Preparing a proposal
Harvard defines equipment as an item that costs over $5,000 and has an expected useful life of more than one year. A proposal requires special attention if it includes equipment.
Narrative
The narrative should explain why the project needs the equipment. It should also explain why other Harvard equipment is not suitable or available. Federal agencies expect Harvard to use federal funds only on necessary equipment that is not already available at the organization. (See NIH GPS 8.3.3)
Budget
The price of the equipment itself is often just one part of the total costs of the item. Other costs to consider:
- Shipping, installation, and calibration.
- New types of supplies, staff, or training.
- Building modifications related to security, electricity, air handling, the supply and disposal of water and specialized gases or chemicals, or the safety of users and others who will share its space.
- Registration, licensing, or monitoring.
- Large machinery may need increased structural support or the reconfiguration of walls, hallways, or doorways to enable delivery and installation.
- Ongoing and costly service by the manufacturer or supplier.
There may be a need to identify funding sources for these one-time and recurring expenses and to seek approval of the tub or department for facilities-related alterations or these and other extraordinary needs. Please refer to Appendix A of the University policy known as Financial Management of Property, Plant and Equipment for guidance about which costs become part of the capitalized acquisition cost and which costs become the responsibility of the PI or department.
In the proposal budget, the cost of equipment does not usually take indirect costs. Most federal awards use the Modified Total Direct Cost (MTDC) cost basis. MTDC excludes several categories of expenses, including equipment, stipends, tuition, and others. Some non-federal awards follow this practice, too. As you review the budget, please make sure the overhead treatment is correct.
Setting Up an Award
Terms and Conditions
It is important to look for equipment terms on awards with equipment in the budget. If there are no equipment terms, the sponsor might have a policy manual with equipment terms that apply to all awards. Most federal awards or policy guidelines have equipment terms. If not, please ask the officer who negotiated the award to agree on equipment terms with the sponsor. Two areas are most important – title and reporting.
Title
Having “title” to an item means that you own it. Most of Harvard’s federal grants allow Harvard to hold title to – or own – equipment when we buy it. Federal contracts are different. Federal agencies often keep title until the contract is over and Harvard has met specific reporting requirements. Harvard prefers to own equipment bought for awards, therefore the terms of the agreement should give title to Harvard when possible. If the sponsor will not give title to Harvard upon acquisition, title should be requested after the award is over.
Reporting
Some federal and non-federal sponsors require reporting on equipment. It is important to understand and document those reporting requirements so that departments know what and when to report.
Equipment Terms in GMAS
When setting up an award in GMAS for an award that includes the purchase of equipment, Sponsor Equipment Terms must be entered.
Managing an Award
Equipment purchases on sponsored awards have to follow University Procurement policies. A sponsor or an award may require notification about equipment purchases, so familiarity with equipment terms is important. Once equipment is purchased, departmental and tub property management update Harvard Oracle Fixed Asset system (OFA) and affix an identifying property tag. Other tub or departmental processes may occur related to delivery, installation, acceptance, or other operational concerns.
Additional steps are required if a PI decides to purchase equipment on an award that does not have equipment in the budget. The sponsor may require prior approval since shifting costs on an award can affect the scope of work. In some cases, equipment purchased without prior approval is an unallowable cost and will not be reimbursed by the sponsor. If the award does not have equipment terms and there is not a policy manual with equipment terms, it will be necessary to clarify these terms with the sponsor and document who has title and what the reporting requirements are.
Closing out an Award
Award close out requires several administrative steps related to equipment.
Reporting
Sponsors often ask for specific equipment reporting at the end of an award. Some sponsors expect a “negative report” that confirms the award funded no equipment. Other sponsors expect Harvard to submit a list of equipment on the award. The department and OSP Research Finance work together to complete any required equipment reporting.
Title
Ownership can change after an award ends. Some sponsors, including some federal sponsors, will give ownership to Harvard after a period of time if we request it. When Harvard does not already hold title, the close out process should follow the sponsor’s procedure for requesting title. OSP Research Finance or the Department/Local level managing unit may request the title.
Update Oracle Fixed Asset (OFA) Title
Federal regulations require Harvard to manage our assets responsibly. OFA contains several required pieces of identifying information, including serial number, manufacturer, funding source, principal investigator, location, among other attributes. An indication of ownership is also required and is included. If ownership changes after award close out, the grant manager should work with the tub equipment manager to update OFA with the updated title status.
Clear Fabrications
Harvard sometimes builds the equipment it needs for research instead of purchasing it. The costs of building the equipment add up in a “Fabrication” account. The Fabrication account has to be cleared out when the award is over so that the fund shows a zero balance overall. OSP Research Finance and the Office of the Controller will work with the department to move Fabrications costs so that the award can close.