Authority/Reference(s) 45 CFR 75, Subpart E; Uniform Grant Guidance (UGG); OMB Circular A-110; ;UGMS; FAR
Revision Date September 15, 2015

Policy

Equipment as defined by UGG is tangible personal property (including information technology systems) having a useful life of more than one year and valued at over $5,000.

Equipment disposition is the final settlement (i.e., sale, exchange, or transfer) of the property purchased through the contract.  Equipment purchased through the contract is subject to an equitable claim by the state and the federal government. 

  • Equipment valued at $5,000 or less may be retained, sold, or disposed of by the contractor with no further obligation.

  • Equipment valued at $5,000 or more is required to disposition of equipment per Section 200.313 of UGG.

Determining equitable claim

The equitable claim amount is determined by establishing the percentage of monetary interest DFPS has in the equipment (i.e., was the piece of equipment purchased entirely by DFPS, or did DFPS provide less than 100% of the funds used to purchase the equipment?). 

Approval must be obtained by DFPS before disposing of equipment prior to the end of the useful life of an item.  These useful life assignments are provided by the Comptroller at: SPA Process User's Guide

Methods of equipment disposition

Once DFPS determines the percentage of monetary interest it has in the equipment, the method of allocation or return is decided. 
Disposition of the equipment generally involves the contractor following the method below:

  1. Compensation for the equipment

    If the contractor wishes to retain the equipment for other uses, the contractor must make compensation to DFPS.  The amount of compensation is computed by multiplying the current fair market value of the equipment by the percentage of funds DFPS originally put toward the purchase of the equipment.
    If the contractor has no need for the equipment, the contractor will obtain disposition instructions from the agency

  2. Sale of the equipment

    If the contractor chooses to sell the equipment, proper sales procedures must be established to ensure the highest possible return.  The contractor must give DFPS its share of the proceeds after deducting the cost of the sale.  DFPS' share is determined by multiplying the proceeds from the sale by the percentage of funds DFPS originally put toward the purchase of the equipment.

    The actual cost of the sale and of associated handling charges may be deducted from the amount due the agency.  The net amount is submitted to DFPS.

  3. Transfer of the equipment
  4. DFPS reserves the right to transfer the equipment to another program or contractor who is eligible under existing statutes.  Transfer of equipment must be made according to appropriate DFPS policies.

    If the contractor is instructed by DFPS to ship the equipment elsewhere, the contractor will be reimbursed by the agency in an amount computed by multiplying the current fair market value of the equipment by the percentage of funds not originally supplied by DFPS or charged to DFPS toward the purchase of the equipment, plus any reasonable shipping or interim storage costs incurred.

  5. Return of the equipment
  6. After the contractor returns the equipment, DFPS will either transfer the equipment to another contractor, or add the equipment to the DFPS inventory.

    If adding the equipment to DFPS' inventory, DFPS transfers the equipment to the area that originally purchased the equipment or to a different region. 

  7. Determining the method of equipment disposition
  8. The method of disposition is determined on a case-by-case basis, following the guidelines found in Section 200.313 of UGG.

    The final disposition of the equipment is established as part of contract termination procedures or at the time excess equipment is identified.  Disposition is at the state's discretion and is dependent upon the value, condition, and amount of equipment and whether the equipment can be used to further service DFPS clients, the state, or a federal program. 
    When determining the method of disposition, the following questions should be considered:

    • What is the cost benefit of maintaining the equipment?
    • Who, if anyone, can make the best use of the equipment in serving clients or continuing the service?
    • Does DFPS have a large enough claim on the equipment to require it to be entered into the DFPS inventory?

Documenting equipment disposition

The contractor's signature authority submits notification to the contract manager of their intent to dispose of the equipment, and what the DFPS equitable claim is. The correspondence must contain sufficient information for the contract manager to verify the claim, which includes:

  • A description of the equipment;

  • The manufacturer's serial number, model number, or other identification number;

  • Identification of the grant under which the contractor acquired the equipment;

  • Acquisition date and unit acquisition cost;

  • The information needed to calculate the agency's percentage of monetary interest;

  • Location and condition of the equipment and the date the information was reported;

  • Value of each item of equipment, including source(s) of valuation (e.g., names and addresses of bidders and amounts of bids received, and/or names and addresses of appraisers and appraisal amounts);

  • All pertinent information on the final transfer, replacement, or disposition of the equipment.  Information should include the option(s) DFPS accepts to resolve its equitable claim and means of carrying out the option(s).  If the equipment is sold, information on the means used to advertise and/or accept offers and documentation of costs associated with the sale and other such data are required.

In addition to adequate documentation, the contract manager must accept and approve the notification, and maintain a copy in the contract file.