On June 3, 1998, NOAA established a new capitalized personal property threshold of $200,000 and a bulk purchase threshold of $1 million. A bulk purchase is defined as an acquisition of a quantity of similar items individually costing $25,000 or more and less than $200,000 where the total monetary value of the one-time acquisition of those items is $1 million or more. The following points define a bulk purchase:

• A one-time purchase against one particular purchase order or delivery order (i.e., one unique purchase/delivery number). The cost of each separate delivery order when there are multiple purchase/delivery numbers against one contract should not be summed together to determine if there is a bulk purchase. On the other hand, orders must not be split to avoid compliance with this policy
• The value of each item being purchased must be calculated according to the Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards No. 6., Par. 26, that is, the cost of each item is calculated by including all costs required to bring that item into service, including any initial training costs, transportation costs or installation costs. The cost of spare parts, warranties, follow-on training, or other non-capitalizable expenditures should be excluded from the calculation.
• Items acquired on this particular acquisition costing $200,000 or more will be capitalized separately and subtracted from the calculation of the bulk purchase. If the remainder of the purchase falls below the $1 million threshold, then the remaining items aggregating less than $1 million should be expensed, that is, charged to object class code 312x or 26xx.
  
• Only accountable items individually costing $25,000 or more, but less than $200,000 are included in the calculation of the bulk purchase.
• If, after taking all of the above into consideration, the total cost of the items that would ordinarily be non-capitalized exceeds $1 million, the purchase will be considered a bulk purchase. Each individual item included in the bulk purchase will be capitalized. Depreciation will start when the items are accepted. A requisition prepared for such a purchase must use the correct object class code for the type of capitalized item being purchased.
• Each item will be identified in the Property System as a bulk purchase item so there will be no confusion as to why an item costing less than $200,000 has an object class code for capitalized property. This will be done by setting the bulk purchase flag in the asset record.
• One valuation folder will be established for a bulk purchase for audit purposes which will contain individual screen prints for each item, certified inventories for all of the items, support in the form of invoices for the acceptance date, and the total value of all items.

This bulk purchase threshold policy will not be retroactive. Only those bulk purchases for which the assets are received after May 7, 1999, the date the policy was first published on NOAA's Personal Property Internet site, should be considered for capitalization. This statement, therefore, does not affect items identified as bulk purchases prior to May 7, 1999. This includes AWIPS equipment and PUPS ordered under the NEXRAD contract.

If there are questions regarding the specific application of this policy, please contact your NOAA's Finance Office and/or NOAA's Finance's Budget Office. They can be consulted to resolve complicated issues and/or questions. NOAA Finance will continually monitor the bulk purchase threshold to ensure that $1 million is a reasonable threshold based on the nature and amount of property and equipment purchases.