2.4 Loans, Transfers, Leases and Rentals
Stan Dunn, CPPM
Property Management Office
1. Incoming Loans of Equipment
Incoming loans are comprised of property which has been provided to Stanford free of charge, for a specified period of time (short or long term), by an institution or individual. Loans of equipment originate primarily for:
- Equipment Evaluation (will it meet our needs?)
- Clinical Trial Support
- Other Sponsored Research Support
Ownership during the loan period resides with the lender. Stewardship and accountability responsibilities exist for Stanford and require compliance with the terms and conditions of the loan.
A. Operational Procedure
The Property Management Office (PMO) must be notified of all incoming loans of equipment prior to their arrival. PMO will review and involve the Office of Sponsored Research (OSR), Office of Technology Licensing (OTL), Procurement, and the Office of Risk Management as needed.
All loans of equipment must be documented and include, at a minimum:
- Listing of equipment being loaned
- Value of equipment
- Specific start and end dates of the loan period
- Liability, insurance, and/or indemnification clauses
- Maintenance responsibilities
- Purpose and/or intended use for the loaned property
- Transport, delivery and return responsibilities
- Authorized signatures, per Administrative Guide Memo 5.2.3
In all cases, loaned equipment must be identified, recorded, and tracked in the Sunflower database by the Department Property Administrator (DPA). Please refer to Administrative Guide Memo 5.2.3.
Loan terms and conditions may vary. To facilitate closure of a loan, as the end of the loan period approaches, the equipment custodian/user should notify Department Property Administrator (DPA) as to the status of the loaned equipment. If the equipment is being retained past the end date of the current loan agreement, the loan document should be updated by the DPA in coordination with PMO. If the equipment is being returned, the DPA should notify their Property Programs Manager (PPM) to have the record retired from the Sunflower database. PMO may conduct periodic reviews to ensure loan documentation remains accurate.
Each incoming loan type may have unique steps for acquisition, as outlined below.
B. Manufacturer Evaluation Loans
A standard lease equipment purchase requisition is required. In addition to the standard information, the requisition must include the following:
- Clear identification of the transaction as a loan
- Itemized listing of equipment being loaned
- Loan period beginning and end dates
- Equipment value if Stanford were to purchase the item at the end of the loan period (usually provided by lender)
- Routing to Department Property Administrator (DPA) and applicable department approvers
C. Clinical Trial Support Loans
Clinical trials pose unique risks to the University, particularly when they involve human subjects. Prior to initiating a loan of equipment supporting a clinical trial, contact the School of Medicine Research Management Group (RMG). Close coordination with Stanford hospitals and the Institutional Review Board (IRB) may be required.
D. Other Sponsored Research Support Loans
Sponsors may elect to provide equipment for use in support of sponsored research. This may be referred to as Sponsor Furnished Property, Government Furnished Property, or a Bailment Agreement. Specific terms and conditions should be included in the sponsored research agreement.
When federal sponsors loan property to Stanford, there are specific handling and documentation requirements – please contact PMO immediately for guidance.
In addition, equipment may be loaned to Stanford by peer institutions in support of collaborative research projects. Timely documentation of these equipment loans is very important. As soon as the DPA receives notification of an incoming loan the appropriate PPM should be contacted. PMO will generate a loan number and assist with completing the documentation.
2. Incoming No-Cost Title Transfers from other Universities
Equipment is often brought to Stanford by new faculty from their prior institution. When planning for an incoming transfer, it is critical to identify whether or not the transfer is associated with a Sponsored Grant or Contract. The asset’s original source of funding or affiliation with an active grant or contract will determine documentation, recording, and management requirements. Common scenarios include:
- Equipment acquired by the prior institution with unrestricted funds
- Equipment purchased with sponsor funds and award is closed
- Equipment transferring with an active grant
- Equipment transferring with an active contract
Department personnel coordinating the arrival of incoming faculty must inform their DPA of the incoming transfer. The DPA should contact the appropriate PPM as soon as possible to begin processing the incoming equipment transfer.
The DPA will serve as primary liaison with the PMO to ensure documentation is complete and records are established in an accurate and timely manner
The following information is needed:
- Written release by an authorized individual from the relinquishing institution
- Point of Contact at the relinquishing institution
- Equipment description
- Model number
- Serial number
- Year of manufacture
- Original acquisition cost
- Type of original funding source
- Ownership at time of transfer
- Current or last accountable agreement (grant, contract, or other agreement)
Upon receipt of this information, PMO will review and obtain clarification, if needed, from the Point of Contact at the relinquishing institution.
PMO will provide the DPA any necessary guidance and instruction to proceed with the completion, acceptance and recording of the incoming transfer.
Note: Care should be taken that any required software licenses are obtained by Stanford.
3. Leased Equipment
Leasing as an acquisition method is an option after other methods have been considered and deemed less desirable. Leases are contracts under which a lessee has committed to pay stipulated cash payments for the use of an asset for a specific period of time.
For property management purposes, an equipment lease is considered the commitment to pay for the use of an asset for longer than one year, with total contracted cash payments over the term of the lease of $5,000 or greater.
The terms and conditions of a lease agreement should, at minimum, provide the following property management elements:
- Itemized list of equipment and components
- Location (intended place of use)
- Lease period
- Specify ownership of equipment
- Liability and insurance terms
- Transport, delivery, and return responsibilities
- Use restrictions, if any
- Maintenance responsibilities
- Payment terms (and fees, if applicable)
- Buy-out options, if any
A. Capital versus Operating Leases
An equipment lease is capitalized if the total anticipated contracted cash payments over the term of the lease, excluding any transportation costs, are greater than or equal to $200,000, on a per contract basis, and at least one of the following criteria is met:
- By the end of the lease term, ownership of the leased property is transferred to Stanford
- The lease contains a bargain purchase option that Stanford reasonably expects to exercise
- The lease term is substantially (75% of more) equal to the estimated useful life of the leased property
- At the inception of the lease, the value of the minimum lease payments is 90% or more of the fair value of the leased property.
Capital leases may require the pre-approval of the CFO or their designee. They are reported as an asset and a liability on Stanford's financial statements and interest and depreciation are expensed. See Administrative Guide Memo 5.2.2 for additional information.
Leases that do not meet the above definition are considered operating leases, and payments are expensed as incurred.
B. Leasing on Sponsored Projects
Generally, leasing equipment on federal sponsored projects is not allowable as a direct charge. Specific authorization from the sponsor is required. Contact PMO for further guidance.
C. Equipment Lease Operational Procedure
The iProcurement system is used to process a Standard Lease Equipment requisition for acquiring leased equipment.
In addition to basic information, the following unique information is required when preparing a Standard Lease Equipment requisition:
- Lease term (in months)
- Equipment description
- Location where equipment will be used
- Option to extend or renew (Y/N)
- Point of Contact in department
Leased equipment must be tagged and recorded in Sunflower by the DPA for accountability and reporting purposes. Records must reflect the acquisition method of “LEASE” to facilitate reporting requirements. PMO will monitor leased equipment to ensure timely action at the end of the lease term.
“Rentals” – that is, contracted agreements where the total payment commitment is less than $5,000 OR the lease term is less than one year (with the intent to return the equipment at that time) are not required to be recorded in the Sunflower database.
Depending on the terms of the lease, the following expenditure types are used:
|52910||LEASE EQUIPMENT >1yr; <$5K||Less than $5K commitment, Greater than one year|
|52921||LEASE GEN PURPOSE EQUIP >$5K||$5K+ commitment, Greater than one year, Non-research equipment|
|52951||LEASE SPEC PURPOSE EQUIP >$5K||$5K+ commitment, Greater than one year, Research equipment|
|52981||LEASE EQUIP. 1 MO TO 1 YEAR||Greater than one month but less than one year, and $ commitment|
|52992||RENT OTHER||<1 MO or other rental|
D. Equipment Purchase at the End of the Lease Agreement
To exercise a buyout option at the end of a lease, the department must submit a Standard Equipment Lease Change Order in the iProcurement system, and reference the original PO number of the equipment lease. If the buyout amount will exceed $5,000, a Standard Capital Equipment requisition type may be required. Contact PMO for guidance.