3. Property Disposal

Equipment

When an item of equipment is being sold that was wholly or partially purchased with VFA funding, the Federal Government has an interest vested in that equipment. The VFA percentage used to purchase the equipment must be applied to the sale price and recovered for the Government during the sale. This percentage will remain the same even following depreciation. If the VFA disposal sale amounts to less than $5,000 fair market value, it is not required that the Federal Government be reimbursed for its percentage of the VFA funds used to purchase the equipment.

When fire departments dispose of equipment obtained in part with VFA funding, items with a fair market value per unit of less than $5,000 may be retained, sold, or otherwise disposed of with no further obligation to the awarding agency. Items with a fair market value per unit of $5,000 or more may be retained or sold and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency's share of the equipment. See 7 CFR 3016.32 for property purchased by State and local governments (Appendix H) and 7 CFR 3019.34 for property purchased by nonprofit rural fire departments (Appendix I).

Nonprofit RFD's may deduct 10 percent or $500, whichever is less, from the amount due the Federal Government to cover sale expenses. Also, the Forest Service may authorize the recipient to use the entire proceeds of the sale for allowable program expenses instead of returning the money to the Federal Government.

VFA equipment may be traded in or sold and the proceeds used to procure in-kind replacement property. "In-kind" means that the replacement equipment must be fire equipment, although, not necessarily the same type of item that is replaced. It is also probable that the fair market value at the time of disposal would seldom exceed the above threshold. For these reasons, fire departments would seldom be required to remit a portion of the sales proceeds to the Federal Government.

Supplies

For State and local governments 7 CFR 3016.33 provides that if there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the award, and if the supplies are not needed for any other Federally sponsored programs or projects, the grantee or subgrantee shall compensate the awarding agency for its share (see Appendix H). For institutions of higher education and nonprofit corporations 7 CFR 3019.35 also provides that the inventory of unused supplies must exceed the $5,000 threshold before the awarding agency must be compensated. (see Appendix I).