Equipment

Major (Capital) Equipment

Definition: An article of non-expendable, tangible personal property which

  • stands alone,
  • is complete in itself,
  • does not lose its identity,
  • has a useful life of more than one year
  • has an acquisition cost that (as of July 1, 2013) equals or exceeds $5,000. (The previous threshold was $3,000.)

MIT's capitalization policy provides a comprehensive explanation.

  • Purchases of major equipment are subject to agency/sponsor regulations and award terms and conditions
  • Estimates should be based on written quotations or catalog prices
  • Before budgeting equipment on a sponsored project, assure that the:
    • Equipment is necessary for the performance of the project
    • Equipment is allowable (some sponsors do not allow for major equipment)
    • Cost of equipment is reasonable
    • Equipment purchase is allocable to the project (i.e., equipment benefits this particular project)
    • Timing of the purchase is consistent with the project's period of performance
  • Equipment must be movable and cannot be affixed to the building or structure. For example, an A/C unit that is installed in a window and is removable can be categorized as equipment. An A/C unit that is ducted and installed would be considered part of a renovation project, not equipment, because the building shell has been modified
  • General-purpose equipment—such as photocopiers, laptop computers, and fax machines—generally is not allowable, unless the equipment will be used primarily or exclusively for the research project. Budget justification should include detailed information linking the general-purpose equipment acquisition to the technical work of the project
  • Capital equipment is excluded from the F&A cost base

Sample Budget Justification

  • A Beckman Digimax Signal Analyzer is required to monitor the animal behavioral day-night studies. The laboratory's analyzer is over 10 years old and is no longer supported by the vendor; it has limited capability for the types of experiments we are now proposing. The current vendor quote is $12,500
  • A $6,000 high-speed, multipurpose Centro-lab Centrifuge is requested. Because of the number and complexity of experiments proposed, a dedicated centrifuge is required. All lab personnel supported on this project will use this equipment

Minor Equipment

Minor equipment is defined as equipment with an acquisition cost between $500 and $4,999. Examples include: small centrifuge, hot plate, and project-dedicated laptop computer. This category of equipment is important to manage like major equipment purchased for federal contracts because we sometimes need to seek approval for purchases and request title.

  • Minor equipment is included in the Modified Total Direct Cost base; therefore, F&A is applied to minor equipment charged to research awards
  • Minor equipment is not subject to sponsor requirements governing major (capital) equipment
  • Unless the sponsor has a specific line category for minor equipment, these items are generally budgeted under Supplies & Materials/Materials & Services
  • General-purpose equipment—such as photocopiers, laptop computers, and fax machines—generally is not allowable, unless the equipment will be used primarily or exclusively for the research project. Budget justification should include detailed information linking the general-purpose equipment acquisition to the technical work of the project

Sample Budget Justification

Three laptop computers ($1,000 each) are requested. Research personnel (GRAs and RAs) will take these laptops to the field to record data during interviews with human subjects, assist with statistical analysis, and facilitate communications among research project personnel through the 12-month survey period.

Fabricated Equipment

Many research projects include the design, development, and building of equipment that is not available commercially. Equipment that cannot be purchased “off the shelf,” and is built by the research team, is called “fabricated equipment.”

  • If fabrication of equipment at MIT is anticipated, a cost estimate of the completed equipment should be developed based on required materials and components
  • The materials purchased to create the equipment may be capitalized but the labor used to build the fabricated equipment may not therefore F&A charges will apply to labor costs
  • Characteristics of fabricated equipment:
    • Unique, specialized equipment
    • Not commercially available
    • Useful life of more than one year
    • Aggregate cost of materials and services is (as of July 1, 2013) $5,000 or more (excluding labor costs)
    • May require sponsor approval
  • Questions about MIT's definition of fabricated equipment should be directed to the MIT Property Office. Fabricated equipment is considered equipment for F&A purposes. If the cost of the components is (as of July 1, 2013) more than $5,000, the fabricated equipment is excluded from Modified Total Direct Costs and thus excluded from the F&A calculation. If the cost of fabrication is (as of July 1, 2013) less than $5,000, the fabricated equipment is deemed Minor Equipment and is included in the F&A calculation.
  • Fabricated items delivered to sponsors or sponsor directed third parties before it has been used in place at MIT for at least one year will not be considered Capital Equipment. Instead the items will be coded as Deliverable End Items and will incur F&A.

Sample Budget Justification

These components are required to construct the proposed new radio telescope. This will be a unique research tool, and no commercial vendor is known. MIT will fabricate the refinement detectors under the subaward described in this proposal. The Institute will assemble, test, transport, and deploy the new telescope at the Sunny Island site. Any significant component costs should be individually supported with vendor quotes and descriptions of the purpose or function in the final equipment. If there are alternatives, they should be cited with justification for the final choice.

FAQs

 

My PI's project involves fabricating a new piece of major equipment. How do I treat this in the budget if the final equipment is made from many materials and supplies?

Many research projects include the design, development, and building of equipment that is not available commercially. Equipment that cannot be purchased “off the shelf,” and is built by the research team, is fabricated equipment. There are instances where the whole research project is the fabrication of equipment.

The act of assembling a CPU, monitor, and keyboard does not meet the definition of a fabrication, since the computer system is not unique.

The Property Office is responsible for determining whether budgeted items meet the definition of “fabricated equipment.”