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Page Updated: January 23, 2020
This document is intended to serve as a guide for the UW – Madison campus regarding the purchase of basic electronic tools with funds from sponsored projects. Recent changes in Federal regulations make computing devices allowable as direct costs on Federal awards if they meet certain conditions.
Computing devices are defined in the Uniform Guidance, 2 CFR §200.20 and 2 CFR §200.94:
Throughout this guidance document, the term "computing device" will be used interchangeably with "computers" and "electronic devices." Examples of computing devices that are allowable if they are essential and allocable (see below) include:
Effective immediately, proposals with an expected start date of 12/26/14 or later may include costs for computing devices in accordance with the Uniform Guidance, as outlined below. New awards or incrementally funded awards with a new funding increment beginning on or after 12/26/14 also may proceed in accordance with this guidance.
Prior to the release of 2 CFR 200 et al., also known as the Uniform Guidance, the Federal government's point of view was that computing devices were general purpose equipment that were unallowable on Federal awards. To charge computing devices as direct costs on Federal awards, PIs were required to demonstrate that unlike circumstances existed and that the devices were not administrative in nature. This will no longer be the case.
The Office of Management and Budget acknowledged in the preamble to the Uniform Guidance that technology improvements have helped lower the cost of computing devices below the Federal equipment threshold of $5,000 and, as such, these devices should be treated similarly to other items under this amount. With the advent of the Uniform Guidance, computing devices may be considered allowable direct charges under certain circumstances, so PIs will need to demonstrate that such costs fit the criteria in the Uniform Guidance. Computing devices that cost $5,000 or more and have a useful life of at least one year are considered equipment. This policy deals specifically with computing devices that cost less than $5,000, which means they are treated as allowable supply items, not as equipment.
The Uniform Guidance, 2 CFR §200.453, part (c), states:
In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award.
The following criteria will be used to determine whether or not a device is essential and allocable:
The basic criteria for purchasing computing devices are similar for non-Federal sponsored projects, but may be more flexible depending on the sponsor. Principal investigators are recommended to include a justification for the purchase of computing devices with non-Federal funding, but divisional offices may have varying requirements. Please contact your Dean or Director’s office for guidance. Please note that written sponsor guidelines may prohibit the purchase of computers and electronic devices. All other sponsor restrictions, such as rebudgeting, prior approvals, notifications, etc., apply to the project.
The device should be identified in the proposal budget and justified as to why it is essential and allocable to the performance of the award. Inclusion in the budget and budget justification is intended to enable the sponsor to review and concur with the need for the computing device. Written justification and/or approval is meant to prevent questions regarding the allowability of costs in event of an audit.
Not all proposals include detailed budgets; some sponsors allow the use of modular budgets. In the case of modular budgets, the PI and his/her department are expected to provide a written justification for a computing device. This justification should be provided in the WISPER record and will be reviewed by the Dean or Director's office. Contact your Dean or Director's office regarding specific procedures on submitting such a justification.
Not every cost can be anticipated at the time of proposal preparation. When a post-award need for a computing device is identified and prior to its purchase, an explanation of the need should be submitted to the appropriate College/School research contact. The purpose and benefit of the device to the specific project should be fully described in the justification. Contact your Dean or Director's office regarding specific procedures on submitting such a justification.
If a computing device is purchased with sponsor or University funds, the device is the property of the University and should be retained by the department after the end of the award for ongoing research activities or for disposal in accordance with University policies.
If a computing device expense is deemed unallowable at any time, the cost will revert back to the PI, the PI's department/unit, and the college/school for recovery from an unrestricted source of funding.
Consistent with the Federal and State definitions of equipment, the University has defined capital equipment as an article of nonexpendable, tangible property with a useful life of more than one year and an acquisition cost of $5,000 or more. Items with a useful life of less than one year or an acquisition cost of less than $5,000 are defined as supplies. That means most personal computers and laptops are defined as supply items, not as equipment.
For computing devices that are considered equipment (items with an acquisition cost of $5,000 or more with a useful life of more than one year), the devices fall into one of two categories: either general purpose equipment (2 CFR §200.48) or special purpose equipment (2 CFR §200.89).
General purpose equipment is equipment which is not limited to research, medical, scientific or other technical activities. Such equipment is unallowable as a direct charge, unless the Federal awarding agency or pass-through-entity has provided prior written approval.*
Special purpose equipment means equipment which is used only for research, medical, scientific, or other technical activities. Special purpose equipment is allowable as a direct cost, provided that the items have the prior written approval* of the Federal awarding agency or pass-through entity.
*The Federal-wide Research Terms and Conditions will continue to apply to awards in which they are incorporated.
The UW Advanced Computing Initiative is available to consult, both pre- and post-award, about the effective ways to use computation in your research within the guidelines outlined here. In particular, such consultations during proposal preparation can help researchers get the most benefit out of their research budgets by identifying an appropriate mix of supplies, equipment, and services for the particular research in question.
UW-Madison has established relationships with vendors to obtain highly competitive prices on quality-tested products, including computing devices. A range of products from various suppliers is available through Shop@UW and purchasing contracts. PIs and departments are encouraged to take advantage of this easy-to-use system and the significant savings available through strategically sourced contracts. For further information, see Purchasing Services.