Needed, Received & Used
Expenditures that occur close to the project end date need to be reviewed with the "needed, received, and used" concept. Although the phrase "needed, received, and used" does not appear in any regulation, the concept does. For example, if the Project Leader (PI) wants to buy 2 computers three months before the end of a project, OMB Circular A-110, Section .44 provides the following guidance:
(a) … (1) Recipients avoid purchasing unnecessary items. (2) Where appropriate, an analysis is made of lease and purchase alternatives to determine which would be the most economical and practical procurement for the Federal Government
This language could be interpreted to mean that if 2 PCs were needed during the last few months of the project then, perhaps, it would be less expensive to the federal government to lease them. Or, perhaps it would be more appropriate to request a no-cost extension so that the computers could be used over a larger portion of the project period.
Also, per A-110 Subpart A. 2 (y) Project costs
means all allowable costs, as set forth in the applicable Federal cost principles, incurred by a recipient and the value of the contributions made by third parties in accomplishing the objectives of the award during the project period
Per OMB Circular A-21, Cost Principles for Educational Institutions, Section C. 3. Reasonable Costs
A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made
. Major considerations involved in the determinationof the reasonableness of a cost are: (a) whether or not the cost is of a type generally recognized as necessary for the operation of the institution or the performance of the sponsored agreement
; (b) the restraints or requirements imposed by such factors as arm's-length bargaining, Federal and State laws and regulations, and sponsored agreement terms and conditions; (c) whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities
to the institution, its employees, its students, the Federal Government, and the public at large; and, (d) the extent to which the actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.
The above language supports the concept that the expenditure must be needed by the project, it must be allowable according to the cost principles, and it must be purchased and used during the project period, or, in unusual circumstances, used to complete the final report, i.e., paper and ink purchased within the project period for the printing of a huge final report.
Exceptions to the “needed, received, and used” concept are granted for pre-award costs, and for continuation projects, when allowed by the terms and conditions, and when funded by the same agency. Please check with your CGA contact for further information. While the above logic may convince some of the need for the "needed, received, and used" concept others may disagree. If a department
feels strongly that a particular transaction is appropriate, they can approve the purchase on a departmental unrestricted account pending written approval from the funding agency. Requests for agency approval must be signed by CGA prior to mailing to ensure acceptance of the approval language. Once written approval is received, the expenditure can be transferred to the project account.