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Page 32 of 51 <br />programs or projects supported by Federal awarding agency that financed the equipment <br />and second preference must be given to programs or projects under Federal awards from <br />other Federal awarding agencies. Use for non -federally -funded programs or projects is <br />also permissible. User fees should be considered if appropriate. <br />(3) Notwithstanding the encouragement in 200.307 Program income to earn program income, <br />the non -Federal entity must not use equipment acquired with the Federal award to <br />provide services for a fee that is less than private companies charge for equivalent <br />services unless specifically authorized by Federal statute for as long as the Federal <br />Government retains an interest in the equipment. <br />(4) When acquiring replacement equipment, the non -Federal entity may use the equipment to <br />be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the <br />replacement property. <br />(d) Management requirements. Procedures for managing equipment (including replacement <br />equipment), whether acquired in whole or in part under a Federal award, until disposition <br />takes place will, as a minimum, meet the following requirements: <br />(1) Property records must be maintained that include a description of the property, a serial <br />number or other identification number, the source of funding for the property (including <br />the FAIN), who holds title, the acquisition date, and cost of the property, percentage of <br />Federal participation in the project costs for the Federal award under which the property <br />was acquired, the location, use and condition of the property, and any ultimate disposition <br />data including the date of disposal and sale price of the property. <br />(2) A physical inventory of the property must be taken and the results reconciled with the <br />property records at least once every two years. <br />(3) A control system must be developed to ensure adequate safeguards to prevent loss, <br />damage, or theft of the property. Any loss, damage, or theft must be investigated. <br />(4) Adequate maintenance procedures must be developed to keep the property in good <br />condition. <br />(5) If the non -Federal entity is authorized or required to sell the property, proper sales <br />procedures must be established to ensure the highest possible return. <br />(e) Disposition. When original or replacement equipment acquired under a Federal award is no <br />longer needed for the original project or program or for other activities currently or <br />previously supported by a Federal awarding agency, except as otherwise provided in Federal <br />statutes, regulations, or Federal awarding agency disposition instructions, the non -Federal <br />entity must request disposition instructions from the Federal awarding agency if required by <br />the terms and conditions of the Federal award. Disposition of the equipment will be made as <br />follows, in accordance with Federal awarding agency disposition instructions: <br />(1) Items of equipment with a current per unit fair market value of $5,000 or less may be <br />retained, sold or otherwise disposed of with no further obligation to the Federal awarding <br />agency. <br />(2) Except as provided in 200.312 Federally -owned and exempt property, paragraph (b), or if <br />the Federal awarding agency fails to provide requested disposition instructions within <br />R22AP00055 Agreement Template <br />City of Santa Ana (0112021) <br />