Federal Assistance Manual Chapter 1-410

CHAPTER 1-410 PROPERTY ACQUIRED UNDER OSM GRANTS AND COOPERATIVE AGREEMENTS

• 1-410-00 Purpose
  
• 1-410-10 OSM Policy
  
• 1-410-20 Applicability
  
• 1-410-30 Real Property
  
• 1-410-40 Equipment
  
• 1-410-50 Supplies

1-410-00 PURPOSE

1. The purpose of this chapter is to provide OSM policy and procedures for the use, management and disposition of real property, equipment and supplies purchased under an OSM grant or cooperative agreement.

2. The requirements for use, management and disposal of real property, supplies and equipment purchased under a grant approved after October 1, 1988, are established in the Grants Management Common Rule (codified by the Department of the Interior at 43 CFR 12, Subpart C).

1-410-10 OSM POLICY

In addition to the Grants Management Common Rule requirements, the following OSM policies are provided for equipment:

1. The signing of a grant sets up a legal, binding relationship between the grantor and grantee. The basis of this relationship is the terms and conditions outlined or referenced in the approved agreement. Among other items, the parameters surrounding the purchase, use, and disposal of equipment are set at the time of signing the grant. Therefore, for equipment purchased under a grant approved prior to the implementation of the Common Rule (October 1, 1988), equipment accountability and disposal will be in accordance with policies in effect at the time and outlined in 1-410-40A.

2. Except as noted in 1-410-10A, a State will use, manage, and dispose of equipment under a grant in accordance with State laws and procedures.

3. Except as noted in 1-410-10A, other grantees and subgrantees will follow Federal requirements outlined in the Grants Management Common Rule and 1-410-40B.3.

1-410-20 APPLICABILITY

This chapter is applicable to all real property, equipmentand supplies acquired under OSM grants and cooperative agreements.

1-410-30 REAL PROPERTY

1. Acquisition
   1. Land. OSM grant or cooperative funds may be used for land acquisition only when specifically authorized.

      AMLR funds may used for land acquisition when lands are purchased in accordance with the limited acquisition purposes set forth in sections 407 and 409 of SMCRA, appropriate regulations at 30 CFR 879 and the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970. The authorization is limited to acquisition of those lands required for reclamation work and on which permanent facilities will be constructed, or for coal refuse disposal sites which will serve the purpose of the title.

   2. Other Real Property. Title to and accountability for real property shall vest in the grantee subject to the condition that the grantee shall use the real property for the authorized purpose of the original grant as long as needed.

2. Use. Grantees shall use real property acquired in whole or in part with OSM funds for the authorized purpose of the original grant as long as needed, whether or not the program or project continues to be supported by Federal funds.

3. Disposition. When real property is no longer needed for the originally authorized purpose, the grantee shall request disposition instructions from OSM. OSM shall provide disposition instructions in accordance with one of the following options:
   1. Retain title after compensating OSM. The amount paid to OSM will be computed by applying OSM's percentage of participation in the cost of the original purchase to the fair market value of the property.

   2. Sell the property and compensate OSM. The amount due OSM will be calculated by applying OSM's percentage of participation in the cost of the original purchase to the proceeds of the sale of the property, after deducting any actual and reasonable selling and fixing-up expenses. When a grantee is directed to sell real property, sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return.

   3. Transfer title to OSM or a third party designated/approved by OSM. The grantee shall be paid an amount calculated by applying the grantee's percent of participation in the purchase of the real property to the current fair market value of the property.

1-410-40 EQUIPMENT

1. Pre-October 1988 Equipment
   1. Definition. For equipment purchased under a grant approved prior to October 1, 1988, the definition of equipment (nonexpendable personal property) is tangible, personal property having a useful life of more than two years and an acquisition cost of $500 or more per unit. A recipient may use its own definition of equipment provided that such definition would at least include all equipment as defined above.

   2. Title. Title to equipment acquired under a grant will vest, upon acquisition, in the grantee, subject to the use, right to transfer title and disposition restrictions outlined below.

   3. Use. The grantee shall use the property in the grant-supported program or project as long as there is a need for the property to accomplish the purpose of that program/project, whether or not the program/project continues to be supported by Federal funds. When no longer needed for the original program/project, the grantee shall use the property in connection with its other federally-sponsored activities, in the following order of priority:
      1. For other OSM-sponsored activities.

      2. For activities sponsored by other Federal agencies.

   4. Right to Transfer Title. When OSM determines that equipment with an acquisition cost of $1,000 or more is unique, difficult or costly to replace, OSM may reserve the right to require the recipient to transfer the equipment to the control of OSM or directly to a third party named by OSM when such third party is otherwise eligible under existing regulations. Such reservations shall be subject to the following standards:
      1. The equipment shall be appropriately identified in the OSM grant agreement or otherwise made known to the recipient.

      2. OSM shall issue disposition instructions within 120 calendar days after the end of the project or grant for which it was acquired.

   5. Disposition. When the grantee no longer needs the property as provided in above, the property may be used for other activities in accordance with the following standards:
      1. Nonexpendable property with a unit acquisition cost of less than $1,000 may be used for other activities without reimbursement to OSM. The property may also be sold and the proceeds retained by the grantee.

      2. Nonexpendable personal property with a unit acquisition cost of $1,000 or more may be retained for other uses provided that compensation is made to OSM. The amount of compensation shall be computed by applying the percentage of Federal participation in the cost of the original program or project to the current fair market value of the property.

      3. If the grantee has no need for the property and the property has further use value, the grantee shall request disposition instructions from OSM. Disposition shall be in accordance with the following procedures:
         1. The recipient shall prepare and submit to OSM the form OSM-60, Report of Government Property, and a letter requesting disposition instructions for the equipment.

         2. OSM shall provide the final disposition instructions in accordance with the following options:
            1. instruct the grantee to sell the equipment and compensate OSM. The amount due OSM will be calculated by applying OSM's percentage of participation in the cost of the original purchase to the proceeds of the sale of the property, after deducting $100 or 10 percent of the proceeds (whichever is greater) for selling and handling expenses.

               When a grantee is directed to sell equipment, the sale must occur through the grantee's established sale or auction procedures.

            2. If the grantee does not wish to dispose of the equipment or does not have an established sale/auction procedure, OSM shall instruct the grantee to transfer the title and ship the equipment to OSM or a third party designated/approved by OSM. The grantee shall be paid an amount calculated by applying the grantee's percent of participation in the purchase of the property to the current fair market value of the property.

2. Post-October 1988 Equipment
   1. Definition. For equipment purchased under a grant approved after October 1, 1988, the definition of equipment (nonexpendable personal property) is tangible, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A recipient may use its own definition ofequipment provided that such definition would at least include all equipment as definedabove.

   2. Title. Title to equipment acquired under a grant will vest, upon acquisition, in the grantee, subject to the obligations and conditions set forth below.

   3. Use, Management and Disposal Requirements
      1. The following sections provide guidance on the use, management and disposal of equipment purchased under a grant. A State may use, manage and dispose of equipment acquired under a grant in accordance with State laws and procedures; other grantees are required to follow the requirements outlined below.

      2. Use.
         1. Equipment shall be used by the grantee in the program or project for which it was acquired as long as needed, whether or not the program or project continues to be supported by Federal funds. When no longer needed for the original program or project, the equipment may be used in other activities currently or previously supported by a Federal agency.

         2. The grantee shall also make equipment available for use on other programs or projects currently or previously supported by the Federal Government, providing such use will not interfere with the work on the program or projects for which it was originally acquired. First preference for other use shall be given to other programs or projects supported by OSM. User fees should be considered, if appropriate.

         3. The grantee shall not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services, unless specifically permitted or contemplated by Federal statute.

      3. Management Requirements. Procedures for managing equipment shall, at a minimum, meet the following requirements:
         1. Property records must be maintained that include:
            1. A description of the property;
               
            2. A serial number or other identification number;
               
            3. The source of the property;
               
            4. Who holds title;
               
            5. The acquisition date;
               
            6. The cost of the property;
               
            7. Percentage of Federal participation in the cost of the property;
               
            8. The location, use and condition of the property; and
               
            9. Any ultimate disposition data including the date of disposal and the sale price of the property.

         2. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A copy of the results of the physical inventory and reconciliation shall be provided to OSM.

         3. A control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Any loss, damage or theft shall be investigated and the results of the investigation provided to OSM.

         4. Adequate maintenance procedures must be developed to keep the property in good condition.

         5. If authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.

      4. Disposition. When original or replacement equipment acquired under a grant is no longer needed for the original program or project or for other activities currently or previously supported by OSM, the grantee shall inform OSM of the disposition action it will take as follows:
         1. Items of equipment with a current per unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to OSM.

         2. Items of equipment with a current per unit fair market value of $5,000 or more may be retained or sold after compensating OSM. The amount paid to OSM shall be computed by applying OSM's percentage of participation in the cost of the original purchase to the current fair market value of the equipment.

         3. If the grantee fails to take the appropriate disposition actions in a timely manner, OSM may direct the grantee to take the disposition actions.

3. Federally-Owned Equipment. If a grantee is provided Federally-owned equipment:
   1. Title will remain vested in the Federal Government.

   2. Grantees will manage the equipment in accordance with the requirements outlined in 1-410-40.B.3.c.

   3. Grantees will submit an annual inventory listing. This inventory listing will be submitted to the appropriate OSM office using the OSM 60 form (this form is found in chapter 5-70).

   4. When the equipment is no longer needed, the grantee will request disposition instructions from OSM.

4. Right to Transfer Title. OSM reserves the right to transfer title of any grant-acquired equipment to the Federal Government or a third party named by OSM. Such transfers shall be subject to the following requirements:
   1. The specific piece of property shall be identified in writing to the grantee. This notification shall be made by OSM as soon as possible after approval is given to purchase the equipment in order to facilitate the incorporation of this restriction into the grantee's property management system.

   2. OSM shall issue disposition instructions within 120 calendar days after the end of the grant in which the equipment was acquired. If OSM fails to issue disposition instructions, the grantee shall follow normal disposition procedures.

   3. When title to equipment is transferred, the grantee shall be paid an amount calculated by applying the percentage of participation in the purchase to the current fair market value of the property.

5. Replacement of Property. When an item of nonexpendable personal property is no longer efficient or serviceable, but the recipient continues to need the property, the recipient may replace the property through trade-in or sale and purchase of new property, provided the following requirements are met:
   1. The replacement property must serve the same function as the original property, although not necessarily of the same grade or quality.

   2. Value credited for the property, if the property is traded in or sold, must be related to its fair market value.

   3. The sale of the property and purchase of its replacement shall occur close enough in time to show that the two events are related. However, purchase of the replacement property may occur prior to trade-in or sale of the original property.

   4. Replacement of property under this program is not a disposition of such property. The recipient is not required, at the time of replacement, to compensate OSM for the Federal share of the property. Rather, the Federal share shall be transferred to the replacement property with an appropriate adjustment as provided below.

   5. The Federal share of the replacement property shall be calculated as follows:
      1. The proceeds from the sale of the original property or the amount credited for trade-in shall be multiplied by the Federal share in the property (percentage) to produce a dollar amount.

      2. The dollar amount shall be used to reduce the Federal portion of the cost of the replacement. Any excess proceeds over the Federal portion of the cost of the replacement shall be used to reduce the Federal share of the grant or returned to OSM by check.

1-410-50 SUPPLIES

1. Title to supplies acquired under a grant will vest, upon acquisition, in the grantee.

2. Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the award, and if the supplies are not needed for any other federally-sponsored programs or projects, the grantee shall compensate OSM for its share. The amount paid to OSM shall be computed by applying OSM's percentage of participation in the cost of the original purchase to the current fair market value of the supplies.

3. Grantees shall purchase supplies only in amounts reasonably expected to be required for the OSM-funded grant or cooperative agreement. The supplies should be procured on a timely basis to reflect expected utilization during the period of grant support. Although there is no requirement for accountability for supplies similar to that of equipment, the grantee is expected to maintain those records necessary to support the purchase, receipt, proper charging and use of supplies in accordance with good management practices.

FEDERAL ASSISTANCE MANUAL
January 2, 1998