Handbook of Business Procedures
Feb. 17, 2005
Dec. 10, 2015
16.3. TRACKING, MAINTENANCE, AND UTILIZATION
The following section prescribes procedures for the tracking, maintenance, and utilization of property in the possession or control of the university or a subcontractor of the university in accordance with Texas Government Code 403.273, 403.275, and Federal Acquisition Regulation (FAR) 52.245-1.
A. Responsibility and Liability
The president of the university and the property manager designee are responsible for the custody and care of property in the university’s possession.
The liability for property loss may attach to one or several persons depending on the instance in which property is lost or stolen. If property disappears or deteriorates as the result of the failure of the president, property manager, or employee entrusted with the property, he or she will be fiscally liable for the loss sustained. If property is damaged or destroyed as a result of an intentional wrongful or negligent act of any employee, he or she will be held fiscally responsible for the loss.
Specifically for federally-owned property, responsibility and liability for the property exists from the time of receipt until relieved by the appropriate government contracting officer or property administrator. This responsibility requires that the project director, as custodian, apply sound business practices in controlling equipment and follow the applicable provisions of the Federal Acquisition Regulation (FAR), the related property control procedures of the funding agency, and the provisions of the grant or contract.
B. Annual Physical Inventory (Certification)
The university conducts annual physical inventory in cycles. Inventory Services places every department, college, office, etc. into one of the cycles to help facilitate the process. During this time, reports are generated from the scanning results each department submits to Inventory Services. It is imperative that departments follow up with Inventory Services with the requested information as it will help to ensure that the university’s records are accurate. The annual inventory certification is one of the university’s ways of verifying that property in its possession is being taken care of in the appropriate manner.
Each department, whose total missing and stolen property has a depreciated value in excess of two percent of the department’s total depreciated inventory value at the end of a fiscal year, may be assessed a penalty of 50 percent of the excess of two percent of the department’s depreciated total inventory. The penalty is collected from the department’s official unit (xxxx-000). A letter from Inventory Services is sent to the Budget Office instructing them to reduce the department's budget by the amount of the penalty for that fiscal year. If a department recovers or accounts for lost or missing property to the satisfaction of Inventory Services, these funds are returned.
Any significant adjustment to U.S. government-owned inventory requires prior approval from the cognizant government property administrator or from the sponsor’s administrative contracting officer.
Data from the annual certification is used to create an annual risk assessment. The risk assessment helps to determine which units will be audited by Inventory Services in the upcoming year.
C. Temporary Removal of Equipment from UT Premises
1. Government Furnished Equipment (GFE)
GFE is not permanently removed without written permission from the contracting officer. Equipment may be checked out for short periods of time if the following conditions are met:
- Removal is essential to the research being conducted.
- Repair or testing of the equipment.
- Return to the U.S. government.
- Written receipt is signed by the person removing the equipment and retained on file by the project director.
- Inventory record is updated to the new location by the project director or by Inventory personnel.
- All government property being shipped for repair or testing to another research location, or returned to the U.S. government, is shipped either on a Government Bill of Lading or paid by contract/grant funds. Equipment is insured if paid by contract/grant funds for full value. All shipping documents are annotated "Government-Owned Property."
- Proper care shall be taken to ensure that all government-owned property being moved from one location to another is protected from damage through the use of proper packing, special crates or coverings, and adequate use of handling equipment (fork lifts, etc.). Standard safety procedures are utilized in all instances.
2. University Equipment
For any property that is checked out, kept at someone’s home, or housed out in the field and not on campus, a checkout log or off-campus form must be completed and kept by the department in addition to any other departmental liability forms. For an example of the information required on a checkout log or off-campus form, refer to Inventory’s Equipment Located off Campus sample form. This sample form or equivalent is required to be kept by departments for all equipment kept off campus.
D. Maintenance of Equipment
1. Preventive Maintenance
The preventive maintenance measures are designed to preserve and prolong the useful life of the property, minimize the incidence of failure through breakage of its component parts, and promote its full utility through maintenance of high standards of condition and performance. The preventive maintenance program includes the following:
- Provision of a proper environment for the preservation of the property, compatible with its use in performance of authorized research.
- Cleaning and painting, or application of suitable preservative coatings to equipment, as required for surface protection and good appearance as well as proper storage and preservation of accessories and special tools furnished with an item of equipment but not regularly used with it.
- Routine daily cleaning and lubrication of metalworking machines. A thorough cleaning and lubrication is scheduled weekly. Removal of sludge, chips, and cutting oils from metalworking machines that are not used for an extended period of time.
- A constant surveillance by cognizant persons of all property, especially machine shop equipment and vehicles, for evidence of improper maintenance, malfunction, or wear, and the reporting of equipment shortcomings to their supervisors.
- A periodic inspection and servicing of equipment to assure detection of maladjustment, wear, or impending breakdown.
2. Remedial Maintenance
The remedial maintenance measures are designed to correct deficiencies in equipment as they become known. Remedial maintenance of property will include prompt replacement or repair of worn or broken component parts, except in cases where it is not economically advantageous.3. Capital Rehabilitation
In the event that a piece of government-owned equipment needs major repairs to bring the item back to its original condition, the project director shall get permission from the contracting officer before doing the needed work.4. Cannibalization of Government Equipment
Cannibalization is the removal or exchange of parts or assemblies from an item of equipment to replace a damaged or worn out part or assembly of another item of equipment. In keeping with sound maintenance practices, cannibalization of a government property item must not be undertaken until approval is obtained from the appropriate government contracting officer. If necessary, assistance in gaining this approval may be obtained from the Office of Accounting.
E. Utilization of Government Property
Government-owned equipment shall be used only for those purposes related to the assigned contract/grant and/or may be used for other research projects if it does not interfere with the use for the main project. Rental or use fees charged to non-federal grants and contracts is determined from historical costs to operate equipment (supplies and maintenance), and such charges must not exceed charges from local vendors that rent alike equipment. These charges must be approved and reviewed annually or if circumstances change.
The project director is responsible for determining minimum usage levels of government-owned property with an acquisition value of $5000 or more. If actual use drops below this level, an analysis of need shall be made, and retention justified. If there is no longer a need for the item, the project director shall make it known to the Office of Accounting, where action must be taken to reassign the equipment elsewhere within the university complex or as directed by the appropriate government agency.
F . Records
This part establishes the minimum requirements for records to be kept and maintained on government property in the possession of the university and/or subcontractor as described in Federal Acquisition Regulation (FAR) 52.245-1.
1. General Overview
Contractors are required to establish and maintain adequate property control records. Unless the contracting officer directs otherwise, records of government property maintained by the university under terms of a particular contract are utilized as the official records for that contract. In this regard, the official property records at the university are established by the property manager and maintained in the Office of Accounting. In addition, each project director is responsible for keeping sufficient records in order to correct and validate all required inventories and reports, and to ensure proper control of government property in his or her possession. If the project director has more than one contract with a particular government agency, separate property records for each shall be maintained.
Property records shall enable a complete, current, auditable record of all transactions and shall, unless otherwise approved by the property administrator, contain the following:
- The name, part number and description, National Stock Number (if needed for additional item identification tracking and/or disposition), and other data elements as necessary and required in accordance with the terms and conditions of the contract
- Quantity received (or fabricated), issued, and balance-on-hand
- Unit acquisition cost
- Unique-item identifier or equivalent (if available and necessary for individual item tracking)
- Unit of measure
- Accountable contract number or equivalent code designation
- Posting reference and date of transaction
- Date placed in service (if required in accordance with the terms and conditions of the contract)
Various government agencies require periodic inventory reports of government-owned equipment or updated cost information. These reports are normally prepared and submitted by Inventory Services. They are based on data from the property records and information provided by the departments. Inventory Services also updates associated records in the accounting system to track Office of Naval Research administered accounts. Due to the timeliness requirements placed on these reports by the sponsoring agencies, it is essential for the university’s departments to cooperate with any requests made by Inventory Services.
3. Records of Materials and Supplies Consumption
This part prescribes procedures on the use of supplies and expendable property purchased with funds from contracts or grants, and the need for keeping records of such purchases. There are no general requirements from government agencies for reports of supplies used; however, occasionally there are individual requests for providing such information. Accordingly, it is considered to be good business to establish minimum requirements at the university. The project director must maintain records of supplies purchased and used with contract or grant funds.
The internal operating procedures of the department or unit should ensure that supplies acquired with federal funds are not used to support the university research and development activities.
At a minimum, the project director shall establish and maintain records on supplies to show:
- Contract and grant number
- Purchase order number and date
- Cost of purchase
- General description and quantity of supplies
- Name of company from which purchased
These records must be retained for at least six months following the termination of the contract or grant.4. Maintenance Records
The contractor shall properly maintain government property. The contractor’s maintenance program shall enable the identification, disclosure, and performance of normal and routine preventative maintenance and repair. The contractor shall disclose and report to the property administrator the need for replacement and/or capital rehabilitation.