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Managing Supplies and Equipment for a Sponsored Project

Appropriately purchasing supplies and equipment for a sponsored project is an integral part of successful grant stewardship. While the process for ensuring success begins during budget development and justification, grant stewardship is critical over the entire life of the sponsored project. For many, a grant accounting system eases the burden of proper stewardship through tracking and monitoring purchases, use, and disposition. Through tracking and monitoring past purchases, organizations are more effective in projecting purchases and costs for new proposal development.

The purchasing process begins at the proposal stage by defining, estimating, budgeting, and justifying items necessary for the work being accomplished. By reviewing previous purchases in research administration software, estimating and budgeting costs for similar work can be completed with ease.

During this process, it is also important to review the sponsor terms and conditions associated with the potential funding to determine limitations on purchases or exclusions. In general, supplies do not require specific approvals, aside from the budget included in the proposal, but capital equipment purchases typically require specific approvals and justifications. Familiarizing yourself with the sponsor and institutional purchasing and procurement rules as well as knowing how to differentiate between supplies, equipment, and capital equipment will ensure more effective compliance, tracking, and reporting, both internally and for the sponsor.

Supplies and Equipment for a Sponsored Project

Per federal guidance, supplies and small equipment have a per-item value of less than $5,000. Generally, these consumables do not require tracking by the sponsor. Note that in some situations, though, specific sponsor or institutional policies will require tracking of certain “high-value goods” or “sensitive materials.” These can include items that are considered supplies and small equipment according to the federal regulations, such as computing devices, precious commodities, or sensitive chemicals/materials.

Also of note are supplies or small equipment purchased for fabrication. For example, a computer intended for use as a component in a high-end workstation or supercomputer becomes part of the fabricated capital equipment if the combined cost or the various components is $5,000 or greater. This distinction impacts not only indirect cost calculations but also tracking and reporting requirements.

Capital and Fabricated Equipment

Capital equipment is something that has an acquisition cost greater than $5,000 and a useful life greater than one year. The cost includes all components and costs associated with acquisition. Unlike supplies or small equipment, the cost of capital equipment is capitalized or depreciated over the expected life.

Fabricated equipment is typically a specialized item not readily available from vendors in the marketplace. Multiple vendors may supply various components needed for fabrication but ultimately cannot produce or do not provide the final product necessary for the project. The cost of the fabricated equipment is determined by calculating the cost of all components and related costs necessary to its implementation.

Capital equipment and fabricated equipment are subject to the same rules as any other expense charged to a sponsored project. Additionally, these purchases are subject to the procurement requirements specified by the Office of Management and Budget at 2 CRF 200. As part of these regulations, an evaluation of whether renting the capital equipment is more cost effective than purchase must also be conducted.

Procurement on a Sponsored Project

Gil Tran, a senior policy analyst with the Office of Management and Budget, diagrams the procurement requirements below:

In the diagram above, procurement is divided into 5 types. From left to right: micro purchases have the fewest requirements, while a sole source purchase has the most requirements. Through this process, just remember to retain all documentation supporting your purchase for audit purposes.

Small purchases, under the acquisition threshold ($3,000-$150,000) need at least three adequate and reasonable quotes from qualified sources. A minimum or two or more formal sealed bids are needed for construction projects to award firm, fixed-price agreements over $150,000. Competitive proposals can be either fixed or cost reimbursed for projects over $150,000 and while all procurements must reflect reasonable prices, other factors that would advance program or project objectives can also be taken into consideration when determining the most qualified competitive proposal. In instances where the sources were deemed inadequate upon review, or to address a public exigency, express written authorization from the sponsor may be granted to seek a non-competitive, sole source proposal. Detailed documentation supporting the sole source approval is needed prior to award and to comply with the sponsored project requirements.

Cayuse continually updates its software to keep up with the changing needs of our administrators, departments, and upper management as new compliance requirements emerge. From online tools for investigators, to managing expanding grant portfolios, to programs designed to track and monitor supplies and equipment for a sponsored project, we offer solutions designed specifically for research institutions. See more information about our software or contact us to learn more.