Equipment acquisition, use and disposition requirements under Federal financial assistance awards are found in 2 CFR 200.
This information applies to:
All grants and cooperative agreements
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Overview
Equipment may be an allowable cost to a Federal award or subaward when its need and utility in completing a project are justified by the recipient or subrecipient and approved by the Federal agency or pass-through entity. Equipment means tangible personal property (including information technology systems) having a useful life of more than one year, and a per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes, or $10,000. Tangible personal property that does not meet this definition is generally considered "supplies".
Equipment may fall into one of four categories of "equipment" defined in the Uniform Guidance: capital assets, computing devices, general purpose equipment, information technology systems, special purpose equipment, or supplies. Federal financial assistance applicants and recipients/subrecipients should be familiar with these differing types and the specific requirements that determine the allowability of each under an award.
Applicants seeking to acquire equipment on a U.S. Fish and Wildlife Service award or subaward must obtain prior approval from the Service or pass-through entity. They do so by providing a justification for the equipment need, with cost estimates, in the grant application. If the need wasn’t anticipated, an award recipient or subrecipient may request purchase approval during the award period of performance. These are both considered “prior approval” requests. The Service or pass-through entity will determine the allowability of the equipment purchase request within the context of the project objectives and activities, and in accordance with any program funding restrictions. The Service or pass-through entity gives written approval of equipment purchase requests to a recipient in the Notice of Award or through other documented means, with any special terms and conditions that may apply.
The costs of depreciation, equipment rental, and operating and maintaining acquired equipment may also be allowable under a Federal award. More information about the allowability of these costs can be found under Related Pages.
The requirements for the use, management, and disposal of equipment acquired under a Federal award depend on the type of recipient or subrecipient. States follow the requirements in 2 CFR 200.313(b); all other non-Federal entities follow 2 CFR 200.313(c) through (e). Special terms and conditions for equipment use, management, and disposition may also be applied to any entity by the Service or pass-through entity to an award.
Authorities
2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
§200.1 Acquisition cost.
Acquisition cost means the (total) cost of the asset including the cost to ready the asset for its intended use. For example, acquisition cost for equipment means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Acquisition costs for software include those development costs capitalized in accordance with generally accepted accounting principles (GAAP). Ancillary charges such as taxes, duty, protective in transit insurance, freight, and installation may be included in or excluded from the acquisition cost in accordance with the recipient's or subrecipient's regular accounting practices.
§200.1 Capital assets.
Capital assets means tangible or intangible assets used in operations having a useful life of more than one year which are capitalized in accordance with GAAP. Capital assets include: (a) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and (b) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance). For purpose of this part, capital assets do not include intangible right-to-use assets (per GASB) and right-to-use operating lease assets (per FASB).
§200.1 Capital expenditures.
Capital expenditures means expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life.
§200.1 Computing devices.
Computing devices means machines that acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information. See also the definitions of supplies and information technology systems in this section.
§200.1 Equipment.
Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes, or $10,000. See the definitions of capital assets, computing devices, general purpose equipment, information technology systems, special purpose equipment, and supplies in this section.
§200.1 General purpose equipment.
General purpose equipment means equipment that is not limited to research, medical, scientific, or other technical activities. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles. See also the definitions of equipment and special purpose equipment in this section.
§200.1 Information technology systems.
Information technology systems means computing devices, ancillary equipment, software, firmware, and related procedures, services (including support services), and resources. See also the definitions of computing devices and equipment in this section.
§200.1 Special purpose equipment.
Special purpose equipment means equipment that is used only for research, medical, scientific, or other similar technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments, spectrometers, and associated software. See also the definitions of equipment and general purpose equipment in this section.
§200.1 Supplies.
Supplies means all tangible personal property other than those described in the equipment definition. A computing device is a supply if the acquisition cost is below the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes or $10,000, regardless of the length of its useful life. See this section's definitions of computing devices and equipment.
§200.313 Equipment.
See also §200.439 Equipment and other capital expenditures.
(a) Title. Title to equipment acquired under the Federal award will vest upon acquisition in the recipient or subrecipient subject to the conditions of this section. This title must be a conditional title unless a Federal statute specifically authorizes the Federal agency to vest title in the recipient or subrecipient without further responsibility to the Federal Government (and the Federal agency elects to do so). A conditional title means a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled. Title for equipment vested in a recipient or subrecipient is subject to the following conditions:
(1) Use the equipment for the authorized purposes of the project during the period of performance or until the property is no longer needed for the purposes of the project.
(2) While the equipment is being used for the originally-authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests without the approval of the Federal agency or pass-through entity.
(3) Use and dispose of the property in accordance with paragraphs (b), (c), and (e) of this section.
(b) General. A State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. Indian Tribes must use, manage, and dispose of equipment acquired under a Federal award in accordance with tribal laws and procedures. If such laws and procedures do not exist, Indian Tribes must follow the guidance in this section. Other recipients and subrecipients, including subrecipients of a State or Indian Tribe, must follow paragraphs (c) through (e) of this section.
(c) Use.
(1) The recipient or subrecipient must use equipment for the project or program for which it was acquired and for as long as needed, whether or not the project or program continues to be supported by the Federal award. The recipient or subrecipient must not encumber the equipment without prior approval of the Federal agency or pass-through entity. The Federal agency may require the submission of the applicable common forms for reporting on equipment. When no longer needed for the original project or program, the equipment may be used in other activities in the following order of priority:
(i) Activities under other Federal awards from the Federal agency that funded the original program or project; then
(ii) Activities under Federal awards from other Federal agencies. These activities include consolidated equipment for information technology systems.
(2) During the time that equipment is used on the project or program for which it was acquired, the recipient or subrecipient must also make the equipment available for use on other programs or projects supported by the Federal Government, provided that such use will not interfere with the purpose for which it was originally acquired. First preference for other use of the equipment must be given to other programs or projects supported by the Federal agency that financed the equipment. Second preference must be given to programs or projects under Federal awards from other Federal agencies. Use for non-federally-funded projects is also permissible, provided such use will not interfere with the purpose for which it was originally acquired. The recipient or subrecipient should consider charging user fees as appropriate.
(3) Notwithstanding the encouragement in § 200.307 to earn program income, the recipient or subrecipient must not use equipment acquired with the Federal award to provide services for a fee that is less than a private company would charge for similar services unless specifically authorized by Federal statute. This restriction is effective as long as the Federal Government retains an interest in the equipment.
(4) When acquiring replacement equipment, the recipient or subrecipient may either trade-in or sell the equipment and use the proceeds to offset the cost of the replacement equipment.
(d) Management requirements. Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements:
(1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property.
(2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years.
(3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program.
(4) Regular maintenance procedures must be in place to ensure the property is in proper working condition.
(5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return.
(e) Disposition. When equipment acquired under a Federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a Federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Disposition of the equipment will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions:
(1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity.
(2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment.
(3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property.
(4) In cases where a recipient or subrecipient fails to take appropriate disposition actions, the Federal agency or pass-through entity may direct the recipient or subrecipient to take disposition actions.
(f) Equipment retention. When included in the terms and conditions of the Federal award, the Federal agency may permit the recipient to retain equipment, or authorize a pass-through entity to permit the subrecipient to retain equipment, with no further obligation to the Federal Government unless prohibited by Federal statute or regulation.
§200.439 Equipment and other capital expenditures.
(a) See § 200.1 for the definitions of capital expenditures, equipment, special purpose equipment, general purpose equipment, acquisition cost, and capital assets.
(b) The following rules of allowability must apply to equipment and other capital expenditures:
(1) Capital expenditures for general purpose equipment, buildings, and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity.
(2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $10,000 or more have the prior written approval of the Federal agency or pass-through entity.
(3) Capital expenditures for improvements to land, buildings, or equipment that materially increase their value or useful life are allowable as a direct cost, but only with the prior written approval of the Federal agency or pass-through entity. See § 200.436 on the allowability of depreciation on buildings, capital improvements, and equipment. See § 200.465 on the allowability of real property and equipment rental costs.
(4) When approved as a direct cost in accordance with paragraphs (b)(1) through (3), capital expenditures must be charged in the period in which the expenditure is incurred or as otherwise determined appropriate and negotiated with the Federal agency.
(5) The recipient or subrecipient may claim the unamortized portion of any equipment written off as a result of a change in capitalization levels by continuing to claim the otherwise allowable depreciation on the equipment or by amortizing the amount to be written off over a period of years negotiated with the cognizant agency for indirect cost.
(6) Cost of equipment disposal. If the Federal agency instructs the recipient or subrecipient to otherwise dispose of or transfer the equipment, the costs of disposal or transfer are allowable.
(7) Equipment and other capital expenditures are unallowable as indirect costs. See § 200.436.
The Council on Federal Financial Assistance (COFFA) Frequently Asked Questions on 2 CFR 200 (Published Jan 15, 2025)
200.313
.313-1 Capitalization Level for Software
Q. Does the inclusion of information technology systems in the definition of equipment mean that the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $10,000 applies to software?
A. Yes, the maximum capitalization level of $10,000 applies to software, regardless of the level used for financial statement purposes. This definition encompasses purchased software that comes with the hardware with a unit cost greater than $10,000. It does not include internally developed software projects which are capitalized in accordance with GAAP for financial statement purposes.
200.313
.313-2 Equipment and Conditional Title
Q. What does conditional title mean and does this affect how recipients account for equipment ownership?
A. Conditional title means that equipment ownership vests in the recipient at the time of acquisition and that it is contingent on meeting the requirements for use, management, and disposition of the equipment as required in 2 CFR § 200.313. A conditional title means a clear title is withheld by the Federal agency until conditions and requirements specified in the terms and conditions of a Federal award have been fulfilled. There is not any change in the Uniform Guidance for how recipients should account for equipment ownership.
Frequently Asked Questions
How do I determine the "per-unit acquisition cost"?
This cost is not just the net base price of the equipment. It also includes the cost of any modifications, attachments, accessories, or auxiliary components that make the equipment usable for the purpose for which it was acquired (§200.1). For example, you need a histology/pathology microscope that can capture images for a digital tissue sample catalog you're creating as part of a project. The base microscope will cost $9,100, but you also need the digital camera attachment which will cost $1,100. Used and maintained together as one unit, the per-unit acquisition cost is therefore $10,200 and would require prior approval for the purchase.
If the item I want to purchase has a per-unit acquisition cost of less than $10,000, is it a “supply”? I don’t need to request prior approval from the Service then, right?
It depends. If your organization does not set an equipment capitalization level or sets the level at $10,000, an item less than $10,000 would be considered a ‘supply’ and would not require prior approval from the Service to purchase. If your organization sets a lower equipment capitalization level, you would need to determine if the per-unit acquisition cost meets or exceeds that level in order to determine if prior approval is required. (See §200.313 Equipment and §200.439 Capital Assets.)
When do I need to request approval from the Service to purchase equipment – when the per-unit acquisition cost is $10,000 or more, or once the cumulative total of equipment to be purchased reaches $10,000?
Neither depicts the prior approval requirement circumstance. The prior approval requirements in §200.313 and §200.439 are set at the unit cost level, not the cumulative total cost. Applicants and recipients must seek prior approval from the Service for the lesser dollar threshold of these two circumstances: 1) equipment per-unit acquisition cost is $10,000 or more, or 2) equipment unit cost is at or exceeds the equipment capitalization level established by the recipient or subrecipient for financial statement reporting purposes.
How do I find what my organization’s equipment capitalization level is?
Speak with your organization’s purchasing or contracting office or asset manager. Your organization should have a policy or procedure for defining and managing its capitalized assets.
I plan to subaward funds under this award. Do I need to review and approve equipment costs of my subrecipient?
Yes. As a pass-through entity, you are responsible for determining the allowability of equipment purchase requests and providing specific approval to the subrecipient in the award letter with any special terms and conditions that may apply. (See §200.439.)
Should I consider renting or leasing the equipment I need to carry out the project versus purchasing equipment?
Yes. Conducting a rent/lease vs. purchase analysis using local market rates is a best practice to help recipients and the Service determine the best and most cost efficient way to achieve the project objectives. Including this analysis within your budget justification is encouraged. (See §200.465 Rental costs of real property and equipment.)
Who owns the equipment acquired under a Federal award or subaward?
The recipient or subrecipient retains a conditional title to the equipment once an award or subaward has ended under the condition that the equipment is used and disposed of in accordance with §200.313(b), or (c) through (e), depending on the subrecipient entity type.
May the Service require the recipient to return the equipment once the award has ended?
No. The Service cannot require the return of equipment. Entities follow the appropriate disposal procedures - A State/Tribe must use, manage, and dispose of equipment acquired under a Federal award in accordance with its written laws and procedures, and in accordance the Terms and Conditions in its Notice of Award under which it was originally purchased. If a non-State/Tribal recipient cannot continue to use the equipment for the award-intended purpose or other purposes outlined in 2 CFR 200.313(c), it may request disposition instructions from the Service, who may request the equipment be transferred to the Federal government in its disposition instructions. The Service must then compensate the recipient for its attributable percentage of the current fair market value of the equipment. (See §200.313(e)(3).
What do I do with equipment purchased on a Federal award once the award has ended?
State recipients must use, manage, and dispose of equipment acquired under a Federal award in accordance with state laws and procedures (§200.313(b)) and should refer to their Notice of Award for any additional terms and conditions that may apply to the acquired equipment.
For all other non-Federal entity recipients, and in accordance with the terms and conditions of the award, equipment must continue to be used in the program or project for which it was acquired, for as long as it is needed. When no longer needed for the original program or project, the equipment may be used to support: 1) other Service grant-funded activities, then 2) other Federally-funded activities (see §200.313(c)(1).) These recipients must also continue to manage the equipment in accordance with the requirements at §200.313(d). If you will not need the equipment after the close of an award or subaward, you should request disposition instructions from the Service or pass-through entity (see §200.313(e)).
When included in the terms and conditions of the Federal award, the Federal agency may permit the recipient to retain equipment, or authorize a pass-through entity to permit the subrecipient to retain equipment, with no further obligation to the Federal Government unless prohibited by Federal statute or regulation (§200.313(f)).
Can I sell equipment purchased under a Federal award when it is no longer needed?
Yes. State recipients may dispose of the equipment in accordance with state laws and procedures (§200.313(b)), unless special terms and conditions regarding disposition have been applied to the award.
For all other non-Federal entity recipients, when the equipment is no longer needed to support the original program or project, or other Federally-supported activities, the recipient must request disposition instructions from the Service if required by the terms and conditions of the award (see §200.313(e)). The Service may authorize the sale of equipment through these instructions, which may include:
(1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity;
(2) Equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment;
(3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property.
I need to replace equipment acquired under a prior Federal award for use on the continuing project. May I use the trade-in or sale value to reduce the acquisition cost of replacement equipment?
Yes. State recipients may replace the original Federally-funded equipment if in accordance with state laws and procedures (§200.313(b)), unless special terms and conditions regarding disposition have been applied to the award.
For all other non-Federal entity recipients, you may either trade-in or sell the equipment and use the proceeds to offset the cost or the replacement equipment (See §200.313(c)(4)).
All recipients should first determine if the acquisition cost of the replacement equipment requires the prior approval of the Service before purchasing the equipment (§200.313 and 200.439). If prior approval requirements apply, you should include details of the original Federally-funded equipment and replacement equipment to be acquired, trade-in or sale value of the original equipment, and the new reduced acquisition cost for the replacement equipment in your purchase request to the Service.
How may we charge the costs of operating and maintaining the acquired equipment to an award?
Operations and maintenance expenditures for equipment are allowable direct costs to a Federal award. Examples of operating expenditures include fuel, insurance, and labor to operate the equipment. Examples of maintenance expenditures include oil, tires, and repair parts and labor. Recipients may also develop equipment use rates from a pool of all operating and maintenance costs (see related page Depreciation / Equipment Use Rates for guidance on properly developing these rates). Recipients must ensure all operations and maintenance costs are properly allocated to Federal and non-Federal funding sources that share in the use of the equipment.
Is Federally-funded equipment reviewed in an audit?
Yes, the equipment retains a Federal interest even when the Federal award is closed. OIG auditors will request a copy of your organization’s equipment inventory and will select a sample to verify compliance with the equipment use, management and disposal requirements at §200.313(b) through (f).
Learning Aids
Related Pages
Depreciation / Equipment Use Rates
2 Comments
Phil King
Jul 13, 2018Nice work!
Ryan Oster
Jul 18, 2018Outstanding work and great resource.