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921 Purpose. To establish requirements and procedures for determining whether to acquire equipment by lease or purchase. This section outlines criteria to be considered to assure that and informed judgement. These procedures are designed to achieve savings on equivalent acquisition costs based on department wide long-range considerations.

922 Authority. This section is issued pursuant to the requirements of:

a. 41 CFR 101-25.5 which prescribes guidelines to be used by Executive Agencies in determining whether acquisition of equipment should be by purchase or lease and Title 41 of Chapter 201, Federal Information Resources Management Regulations.

b. 48 CFR 101-7.4 which provides guidance pertaining to the decision to acquire equipment by lease or purchase.

c. Executive Order 12352, "Federal Procurement Reforms", issued March 17, 1982, which directs the Heads of Executive Agencies engaged in the procurement of products and services from the private sector to ensure timely satisfaction of mission needs at reasonable prices by establishing criteria to improve the effectiveness of procurement systems.

923 Background

a. Executive Order 12352 requires each Procurement Executive of an agency to certify to the Agency Head that procurement systems meet approved criteria. One criterion requires that lease or by analysis be used in the evaluation of contractor proposals in certain equipment acquisitions to determine the lowest overall cost to the Department.

b. FAR Subpart 7.4 requires agencies to consider whether to lease or purchase equipment based on a case by case evaluation of comparative costs and other factors, depending on the type, costs, complexity and estimated period of use of the equipment.

c. 41 CFR 101-25.5 refers to Federal government studies which indicate that, in many cases, considerable savings may be realized by purchasing rather than leasing certain equipment. The studies stress the need for analysis of costs and other factors prior to the determining the method of acquisition.

d. DLMS-2, Section 810, outlines the delegation of procurement authority within the Department of Labor (DOL). Implicit in the delegation of this authority is the responsibility for following regulations and procedures designed to identify the most effective method for acquiring essential equipment at the most reasonable costs.

924 Policy. When acquiring equipment, contracting officers in consultation with the appropriate property officer, if any, shall determine whether lease or purchase is the most economic and advantageous method.

a. This determination shall be based on a cost comparison and analysis of other relevant factors as prescribed in paragraph 926 below.

b. The requirement to perform a lease/purchase analysis applies to the initial equipment acquisition estimated to exceed $25,000 for the expected period of need and if the analysis was not performed for the initial acquisition then a the first renewal or extension of the existing equipment lease.

925 Responsibilities

a. Contracting officers shall:

(1) Document the original contract file with a determination and finding stating why method used for acquiring equipment is most advantageous to the government. Copies of cost data and other information supporting a lease/purchase decision should be retained for review purposes.

(2) Have primary responsibility for assuring that a cost comparison is prepared according to the procedures outlined in paragraph below. The acquiring agency shall forward copies of any appropriate data analysis to the contracting officer and/or the Procurement Review Board, as advantageous acquisition method. Acquiring agencies are also responsible for including projected equipment needs in their Annual Advance Procurement Plans.

b. The Procurement Review Board shall be responsible for reviewing equipment lease/purchase determinations for new awards exceeding $750,000 for total estimated useful life costs and for the annual renewals of such equipment.

c. The Comptroller for the Department shall be responsible for reviewing funding requests from DOL Agencies on a case by case basis in situations where Agency funds are not sufficient to support a purchase that has been determined to be the most advantageous acquisition method.

926 Procedures

a. A comparison of lease and purchase costs should be prepared by the acquiring Agency as early as feasible in the procurement cycle in order to determine the appropriate acquisition strategy. When developing the costs comparison, factors such as the following should be documented:

(1) Length of time the equipment is to be used and the extent of its use, including the possibility of use by another DOL Agency.

(2) Financial, technical and other advantages of types and makes of the required equipment available for the lease/purchase.

(3) Leasing cost and purchase options.

(4) Costs of equipment purchase and installation

(5) Imminent technological improvements.

(6) Other factors related to functional performance or costs of equipment, including maintenance costs.

b. Leased equipment. If the Agency is already using leased equipment, consideration shall be given to the advantage and feasibility of purchasing it or new equipment to perform the required function.

c. Costs Comparison and Methods of Acquisition. The cost comparison shall be completed to provide a basis for estimating the point at which cost of leasing will exceed cost of purchase. The method used shall at least compare the cost of purchasing and maintaining equipment against the cumulative costs of leasing. Factors such as interest rates, technological life and trade -in value may also be considered. GSA will, upon request, assist agencies by providing latest information on price adjustments to Federal Supply Schedule contracts, data and information on technological improvements and market trends (see FAR 7.4). The data information assembled should be analyzed to determine which of the following is the most advantageous acquisition method:

(1) Purchase method shall be used when there is a cost advantage over leasing, provided the equipment will be used beyond the point in time at which the cumulative leasing costs exceed purchase costs.

(2) Lease with option to purchase shall be used when it is necessary or advantageous to defer purchase.

(3) Lease without option to purchase may be used if it is the only way to acquire essential equipment which meets program or system requirements but does not meet the conditions for purchase.

d. Competition Considerations. In order to assure fair and reasonable costs, in conjunction with the cost comparison analysis, contracting officers and acquiring Agencies shall specify equipment needs in terms of the least restrictive specifications in order to promote full and open competition. Advance procurement planning and market research shall be considered the initial steps in an equipment acquisition process which focuses on the lease/purchase cost analysis as required by this section.

927 Funding. When Agency funds are not sufficient to support a determination that purchase is the most advantageous method for shall determine on a case by case basis whether funding assistance should be provided and the appropriate strategy to be employed.

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