July 16, 2025

Please be advised of the following important changes to cost definitions and indirect cost applications, effective July 1, 2025:

1. Equipment Definition Threshold

Equipment is defined as tangible personal property (including information technology systems) with:
• A useful life of more than one year, and
• A per-unit acquisition cost of $10,000 or more. This includes separate components totaling $10,000 if they are assembled to make one piece of equipment. (will require an asset build grant number)
– Applicability: This new threshold applies to all non-federal contracts (not governed by a FAR clause), grants and cooperative agreements. Federal and federal flow through contracts will continue (containing FAR clauses) to apply a lower threshold because the FAR clause property limit has not changed.

Previous Threshold: $5,000 per unit

Capitalized repairs/upgrades/improvements

If the expense is $10,000 or over ($5,000 for federal or federal flow-through contracts) and extends the useful life more than a year, improves the asset, or adapts the asset to a new use then it will be capitalized. Because the capitalization threshold for software is $4M, software upgrades are expense.

2. Indirect Costs on Subawards

The base for calculating indirect costs on subawards has been updated:
– New Threshold: Indirect costs will now be assessed on the first $50,000 of each subaward, regardless of the period of performance.
– Previous Threshold: Indirect costs were applied only to the first $25,000 of each subaward.

These changes should be reflected in all proposals and budgets prepared for submissions on or after July 1, 2025. Please contact the College of Sciences Pre-Award team with any questions.