DINAP BULLETIN 94-14
Prior Approval for Automated Data Processing Equipment
To provide clarification of the Department's revised requirements on prior approval for the acquisition of Automated Data Processing Equipment.
References. a. 29 CFR Part 97 (Administrative requirements for Federal grants to State, local, and Indian tribal governments); b. 29 CFR Part 95 (Administrative requirements for Federal grants to institutions of higher education and non-profit organizations); c. OMB Circular A-87 (Cost principles for State, local and Indian tribal governments); and d. OMB Circular A-122 (Cost principles for non-profit organizations). Background. Up to the present time, there has been some confusion concerning the Employment and Training Administration (ETA) prior approval requirements applicable to grantee acquisitions of automated data processing equipment (hardware and software), regardless of a dollar limit. This confusion has largely been the result of the prior approval requirement language of the above referenced cost principles coupled with a lack of definition of the term equipment. The Department of Labor's (DOL) publication of the 29 CFR Part 95 regulations on July 27, 1994, to implement the revised OMB Circular A-110 (and transmitted in DINAP Bulletin No. 94-3) provided a definition of the term "equipment" along with other definitions, and revised dollar thresholds such that the previous confusion regarding prior approval requirements can now be dispelled. Information. The DOL regulations at 29 CFR Part 97 includes definitions and regulatory requirements applicable to property acquired by States, local governments, and federally recognized Indian tribes with Federal grant funds. The DOL regulations at 29 CFR Part 95 includes definitions and regulatory requirements applicable to property acquired by non-profit organizations with Federal grant funds. While neither the Part 95 nor Part 97 regulations address prior approvals, both of them require adherence to the cost principles applicable to the grantee's type of organization, i.e., OMB Circular A-87 for governments and OMB Circular A-122 for non-profits. Both Circulars specify prior approval requirements. OMB Circular A-87, Attachment B, paragraphs C.1. (Automatic data processing) and C.3. (Capital expenditures) stipulates that prior DOL/ETA approval must be obtained for purchases of equipment with Federal DOL/ETA provided funds. OMB Circular A-122, Attachment B, Item 13 (Equipment and other capital expenditures) stipulates at paragraph b)(1) that capital expenditures for general purpose equipment are unallowable as a direct cost except with the prior approval of the awarding agency. (Note: Paragraph b)(2) deals with special purpose equipment which is defined at paragraph a)(3) as equipment being usable only for research, medical, scientific or technical activities. This should not effect Indian and Native American Grantees.) Both 29 CFR 97.3 and 29 CFR 95.2(n) define equipment as "tangible nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit." The definition of "acquisition cost of equipment" as provided in 29 CFR Part 95.2(c) and 29 CFR 97.3 is "the net invoice price of the equipment, including the cost of modifications, attachments, accessories or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired." Both regulations treat personal property that falls below the $5,000 or one year thresholds as "supplies". Based on these definitions, it is concluded that prior written approval of ETA/DOL is required to acquire equipment at the $5,000 and above level, and is not required to acquire supplies. Guidance. What is a unit? DOL views the term "unit" to be in the broad sense of all of the component parts of a system which are required to enable it to perform the function for which it was acquired. A computer typically used for JTPA purposes with all component parts would cost less than $5,000 and therefore would not require prior Grantor approval. The exception however would be the purchase of specialized equipment that exceeds $5,000 such as computerized assessment testing or Local Area Networks. System design/needs. Grantees should try to purchase the most expandable system appropriate for grant purposes, that is a system that will keep up with new technology. They should also make sure they get good warranties and service. We are providing the following suggested guidance on minimum system configurations: SYSTEM DOS/WINDOWS MAC Computer 486 Power Mac (w/System 7.5)* Memory/Storage 16/500 16/500 Monitor 15" SVGA,NI 15" color Keyboard Regular Enhanced (w/ F keys) Printer Laser Laser Modem or Fax/Modem 14.4bps,V.32bis 14.4bps,V.32bis *Which permits reading/writing DOS/WINDOWS disks. A dedicated telephone line for your system is also desirable. Please note that the minimum system configurations indicated above are provided as a reference for those planning to upgrade or purchase computer equipment. This is not to suggest that grantees currently operating computers with less capability have inadequate systems. Action. Indian and Native American Grantees shall refer to this bulletin when purchasing ADP equipment. Inquiries. Questions should be directed to your DINAP Federal Representative.
All Native American Grantees
THOMAS M. DOWD PAUL A. MAYRAND Chief Director Division of Indian and Native Office of Special Targeted American Programs Programs