Unless otherwise specified by the sponsor terms and conditions, assets are defined as capital equipment by Stanford when the following three criteria are met.

1. Cost is $5,000 or greater
2. Useful life of more than one year, and
3. Individual, stand-alone, moveable, tangible item

Sponsor Terms and Conditions

Always read the award terms and conditions as sponsors may define equipment differently. Verify equipment ownership as well. Review the terms and conditions for required prior approvals and check for other management obligations. It is critical to use the correct Expenditure Types for purchases.

Check the terms and conditions of your particular award for information related to the acquisition, ownership and disposition of property. Some awards do not allow the purchase of particular types of equipment, while other awards are made specifically for that purpose.  Some require pre-approvals before equipment may be purchased.

Document allocability, i.e., the way in which the equipment benefits the project; it is critical, particularly if the equipment is acquired LATE in the project period. Similar to the rules for the direct charging of administrative expenses, there is a parallel requirement for a good budget justification whenever you plan to charge “general purpose” equipment to a project. The federal bias is that such equipment is an indirect cost. If you need to purchase such equipment specifically for a project, the budget justification should be detailed in its linkage of the expense to the technical work of the project. There are no indirect cost waivers on non-capital equipment costing less than $5,000.

Sponsor owned property may have a definition that is different for “equipment” acquisition and reporting thresholds from Stanford’s, so you must review the award terms & conditions for exceptions. Remember, transactions for equipment purchased for the government are not taxable.

Include in the budget: type of equipment, manufacturer’s name or identifying mark, quantity, estimated cost, and basis for the estimate, vendor quote, and sales tax.

Budget for a specific item “or equivalent.” This will give you the flexibility to substitute something equivalent later for the same amount of money. 

Budget sales tax and freight if applicable.

Expenses included in the price of the equipment 

Expenses included in the price of the equipment are listed below. Although some expenses must be excluded from the purchase price they can and should be proposed if applicable. Include these types of expenses  in the "other" expense category.

Equipment Fabrication

“Equipment fabrication” is the building of a unique individual piece of equipment, or scientific instrument by Stanford personnel (not a vendor or subcontractor).

A fabrication must meet all of the following criteria:

1. The item has unique specifications and is described in the research proposal or award.  Details are specified in a dimensioned engineering drawing.  When design changes occur, the engineering drawing should be subsequently updated.
2. The total cost for acquired materials, supplies, and components must be $5,000 or greater. All items acquired for a fabrication must be permanently integrated into the resulting discrete item.
3. The completed fabrication has an estimated useful life of one (1) year or more.  (Note:  If the fabrication is owned or funded by NASA, the useful life must be two (2) years or more.)
4. When completed, the item will not be affixed permanently to a building or structure.
5. The fabrication results in a unique, stand-alone, tangible item capable of specific identification and continuous control through tagging and periodic physical inventory. Components should be designed to remain at one position in the fabrication; they are not to be removed and replaced throughout the useful life of the fabrication.
6. It must be completed in ample time to directly benefit the funding project and used for its intended purpose.  If it is a contract-deliverable item, it must be completed in time to meet the delivery schedule as outlined in the funding sponsored project.

General Purpose Equipment

General purpose (non-scientific) equipment budgeted in a proposal will require an especially careful budget justification. A similar type of justification is needed if you are proposing to purchase general purpose equipment. Office equipment is normally considered an indirect cost. Avoid a CAS violation by always charging these items consistently.