2.6 Fabrication

Stanford’s dynamic research environment often requires the creation of one-of-a-kind equipment intended to perform unique, specific functions.  Fabrications are complex, not commercially available items, configured and built by Stanford University personnel. Federal sponsoring agencies often refer to these as Special Test Equipment (STE) or Special Tooling (ST). 

Equipment fabrications may be Stanford or Sponsor funded.  They have specific requirements for acquisition, accounting, tracking, capitalization, and reporting processes. 

This document outlines the criteria and administrative principles associated with fabrications.  It also provides guidance to facilitate accounting, stewardship, and Sponsor compliance.

1. Definition

“Equipment fabrication” is the building of a unique individual piece of equipment, or scientific instrument by Stanford personnel (not a vendor or subcontractor).

A fabrication must meet all of the following criteria:

• The item has unique specifications and is described in the research proposal or award.  Details are specified in a schematic drawing.  When design changes occur, the schematic drawing should be subsequently updated.
• The total cost for acquired materials, supplies, and components must be $5,000 or greater. All items acquired for a fabrication must be permanently integrated into the resulting discrete, stand-alone item.
• The completed fabrication has an estimated useful life of one (1) year or more.  (Note:  If the fabrication is owned or funded by NASA, the useful life must be two (2) years or more.)
• When completed, the item will not be affixed permanently to a building or structure.
• The fabrication results in a unique, stand-alone, tangible item capable of specific identification and continuous control through tagging and periodic physical inventory. Components should be designed to remain at one position in the fabrication; they are not to be removed and replaced throughout the useful life of the fabrication.
• It must be completed in ample time to directly benefit the funding project and used for its intended purpose.  If it is a contract-deliverable item, it must be completed in time to meet the delivery schedule as outlined in the funding sponsored project.

2. Administrative Principles and Guidance

The following principles and guidance are provided to ensure accurate administration, accounting, classification, stewardship, and reporting of equipment fabrications:

Allowable Costs

The following costs may be charged to a capital fabrication Project-Task-Award (PTA):

• Fabrication components (raw materials and parts)
• Reasonable start-up supplies and parts to be incorporated in or otherwise consumed in the research and development of the fabrication
• Freight and handling
• Third party installation charges (i.e.: vendor or manufacturer)
• Technical services for parts provided directly to a vendor. (e.g. precision machining, polishing, plating, annealing).  Contact the Property Management Office (PMO) for specific guidance. 

Unallowable Costs

The following costs may not be charged to a fabrication PTA:

• Documentation
• Repair or maintenance to retain existing functionality or capacity
• Warranty
• Administrative support equipment
• General purpose equipment, tools, and other material that is not integrated into the fabrication
• Enhancements to equipment that is not integrated into the fabrication
• Stanford Service center charges
• Any other costs not directly allocable to the fabrication. For example, building infrastructure upgrades.

3. Accounting Protocols

There are specific accounting protocols for capturing the fabrication cost that will be capitalized.   Fabrication expenses are charged to a capital Project-Task-Award (PTA) in Oracle Grants Accounting.

• Each fabrication requires a unique Project and Task setup in Oracle Grants Accounting.  In addition:
• For fabrication projects funded by Stanford unrestricted accounts, please contact PMO.
• For NASA contracts only, the cost of all labor associated with the fabrication is tracked in a separate Task, using the same Task number appended with an “L” (e.g. 4000L) and is included in the acquisition cost reported to the sponsor. Reference the NASA Labor Accounting section below.
• If a fabrication includes cost sharing or multiple awards, the same project and task should be set up for all awards funding the fabrication. Complete information on cost sharing can be found in the Research Policy Handbook (RPH) Section 15.3.
• Fabrication expenditures for materials, supplies and components must be charged to the following expenditure types (ETs):

For purchases from outside vendors, use:

• 53195  (SU Owned Cap Fabrication) or
• 55095  (Non-SU Owned Cap Fabrication)

For purchases from Stanford Stores, use:

• 58671  (Intra-Dept SU Owned Cap Fabrication) or
• 58676  (Intra-Dept Non-SU Owned Cap Fabrication)

Continued from above:

• Quantities of goods acquired must be reasonable and directly allocable to the specific fabrication.
• Reimbursement transactions are not allowed.
• PCARD transactions are not allowed when title (ownership) to the fabrication will vest with the sponsor. PCARD transactions on Stanford-owned fabrications have strict requirements and are subject to additional audit scrutiny.  For additional guidance regarding P-card use on Stanford Owned fabrications, Contact your Property Programs Manager (PPM) or send an email to equipment-fab@lists.stanford.edu.
• A fabrication should be completed in ample time for it to benefit the funding project; for those that are not, costs may be reclassified as expense and applicable indirect burdening charges may be incurred.
• Completed fabrications must be in use for one year or more (two years, if NASA funded).  Disassembly or cannibalization prior to meeting the useful life requirements will result in the re-categorization of costs as expense and indirect burdening charges will apply per University policy.
• In-process fabrications are subject to periodic review and verification that costs are allowable, allocable and reasonable.

NASA Contract Fabrication Labor Accounting

Appropriately accounting for labor costs associated with each fabrication may be required for sponsor reporting on certain federal contracts, as determined by specific terms and conditions of the agreement. You can collect this information through the Labor Schedules in the Labor Distribution system. Each department establishes and communicates procedures for time-keeping.

Individuals typically charging time (e.g. directly related or hands-on labor) to a burdened fabrication task include:

• Research Assistants
• Professional and hourly technical staff
• Research Associates
• Post-Docs

A PI's general project supervision and oversight time is not charged to a burdened fabrication task.

Departments should establish procedures to follow for making any adjustments to the amount of salary expense charged to fabrication task. Adjustment, if needed should be completed in a timely manner.

Review and adjustment procedures could follow 3 scenarios:

• PI requests adjustment to % charged before the end of a pay period; Labor Schedule adjusted
• PI requests adjustment to % charged following monthly review of Expenditure Statements.; journal transfer is processed
• PI requests adjustment to % charged following quarterly Expenditure Statement certification review; journal transfer is processed

4. Fabrication Completion

A realistic completion date for each fabrication is very important. It should be completed in ample time to directly benefit the funding project within the period of performance.  Completion is normally recognized as the date that the fabrication was first used for its intended purpose.

Requests to extend the fabrication period from that originally proposed, may require written justification from the researcher and may require a physical verification of progress. Fabrications that extend past their scheduled completion dates with no significant progress may be disallowed and expensed (subject to applicable indirect burdening charge costs).

5. Residual Materials

Unused material remaining after the completion of the fabrication should be accounted for and reported according to University policies, applicable federal regulations and/or the terms and conditions of the sponsored award. 

The residual material is subject to regulations found in OMB Uniform Guidance Section 200.314-Supplies (*See Note) or the specific terms of the contract. For Sponsor-owned fabrications, approvals from the sponsor should be obtained prior to the disposal of any residual material, regardless of aggregate value. 

In order to be in compliance with all applicable regulations and University policies, it is important to notify your Property Programs Manager of any residual material remaining at the completion of a fabrication.

6. Disposition of Fabrications

Disposition of fabrications is primarily accomplished through disposal as excess, by cannibalization, or by meeting deliverable terms of a contract.

Contact your Property Programs Manager (PPM) prior to any disposal action, including cannibalization, so appropriate approvals can be obtained.

7. Administrative Procedures

The following procedure details the steps of what needs to be done and who is responsible during the initiation, work-in-progress and completion of a fabrication.