Handbook of Business Procedures
Feb. 17, 2005
June 22, 2010
16.5.1. ACQUISITION OF EQUIPMENT
Prior to the purchase of equipment, the Project Director will screen available equipment to ascertain whether existing equipment will meet the requirements.
The authority to purchase equipment is determined by the contract or grant. Project Directors and departmental purchasing personnel must be sufficiently familiar with the provisions of the contract or grant to ensure that purchases are not made until approval is obtained from the sponsoring Government agency.
An accountant from Contract and Grant Services monitors each Federal contract and grant account. One of each accountant's specific duties is to ensure that approval has been obtained from the Government agency prior to the purchase of equipment.
The unit price for contractor-acquired items is the basic cost, less any discount, plus installation charges, building modifications, and the appropriate shipping charges.
Normally, the unit price of Government-furnished property is provided on the document covering the shipment of the property to UT Austin. However, if the unit price is not stated on the document, it shall be brought to the attention of Contract and Grant Services, where action will be taken to obtain this information. Shipping and installation costs are not normally considered a part of the unit price.
When overages, shortages, or damages are discovered upon receipt of Government-furnished property, the Project Director shall provide a written report to Contract and Grant Services within ten days. This report must contain sufficient facts and pertinent data to enable the Contract and Grant Services to comply with the required reporting procedures of the sponsoring Government agency.
The Project Director is responsible to take all actions necessary in the adjustment of shortage, overages, or damages in shipment of contractor-acquired property in accordance with local purchasing procedures and sound business practices. This action must be taken in conjunction with UT Austin's Central Receiving facility and as prescribed by their procedures.
This part prescribes the procedures for administratively controlling and assigning costs for equipment that is fabricated or constructed by the research department.
Generally, equipment acquired by UT Austin to support research under a Government contract or grant is comprised of easily identifiable, stand-alone items. The equipment items are assigned an inventory number, tagged (if feasible) with a metal label, and have an invoiced unit cost that is charged to an equipment subaccount. However, the nature of the project or research under some contracts or, in others, the non-availability of suitable equipment to perform the research, requires that equipment be fabricated by the department assigned the contract. In these cases, and particularly if more than one item is built, identifying the cost of the equipment becomes complex. Nevertheless, equipment costs must be derived.
Fabricated equipment is defined as a unique one-of-a-kind item that is built or assembled from individual parts or materials by or under the direction of university personnel. The completed item of fabricated equipment may have, but is not limited to a single power source and may result as a stand-alone item. Fabrications are created by assembling a number of components (manufactured or custom made) to produce a piece of equipment that meets unique research specifications. Most fabrications are sponsor-funded and therefore have a number of compliance requirements related to acquiring and tracking individual pieces of equipment in an assembled fabrication.
All services purchased for equipment fabrication must be used in the fabrication process and become a permanent part of the end product’s value. All items purchased must become a permanent part of the end product’s value as well, unless they are destroyed during testing or consumed in fabrication. The completed item of fabricated equipment will have an aggregate cost of $5,000 or more and be recorded as capital equipment in the university's asset system. Upon completion, the end product must have a useful life greater than one year.
The intent herein is not to constrain or impede research efforts, but to ensure that expenditures are properly allocated in keeping with good accounting practices and in a manner that will withstand the scrutiny of the awarding agencies. It is recognized that Project Directors need flexibility in managing their research grants and contracts. Contract and Grant Services will assist and support the Project Directors in that regard.
To consolidate the various expenditures involved in fabricating items of equipment, Contract and Grant Services has established fabrication subaccounts for use in each agreement affected. The Project Director must advise the UT Austin accountant of the particular contract or grant involved if an item of equipment is going to be fabricated so they can jointly agree on the appropriate subaccount number. It is then incumbent upon the Project Director to maintain a record system that will reflect the significant costs directly related to the construction of the fabricated item. If more than one piece is to be produced, (for example, a production run of identical items), the total cost of the operation may be divided by the number of items produced to obtain a unit cost.
Costs of materials and supplies used in fabricating equipment shall be assigned to the fabrication subaccount, to the extent to which they can be identified by the department or center. The costs of contract labor directly related to fabrication shall also be assigned, but not the cost of in-house (UT Austin) labor. Those cumulative costs, as determined by the Project Director, regardless of object class code, will become the cost of record for the fabricated equipment item. When a fabrication subaccount has been established for a particular contract, other subaccounts should not be used to purchase materials, parts, etc. for the fabricated equipment, as to do so would conceal costs properly chargeable to the fabrication. Further, if different equipment items are going to be fabricated, the Project Director must keep the costs for each segregated and properly allocated. To facilitate this segregation, a limited number of different subaccounts can be established for the costs of the different fabricated items. If, however, the different items being fabricated will work as an integral unit or system when finished, the same subaccount number may be used. The Project Director shall determine this; however, the accountant for the contract must be kept apprised. If the Project Director uses one subaccount for different fabricated items, a ledger detail should be maintained by the department or center staff to show how the expenditures were allocated. It is not possible for Contract and Grant Services to maintain this detail.
Departments/centers frequently maintain bench stocks of commonly used components and replacement parts. Because these items are purchased in quantity, they are more economical than special ordering similar items. Consequently, researchers will use them in the interests of expediency and economy. Costs of these items should be determined and transferred by Inter-departmental Transfer Voucher (IDT) from a departmental revolving account to the fabrication subaccount. In some cases, the use of these materials and supplies may be minimal; therefore, it may be difficult or not feasible to ascertain their cost. When such costs are insignificant or cannot be determined, they will not be transferred to the fabrication subaccount. The Project Director shall determine this. The basic policy, however, is to identify and properly assign the costs of all materials and supplies used in the fabricated product.
This part establishes requirements and procedures for tagging U.S. Government-owned equipment in possession of UT Austin.
To facilitate inventory control and enhance security, all equipment items, whether University- or U.S. Government-owned will have inventory tags attached. All U.S. Government-owned property will be tagged in accordance with provisions of this part.
The Office of Accounting Inventory Services will tag the University- and U.S. Government-owned equipment within 10 working days upon receipt of equipment. Equipment that is contractor-acquired and determined to belong to the U.S. Government will be tagged using the University of Texas at Austin bar-coded property tag. A separate Property of U.S. Government tag will be placed on each piece of equipment. This information will then be entered into the inventory records as U.S. Government-owned property. U.S. Government-furnished equipment will be tagged in the same manner and entered into the inventory system as U.S. Government property. If the equipment cannot be tagged because of size, configuration, use, etc., the number may be etched or painted on the item. If this is not practical, a number will be assigned to the item and then entered into the inventory system as U.S. Government property. The record will contain a notation that the number is assigned and not on the item.
When the equipment item has reached an identifiable stage of construction (or is complete), as determined by the Project Director, it will be tagged upon notice from the Project Director. After notification, the Office of Accounting Inventory Services will tag the equipment within 10 working days. The sponsoring agency may have provided an inventory tag and number; if not, a UT Austin tag and number will be assigned. If tagging is not possible or feasible, the department/center shall keep the inventory tag on file along with the other property records for the project. Normally, major fabricated equipment items or diagnostics will be assigned one inventory number; fabricated subsystems that become integral parts of existing items, as well as modifications to existing ones, will be included under the single inventory number for the specific item.