The Uniform Administrative Requirements found in the Code of Regulations (45 CFR 75) are the reference for questions related to how you handle things financially with federal grants. With the influx of CARES Act funds, some of you are considering capital improvements in order to have the phone system or server necessary for remote work, or other upgrades such as cables and wiring that might be required for these things. My understanding — based on what is below — is that if these costs exceed $5,000 you must secure prior approval from ACL/OILP. Be sure to contact your Program Officer about these expenses.

45 CFR § 75.439 Equipment and other capital expenditures.

(a) See § 75.2 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 unallowable as direct charges, except with the prior written approval of the HHS awarding 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 $5,000 or more have the prior written approval of the HHS awarding agency or pass-through entity.

(3) Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the HHS awarding agency, or pass-through entity. See § 75.436 for rules on the allowability of depreciation on buildings, capital improvements, and equipment. See also § 75.465.

(4) When approved as a direct charge pursuant to paragraphs (b)(1) through (3) of this section, capital expenditures will be charged in the period in which the expenditure is incurred, or as otherwise determined appropriate and negotiated with the HHS awarding agency.

(5) The unamortized portion of any equipment written off as a result of a change in capitalization levels may be recovered 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 Federal cognizant agency for indirect cost.

(6) Cost of equipment disposal. If the non-Federal entity is instructed by the HHS awarding agency to otherwise dispose of or transfer the equipment the costs of such disposal or transfer are allowable.

(7) Equipment and other capital expenditures are unallowable as indirect costs. See § 75.436. [79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]

What about prior approval for equipment or upgrades?

2 thoughts on “What about prior approval for equipment or upgrades?

  • June 25, 2020 at 4:32 am
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    Are there funds in the Act to fund new programs? The Alabama SCIL has a new First Responder Training goal in the state plan.

    Reply
    • June 25, 2020 at 8:37 am
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      The CARES Act funding went to the federally funding (Part C) centers for direct response to the COVID-19 crisis among people with disabilities in their service area. They have until September 30, 2021 to spend the fund in a way that 1) addresses the needs raised by the virus, in keeping people with disabilities safe and healthy and 2) in efforts that area allowable with federal funds as described in 45 CFR 75.

      Reply

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