of purchase order period, or 2) Commonwealth retains ownership but will allow University to keep possession for use on other Commonwealth projects that University has with that Commonwealth agency only. If the capital equipment and/or expendable property equipment is being used on another agency project, the agency shall give notice to University that it intends to retain ownership at the end of the project. If and when the capital equipment and/or expendable property is no longer being used on an agency project, University will submit Attachment 3.
Final report of capital equipment and expendable property. When option 1) is selected, upon termination or completion of any purchase order where capital equipment or expendable property were acquired, PSU shall submit within sixty (60) days a report to the awarding agency and to DGS an itemized listing of all capital equipment or expendable property purchased for the project. When option 2) is selected and the capital equipment and/or expendable property is no longer being used on an agency project, PSU shall submit within sixty (60) days a report to the awarding agency and to DGS an itemized listing of all capital equipment or expendable property. A copy of the invoice for each item shall be attached to the report. See Attachment 3 of the Master Agreement for the report format to be utilized.
Disposition of property. Within 60 days of the COP agency's receipt of the Attachment 3 from the University, the agency will arrange for the pickup or delivery (at Commonwealth expense) of Commonwealth-owned property. In the event the COP agency does not contact the University within 60 days to arrange delivery or pickup of any Commonwealth owned property, such property will become the property of the University.
Other Uses Not Allowed. Commonwealth-owned property may not be used for any other purpose without prior authorization of the Commonwealth unless such property becomes the University’s property as detailed above.
The complete text of these requirements can be found in Exhibit A, Article VI of the Commonwealth Master Agreement.
Property ownership clauses vary with industrial agreements as well. PIs should read all property clauses to determine if consignment or ownership requirements necessitate working with Property Inventory.
For questions, additional detail, or to request changes to this policy, please contact the Office of the Senior Vice President for Research or the Office of the Corporate Controller.
Procedure CR2019 – Accounting for Capital Equipment
Procedure CR2020 - Property Fabrication
Procedure CR2068 - Property Inventory Depreciation and Usage Fee Guidelines
FN27 - Establishing and Billing Service Center User Rates
RA66 - Program Income
February 10, 2022 - Updated to include reference to newly issued CR2020
November 24, 2021 - Updated to reflect guidance associated with new Commonwealth Master Agreement (2021-2026)
March 11, 2021 - Updated thresholds per Property Inventory
November 28, 2020 - Updated to reflect UG revision
November 26, 2020 - Updated to reflect issuance of FN27 (replacing AD15)
September 19, 2019 - Changed Vice President for Research to Senior Vice President for Research
- February 26, 2016 - This new policy (incorporating parts of RA07) has been created as part of the policy reorganization brought about by the implementation of the OMB Uniform Guidance (2 CFR 200).
- March 7, 2005 - Editorial changes to correct links.
- February 20, 1998 - Reformatted OSP guidance (dated September 1994) as RA07.
Date Approved:February 22, 2016>
Date Published:February 10, 2022>