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SOP - 14. State-owned Equipment

Capital Equipment Lease, Purchase and Tracking

General Information

While the Petroleum Restoration Program (PRP) generally no longer purchases equipment, many state-owned remedial systems are still in operation. This section of the SOP covers the existing state-owned capital equipment and the rare instances when new capital equipment is acquired. The PRP is required to comply with Department of Environmental Protection (DEP) Directive 320 and Chapter 273, F.S., regarding capital equipment. It is important that Site Managers take property custodianship seriously concerning purchasing, transferring and surplussing capital equipment, as certain violations have criminal consequences. The Equipment Management Contractor assists the Property Custodian Delegate in compiling and submitting the paperwork for equipment capitalization, tracking basic information about the state-owned equipment and the annual reconciliation of the equipment inventory. For questions, procedures, and submittal of any information regarding capital equipment, contact the Equipment Management Contractor by email at cvernon@northstar.com. The email will be distributed to the appropriate staff member who will contact you directly.


Procurement of New Capital Equipment

At this time, generally the only occasion where the PRP will purchase capital equipment is when a component of an existing state-owned remedial system requires replacement. In this case, the Site Manager must discuss the situation with their Team Leader and justify to the Program Administrator that the purchase is the best value to the State.

Prior to procuring new capital remediation-related equipment, a cost benefit analysis must be performed to determine whether leasing of the remediation equipment will be more cost-effective overall than purchasing, considering the proposed milestone schedule and length of use for each equipment component, as well as mobilization and setup. This analysis shall be included in the Contractor’s proposal for RA Construction. At least one written quote for an Equipment Lease and one written quote for an Equipment Purchase shall be provided in support of the cost benefit analysis. The quotes shall be based on the specifications approved in the RAP or RAP Mod, including specific manufacturers and models, if applicable.

The actual procurement of the equipment will be subject to the competitive bidding procedures for the option justified by the cost benefit analysis (purchase or lease). 

In accordance with Florida Statute, DEP assumes ownership of all capital equipment purchased under regular PRP Purchase Orders. Capital equipment is defined as any non-expendable equipment costing more than $1,000 with an expected life of more than one year. This equipment must be capitalized (added to the state inventory system) within 60 days of purchase. DEP is currently capitalizing individual components (blowers, compressors, etc.). 

Note: Remediation equipment purchased under a PBC, AC or PCPP agreement does not become state-owned property, unless that is specified in the agreement.


Capitalization Procedures

The capitalization process for purchased equipment is as follows:

  1. Site Manager must include the equipment purchase as a section 22 item on the SPI. 
  2. After the PO is issued and the ATC invoices for the task with the equipment purchase, they must include the Property Reporting Form(s) with the capital equipment vendor invoice(s) for each capital equipment component purchased. 
  3. The Site Manager must review the Property Reporting Form(s) and equipment vendor invoice for accuracy and forward them to the Equipment Management Contractor.
  4. The Equipment Management Contractor will then complete the separate Equipment/Property Form(s), enter the equipment into the equipment database, and submit the entire capitalization packet to the Property/Records Management Section of the Bureau of General Services with a request for the appropriate number of state property numbers and tags.

 

Property Reporting Form

The cost for a system should be the sum of the costs of all the reusable equipment such as pumps and blowers, but does not include expendable items such as piping or fittings required for installation (other than those already included in a pre-built skid or trailer-mounted system) or exhaustible items such as granular activated carbon or chemical feedstock. The Contractor receives a 6 percent markup on equipment purchase. The Property Reporting Form should not be used for expendables, e.g., carbon, filters, chemicals, etc. This form should also not be used for refurbishment of equipment. Refurbishment/repair costs should go under section 22 in the SPI as reimbursable. If the equipment is a replacement part for a system that was capitalized as a complete system (rather than as individual components), then these costs should not be placed on the Property Reporting Form either as this is considered a repair to the system.


Taxes and Shipping Charges

In the PRP, the Contractor is purchasing the equipment for DEP; therefore, all applicable taxes (including local sales tax) must be paid and are considered a part of the capital equipment cost. The state is exempt from paying taxes only when it purchases an item directly. Shipping charges from the supplier or factory are allowable expenses and are also considered part of the capital equipment cost and should be included on the Property Reporting Form.


New Equipment

All invoices for Purchase Orders that include the purchase of new capital equipment should have a current and completed version of the PRP Property Reporting Form and all vendor invoices for the equipment attached. The Comptroller’s office will not pay invoices for capital equipment that does not include vendor invoices. The cost listed as the Total Vendor Cost on the Property Reporting Form (Section II) must match the cost on the vendor invoice. It is requested that the vendor invoice be broken down by system, with the costs for the enclosure, the control panel, taxes and shipping separated (as is the Property Reporting Form) to ease capitalization. Any costs for installation and/or startup assistance should be on a separate vendor invoice, or clearly separated on the vendor invoice as these costs are not capitalized and must not be included on the Property Reporting Form. PRP Accounting will then send a copy of the information that is required for capitalization to the Equipment Management Contractor.

The benefit of capitalizing equipment as a system rather than individually as components is that replacement components can be installed with no additional capitalization paperwork. Since the capital equipment is a system, any new parts are considered repairs. However, the Site Manager must inform the Equipment Management Contractor of any repairs, including changes in make/model, serial number and equipment specifications. This is necessary to ensure that system specifications (including make, model and age of individual components) are accurately represented on the equipment database.

At the request of the Bureau of Finance & Accounting (BF&A), the Treatment System Costs in Section II of the form has been broken out into vendor cost (with tax and shipping), contractor markup, total cost, DEP cost share (%) and DEP cost to facilitate their reporting requirements. Tax and shipping costs should be prorated as necessary across multiple property reporting forms. 

Note: It is very important that the capital equipment costs be consistently documented amongst the vendor invoice, the Property Reporting Form(s), and the MyFloridaMarketplace (MFMP) Invoice. If these costs do not agree or cannot be verified, then the invoices will not be paid by the BF&A and will be returned to the Site Manager for correction. The Site Manager should contact the Equipment Management Contractor to ensure that the Property Reporting Form is filled out in accordance with capitalization procedures.


Previously Capitalized Equipment Components and Replacement Parts

Although DEP has been capitalizing equipment as systems, if equipment components are purchased that will replace previously capitalized equipment components, then the replacement component still needs to be capitalized. The last section on the Property Reporting Form, titled “Other Components,” is where this information needs to be included along with the MFMP Invoice. The easiest way to check if previous equipment was capitalized by component is to review the original Property Reporting Form. If separate costs for the component were listed on the original Property Reporting Form, then the costs for the replacement components need to be reflected on the form, along with make/model, serial number and equipment specifications. This Property Reporting Form must then be included in the invoice packet that the Site Manager processes for capital equipment. Alternatively, the Site Manager may contact the Equipment Management Contractor who can verify previous capitalization procedures for existing equipment.


Special Requirements for Equipment Trailers

There are special documentation requirements for state-owned equipment trailers. Because they are considered “motor vehicles,” equipment trailers are subject to certain provisions of the Florida Statutes and the Florida Department of Highway Safety and Motor Vehicles (DHSMV) pertaining to the transfer of title, registration and licensure. For additional information, see the "Procedures and Required Documentation and Procedures for the Transfer of Title, Registration and Licensure of State-Owned Remediation System Trailers" memo.

Note: Due to theft and illegal use of trailer tags/license plates, the Equipment Management Contractor now keeps the trailer tags for all state-owned equipment trailers. If the trailer needs to be moved (on its own wheels), the Contractor or Site Manager must request the license plate from the Equipment Management Contractor and affix the license plate prior to mobilizing the trailer. Once the trailer has been relocated, the license plate must be returned to the Equipment Management Contractor, unless it is anticipated that the trailer will be moved again within six months.

In all correspondence with DEP or the Equipment Management Contractor pertaining to capital equipment (including equipment trailers), the cleanup Contractor should include a reference to the DEP facility number of the site for which the equipment Work Order/Task Assignment was issued, as well as the serial number(s) of the equipment.  


Property Numbers

All capital equipment purchased in the PRP requires a property record number issued by the Property Management Section of the Bureau of General Services. A property number should be requested for each system and each enclosure (including the control panel). To maintain consistency, all requests are routed through the Equipment Management Contractor. The following instructions describe the process to obtain a property number: 

  1. The documentation for capitalization that will be routed from PRP Accounting to the Equipment Management Contractor (as specified in section 0) is used to complete the Petroleum Cleanup Equipment/Property Capitalization Form.
  2. The Petroleum Cleanup Equipment/Property Capitalization Form is used to request a property number. The Equipment Management Contractor will complete this form after receiving their copy of the Property Reporting Form(s) and the equipment vendor invoice(s) from PRP Accounting. This form is used to request a new property number or to update the information for an existing piece of equipment. Property numbers will be requested for new or replacement components. The Purchase Costs section of this form also has been broken out into vendor cost (with tax and shipping), Contractor markup, total cost, DEP cost share (%) and DEP cost. Tax and shipping costs should be prorated as necessary across multiple property capitalization forms.
  3. The Property Section will issue property numbers and tags for capitalized equipment and send them to the Equipment Management Contractor for tracking. The Equipment Management Contractor will forward the decals to the Site Manager.

  4. The Site Manager will then either send the property decals and a verification of property number placement letter to the Contractor or Inspector.

  5. The decals must be affixed to the appropriate equipment in a visible location. The Verification of State-Owned Property Number Placement letter must be signed and returned to the Equipment Management Contractor.

Note: If the equipment being purchased is a replacement part and represents a major part of a system that has already been reported as state-owned property (even if the cost is <$1,000), notification must be provided to the Equipment Management Contractor; however, a new property number is not needed. The old property number will be used; the old tag can be reused or a replacement decal can be ordered. If the equipment was capitalized as a system, and costs were not separated by components, it is considered a repair. In this case, the Site Manager should provide the make/model and specifications to the Equipment Management Contractor via email (cvernon@northstar.com).

Annual Inventory

Pursuant to DEP Directive 320 and Chapter 273, F.S., a physical inventory of state-owned property is required to be completed once per year and is initiated with the issuance of the official inventory report to the applicable property custodians throughout the agency by the DEP Property/Records Management Section in the Bureau of General Services at the beginning of the fourth quarter of the calendar year. The deadline for that calendar year will be specified in the request for submittal of their reconciled inventory report. Reconciliation of the inventory report requires confirmation of the location of each property item on the list and/or documentation for necessary adjustments such as transfers, loans or surplus actions. For remediation equipment in the PRP, this task is performed as a joint effort by the Equipment Management Contractor in coordination with the Property Custodian Delegate and Site Managers. A copy of the equipment inventories, for which each Team/Local Program is responsible, is sent including a deadline for submittal of the inventory scanners back to Tallahassee. 

The Site Manager may personally scan the equipment themselves or have an inspector scan the property tags.

Note: Contractors should identify all state-owned equipment on a site and report its condition in each O&M or Post Active Remediation Monitoring (PARM) report. This should be listed as a specific component of the deliverable in the Purchase Order. Since the annual inventory is required by law, documentation for items not scanned or typed in must be submitted by the Site Manager by the stated deadline. The Equipment Management Contractor will report late submittals to the Property Custodian Delegate, who will then contact the Section Leaders for any inventories that are not received by the deadline.

DEP takes state-owned property issues very seriously and Site Managers and Contractors have a property custodian responsibility. Site Managers should be aware of whether their sites have state-owned equipment and require their cleanup contractors to routinely monitor the status of that equipment. Any transfer, replacement (in whole or part), theft or damage should be immediately reported  to the Equipment Management Contractor so that any necessary paperwork or tracking updates can take place. Any changes in inventory (due to transfer, replacement, theft, etc.) must be communicated to the Equipment Management Contractor immediately as they happen. Waiting until the annual inventory causes delays and problems with reconciliation.


Stolen or Missing Equipment

If state-owned equipment is stolen from a site or otherwise cannot be located, it is essential that a report be filed with the police immediately. The Site Manager should send a brief statement via email to the Equipment Management Contractor including the affected property item numbers. The Equipment Management Contractor will then generate a DEP Missing Inventory Items Report (Form DEP 55-404) based on the information the Site Manager provides and will send this form to the Site Manager to complete. The Site Manager will complete the form and send it back (with a copy of the police report) to the Equipment Management Contractor, who will then submit it to the DEP Property Section. Reconciliation of the annual inventory cannot be completed without such documentation.


Transfer of Equipment to Another Site

Upon completion of active remediation at a site, the equipment may be moved to another site, auctioned, or surplussed for disposal (if the equipment is no longer useable). It is critical that the Property Management Section be notified of any change in location of state-owned property. Therefore, the Equipment Management Contractor must be contacted prior to relocating remediation equipment to ensure the proper procedures are followed and the applicable forms are completed. The Equipment Management Contractor will generate the Property Transfer Form and PRP Equipment Chain of Custody form and send both to the Site Manager to complete. The Site Manager will return the completed forms to the Equipment Management Contractor who will then submit them to the Property Management Section and update PRP property records to reflect the new location for the property. When equipment is to be surplussed, there are numerous requirements that must be met. See below section – Surplus, Ownership Transfer & Use Agreement Procedures.

The cost to transfer equipment from Site A to Site B should be incurred by the site receiving the equipment (Site B).


Surplus, Ownership Transfer & Use Agreements Procedures

Generally, the cost-effectiveness of re-using state-owned capital equipment diminishes as its expected useful life is approached, considering the resources necessary for evaluation, repair, refurbishment, transportation, storage and tracking, as well as technical obsolescence over time as cleanup strategies evolve. There are several options for the disposition or handling of state-owned capital equipment upon completion of cleanup activities or exhaustion of program eligibility funding caps (note that the various “agreements” referenced in this section for equipment transfer and use are considered DRAFT and should be reviewed by the OGC prior to execution):

 

1. Equipment Surplus

Pursuant to DEP Directive 320 and Chapter 273, F.S., all surplus actions for state-owned property must be preapproved by the DEP Surplus Property Review Board prior to implementation. If a property item is determined to be no longer useful for reasons including condition, obsolescence or inefficiency, the Site Manager will provide the Equipment Management Contractor with a request for surplus that includes photographs in .jpg format of the individual components as well as the trailer/enclosure of the equipment via email. The Equipment Management Contractor will then submit a DEP Certification of Surplus Property (Form DEP 55-406) to the DEP Property/Records Management Section with the recommended method of disposition.

Note: If certain parts of a remediation system for which surplus approval is requested are going to be re-used (aka cannibalized) elsewhere, this information must be clearly disclosed on the DEP Certificate of Surplus Property Form and not removed until approval has been granted.

Once approval is granted by the Surplus Property Review Board, the property may be disposed. The entity disposing this property must complete a Surplus Property Disposal Certificate/Receipt (Form DEP 55-407) which will be provided by the DEP Property/Records Management Section and return it to the Site Manager, who will then forward the completed form to the Equipment Management Contractor. This form documents the method of disposal, who disposed the property, and who witnessed the disposal. The Site Manager can sign the Witness section based on photos or a report submitted by the Contractor. The property will remain on the official inventory report until this confirmation of proper disposal has been returned to the DEP Property/Records Management Section. If the equipment or any part of the equipment is sold for scrap metal/recycled, which is an allowable surplus function, the Contractor or entity responsible for disposal must provide the Equipment Management Contractor with the receipt and a check made out to DEP for the amount received for the scrapped/recycled state-owned equipment. The Site Manager may also negotiate a reduction from a work order associated with the DEP facility for the amount received. If the Contractor or other entity responsible for disposing the property receives payment for state-owned equipment, detailed information must be provided on the DEP 55-407.

If the Contractor fails to follow established property surplus procedures, it shall result in negative consequences that may include, but not be limited to, written reprimand, forfeiture of retainage on open purchase orders, or the Contractor being removed from the site. The PRP Equipment Management Contractor will be tasked with providing a periodic summary of significant state-owned property procedure violations for review by Site Managers, supervisors and management.  

Approval from the Bureau of General Services (DEP Property/Records Management Section) is required before state-owned equipment may be disposed. All surplus property requests should be routed through the Equipment Management Contractor. Approval must be received before disposing any equipment (scrap or transfer).

Note: Equipment purchased through the reimbursement program is not considered state-owned property and does not have to be surplussed. DEP paid for the use of this equipment during remediation, but does not own it. Equipment purchased by paying off the unreimbursed balance, as described in the section below – Disposition of Equipment Acquired Under the Reimbursement Program - does need to be assigned property numbers and/or surplussed prior to disposal.

 

2. Equipment Ownership Transfer

Transfer of ownership is also a form of surplus and is subject to the Surplus Property Form and approval process above. DEP may transfer ownership of surplus property to another entity based on a sale at a public auction conducted in accordance with applicable regulations with the approval of DEP Surplus Property Review Board. In addition, the following criteria have been developed to facilitate the transfer of ownership of equipment from DEP to a property owner or responsible party when the state-funding cap has been reached or when cleanup complications arise due to the presence of ineligible contamination at a site.

  1. All parties must consent to the terms of transfer in a written agreement such as a Funding Cap Transition Agreement with Exhibit B, a Site Rehabilitation Funding Allocation Agreement with Attachment D, or State Remediation Equipment Ownership Transfer Agreement. The executed agreement must be provided to the Equipment Management Contractor to process the DEP 55-406 & subsequently the DEP 55-407. 
  2. All transfers are subject to DEP surplus property procedures and forms.
  3. The new equipment owner (property owner or responsible party) must agree to use the equipment for any remaining cleanup required for the eligible discharge, if applicable, and assume responsibility for proper demobilization of the equipment and site restoration upon completion. 
  4. All transfers are subject to payment to DEP of the current market value of the equipment. If the property owner/responsible party has paid a percentage of the original purchase of the equipment (e.g., under a PAC or PCPP agreement), then the amount to be paid based on the market value shall be prorated accordingly (be sure to first check the PAC or PCPP agreement to confirm the status of purchased equipment).
  5. The default current market value of equipment shall be based on a useful life of five years with a reduction of 20 percent of the original purchase price upon installation, followed by annual reductions of 16 percent for each of the next five years of use (or 1.333 percent per month for 60 months). Exceptions to the default current market value must be clearly documented, justified, and approved by the Property Custodian Delegate and the DEP’s Property Custodian. 
  6. If the equipment is no longer required at a site and the owner/responsible party has paid a portion of the cost of the equipment, there is no form of compensation available to the owner/responsible party for any residual value in the equipment other than their option to acquire the equipment at current market value less the percentage they have already paid, as described in section 2 A through E above.


Disposition of Equipment Acquired Under the Reimbursement Program

Equipment acquired under the former Reimbursement Program is not considered state-owned property, should not be assigned state property numbers, is not subject to state property surplus procedures, and should not be moved to another cleanup site. Such equipment is the property of the property owner/responsible party or their agent. 

Under the PRP, the state does not authorize costs to maintain or remove reimbursement era equipment for eligible sites that are not within priority funding range, unless there is a clear and demonstrated safety hazard to the general public (case-by-case). However, for eligible sites within priority funding range, if it is determined that such equipment cannot be used for future cleanup activities at the site, costs may be included in a Purchase Order to dismantle and dispose of the equipment provided a written release is obtained from the property owner/responsible party.



Return to: PRP Site Manager Standard Operating Procedures (SOP) webpage.

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Last Modified:
June 29, 2018 - 3:13pm

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