PCS 203: Fabricated Equipment
To outline a procedure for acquiring fabricated equipment on a sponsored account
Federal Acquisition Regulation, Subpart 15
Fabrications are tagged with unique ASU Property Control numbers (PCNs).
In accordance with Federal Acquisition Regulation (FAR) Subpart 15, principal investigators (project directors) shall submit a memorandum detailing why the “equipment” must be fabricated (i.e., not available commercially) to their Office for Research and Sponsored Projects Administration (ORSPA) site officer for approval prior to fabrication when the contract under which the equipment is required exceeds $5 million. All materials regardless of cost are capitalized.
Equipment having a life expectancy of one year or more and a unit cost of $5,000 or more that is purchased for basic and applied research in the sciences and engineering is, to the extent permitted by law, exempt from sales tax. Also exempt are designing, developing, or testing prototypes, processes, or new products. This exemption includes research and development of computer software that is embedded in or an integral part of the prototype or new product or that is required for exempt machinery or equipment to function effectively.
For purposes of this exemption, research and development do not include manufacturing quality control, routine consumer product testing, market research, sales promotion, sales service, research in social sciences or psychology, computer software research that is not included in basic and applied research in the sciences and engineering, or other nontechnical activities or technical services.
The exemption of sales tax does not apply to equipment with a life expectancy of less than one year or project cost of less than $5,000. Fabricated equipment acquired at less than $5,000 is capitalized as long as the completed fabrication is at least $5,000.
The department notifies Property Control before fabricating equipment.
If the finished fabrication will total $5 million or more and the award is a contract, the department contacts the sponsored property coordinator before proceeding with the fabrication. Agency approval must be requested.
When processing Property Requests (RXs) for individual components of fabricated equipment, the department records the assigned fabrication number in the first line of the item description of the request. For P-card purchases, enter the number in the “property” or “notes” fields on PaymentNet after the charge has posted (but before it pays). For SunRISE purchases, enter the number in the “internal notes and attachments” field.
The department uses a 7810 45 or 7810 46 (exempt from sales tax) object/sub-object code on the accounting line of the request. The appropriate commodity code for the type of equipment should be used.
When fabrication is complete, Property Control tags the equipment with the PCN designated for that particular fabrication.
If government- or sponsor-owned material is remaining, the sponsored property coordinator reviews with the principal investigator the excess material left over from the fabrication.
If excess material exists, the coordinator requests disposal instructions from the sponsor or government contracting officer.
|Note:||Fabrications that are completed and do not meet the capitalization threshold will be retired from the Property Control database and all funds will be transferred to expense code 7325.45.|
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