[Code of Federal Regulations]
[Title 32, Volume 1]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR32.34]

[Page 144-146]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
                   Subpart C--Post-Award Requirements
 
Sec. 32.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a fee 
that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the property without approval of the DoD Component that made 
the award. When no longer needed for the original project or program, 
the recipient shall use the equipment in connection with its other 
federally-sponsored activities, in the following order of priority:
    (1) First, activities sponsored by the DoD Component that funded the 
original project.
    (2) Second, activities sponsored by other DoD Components.
    (3) Then, activities sponsored by other Federal agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use shall be given 
to other projects or programs sponsored by the DoD Component that 
financed the equipment; second preference shall be given to projects or 
programs sponsored by other DoD Components; and third preference shall 
be given to projects or programs sponsored by other Federal agencies. If 
the property is owned by the Federal Government, use on other activities 
not sponsored by the Federal Government shall be permissible if 
authorized by the DoD Component that financed the property. User charges 
shall be treated as program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of the DoD Component that financed the equipment.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned property shall include 
all of the following:
    (1) Records for equipment and federally-owned property shall be 
maintained accurately and shall include the following information:
    (i) A description of the equipment or federally-owned property.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment or federally-owned property, including 
the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
property furnished by the Federal Government).
    (vii) Location and condition of the equipment or federally-owned 
property and the date the information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the DoD Component that made the award for its 
share.
    (2) Property owned by the Federal Government shall be identified to 
indicate Federal ownership.

[[Page 145]]

    (3) A physical inventory of equipment and federally-owned property 
shall be taken and the results reconciled with the equipment records at 
least once every two years. Any differences between quantities 
determined by the physical inspection and those shown in the accounting 
records shall be investigated to determine the causes of the difference. 
The recipient shall, in connection with the inventory, verify the 
existence, current utilization, and continued need for the equipment or 
federally-owned property.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment or 
federally-owned property. Any loss, damage, or theft of equipment or 
federally-owned property shall be investigated and fully documented; if 
the property was owned by the Federal Government, the recipient shall 
promptly notify the DoD Component.
    (5) Adequate maintenance procedures shall be implemented to keep the 
equipment or federally-owned property in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards.
    (1) For equipment with a current per unit fair market value of 
$5,000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to the DoD Component that originally 
made the award or its successor. The amount of compensation shall be 
computed by applying the percentage of Federal participation in the cost 
of the original project or program to the current fair market value of 
the equipment.
    (2) If the recipient has no need for the equipment, the recipient 
shall request disposition instructions from the DoD Component. The DoD 
Component shall issue instructions to the recipient no later than 120 
calendar days after the recipient's request and the following procedures 
shall govern:
    (i) The grants officer, in consultation with the program manager, 
shall judge whether the age and nature of the equipment warrant a 
screening procedure to determine whether the equipment is useful to a 
DoD Component or other Federal agency. If a screening procedure is 
warranted:
    (A) The DoD Component shall determine whether the equipment can be 
used to meet DoD requirements.
    (B) If no DoD requirement exists, the availability of the equipment 
shall be reported to the General Services Administration by the DoD 
Component to determine whether a requirement for the equipment exists in 
other Federal agencies.
    (ii) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the equipment and reimburse the DoD Component that made the 
award an amount computed by applying to the sales proceeds the 
percentage of Federal participation in the cost of the original project 
or program. However, the recipient shall be permitted to deduct and 
retain from the Federal share $500 or ten percent of the proceeds, 
whichever is less, for the recipient's selling and handling expenses.
    (iii) If the recipient is instructed to ship the equipment 
elsewhere, the recipient shall be reimbursed by the Federal Government 
by an amount which is computed by applying the percentage of the 
recipient's participation in the cost of the original project or program 
to the current fair market value of the equipment, plus any reasonable 
shipping or interim storage costs incurred.
    (iv) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by the DoD Component that 
made the award for such costs incurred in its disposition.
    (h) The DoD Component may reserve the right to transfer the title to 
the Federal Government or to a third party named by the Federal 
Government when such third party is otherwise eligible under existing 
statutes. Such transfer shall be subject to the following standards.

[[Page 146]]

    (1) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing. For exempt property, 
in accordance with Sec. 32.33(b)(3), note that this identification must 
occur by the time of award, or title to the property vests in the 
recipient without further obligation to the Government.
    (2) The DoD Component shall issue disposition instructions within 
120 calendar days after receipt of a final inventory. The final 
inventory shall list all equipment acquired with award funds and 
federally-owned property. If the DoD Component fails to issue 
disposition instructions for equipment within the 120 calendar day 
period, the recipient shall apply the standards of paragraph (g) of this 
section.
    (3) When the DoD Component exercises its right to take title, the 
equipment shall be subject to the provisions for federally-owned 
property.