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University of Alabama at Birmingham
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purchasing   /  Capital Equipment

Capital Equipment

Definition

Capital equipment is any item of equipment, apparatus, machinery, or furniture not attached to or made a part of a building structure. The item must be non-expendable, have a useful life in excess of one year, and be of sufficient size and individuality to make control feasible. The original acquisition cost should include the cost of all items which, when assembled, will continue to operate as one unit for the remainder of its useful life. The cost should also include the expenses necessary to make it operational. This would include shipping/freight, training, taxes or duties, space modification, etc.

To be considered capital equipment for the Hospital, the item must have an individual cost of $2,000 or more. To be considered capital equipment for the University, the item must have an individual cost of $5000 or more. Major computer software for the Hospital and University is capitalized when the individual cost is $5000 or greater.

Bid Law

As a state institution, UAB is subject to requirements of the State Bid Law. That law requires that all purchases and/or contracts for labor, services materials, equipment, and supplies involving $15,000 or more must be let by open, competitive bidding, on sealed bids, to the lowest responsible bidder. Competitive, sealed bids shall be requested by the Procurement Contracts Department on any item or group of like items costing $15,000 or more annually. Requisitions may not be divided into parts of less than $15,000 for the purpose of avoiding the bid law.


Sole Source

In accordance with the University Policy, any requisition totaling $15,000 or more which is not let for open and competitive bid must be accompanied by a sole source justification form. This form must be complete and signed. Any requisition meeting the above criteria which does not have a completed, signed sole source justification for attached will be returned to the requestor by the Procurement Contracts Department. All sole source transactions are subject to review and audit by the internal audit, state examiners and other governing agencies.

The Director of University Purchasing is vested with the authority to approve a sole source purchase, and the decision of the Director is final.

Board Rule 415

Purchases of individual items of equipment equal to $500,000 or more shall be submitted to the Board of approval in accordance with Attachment C.

Equipment purchases included in Capital Construction Projects, which have Board approval, shall not require separate Board action. Also, purchases of equipment which are funded entirely by grant or contract shall not require Board approval if both of the following criteria are met:
(a) The capital expenditure is less that $1 million; and
(b) At least 75% of the operational cost associated with the equipment will be paid by the grant or contract over the estimated useful life of the asset.

Generally, capital projects with estimated costs of less than $750,000 may be undertaken and associated contracts executed without Board approval. However, all capital projects (regardless of cost) which impact the visual appearance of the campus are to be presented to the Board.

University Purchasing will return to the originator any purchase order requisition for equipment or software that exceeds the above thresholds that do not have a copy of an approved Board resolution attached.

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