Authority/Reference(s) 45 CFR 75, Subpart E; FAR;Uniform Grant Guidance (UGG)
Revision Date September 15, 2015


Equipment is an article of nonexpendable, tangible personal property (including information technology systems) having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of:

  • The capitalization level established by the organization for financial statement purposes, or

  • $5,000.

Contract staff must monitor the contractor’s processes for handling equipment to ensure adequate safeguards are in place to prevent loss, damage or theft of the property and investigation of any loss, damage or theft is conducted. The contractor must have adequate procedures in place for maintenance to keep the equipment in good condition.

Equipment included in a budget should be of adequate quality and of reasonable cost in relation to the service being purchased. Reasonable cost should be a joint agreement between the contractor and DFPS contract staff. 

DFPS contract staff must:

  • Give prior written approval on all equipment purchases to be made by the contractor for contract use from contract funds.

  • Approve the method of reimbursement for the approved equipment purchases.

  • Ensure the contractor uses the equipment for the approved purposes.

  • When the equipment is no longer needed for the original service it may be used in other activities supported, when approved by DFPS, and in compliance with 2 CFR 200.313.

  • A contractor cannot charge less than a private company charges for the use of the equipment unless prior approval is obtained.

When replacing the equipment, a contractor may use the proceeds to offset the cost of the replacement equipment.  All equipment purchases must be made and reimbursed according to the terms of the contract. Purchases of equipment or other capital expenditures of $5,000 or more that are to be billed as a direct charge to cost reimbursement contracts, must obtain approval from the assistant commissioner for the respective program. The memorandum requesting approval will be addressed to the assistant commissioner and signed by the contract division director or program director. The following information must be included in the memorandum:

  • The legal name of the contractor;

  • The contract number;

  • A brief description of each item included in the request;

  • A brief description of the proposed basis for procuring each item (e.g., competitive bid, market price, etc.);

  • A recommendation to approve or disapprove.


  • Upon approval of the purchase request, the contract manager must review to ensure the purchase is reasonable, necessary and meets applicable contracting regulations.

  • Equipment purchased through the contract is owned by the contractor but subject to an equitable claim by the state and the federal government. Contractors are accountable for equipment purchased through the contract.  

  • Contractors are required to maintain inventory of purchased equipment. The inventory system may include the equipment's serial or model number or tagging with its own numbering system. Since the equipment does not belong to DFPS, contractors should not tag the equipment as State of Texas or DFPS property. 

  • Contractors must bill equipment according to federal regulations found in 2 CFR 200, 45 CFR Part 75 which states, expenditures will be charged in the period in which the expenditure is incurred or otherwise directed by the federal awarding agency.

  • DFPS does retain the right to final disposition of any equipment purchased through a DFPS contract.

Note: Certain items, known as controlled assets, although not categorized under the DFPS definition of equipment, must also be tagged and included in a contractor’s inventory according to DFPS policy.