Federal Acquisition Regulation; Lease with Option to Purchase

DEPARTMENT OF DEFENSE

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 7 and 52

[FAC 90-23; FAR Case 91-6; Item V]

RIN 9000-AE86

Federal Acquisition Regulation; Lease with Option to Purchase

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule to amend

the Federal Acquisition Regulation (FAR), based on the Defense

Management Review (DMR), to include information required to support a

contracting officer's decision to use a lease with an option to

purchase, and to outline the Government's right to purchase at any time

during the performance of the contract. This regulatory action was not

subject to Office of Management and Budget review under Executive Order

12866, dated September 30, 1993.

EFFECTIVE DATE: February 27, 1995.

FOR FURTHER INFORMATION CONTACT: Mr. Ralph DeStefano at (202) 501-1758

in reference to this FAR case. For general information, contact the FAR

Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-

4755. Please cite FAC 90-23, FAR case 91-6.

SUPPLEMENTARY INFORMATION:

A. Background

The Secretary of Defense directed that the Defense Federal

Acquisition Regulation Supplement (DFARS) be streamlined and rewritten

as part of the DMR Regulatory Reform initiative. This initiative

resulted in movement of some DFARS language and language from lower

level supplements to the FAR.

FAR 7.402(b)(2) states that if a lease is justified, a lease with

option to purchase is preferable. However, there is no FAR coverage to

implement this requirement. This proposed rule implements FAR

7.402(b)(2) and outlines the Government's right to purchase at any time

during the performance of the contract.

A proposed rule was published in the Federal Register at 56 FR

37404, August 6, 1991. Ten comments received from five individuals and

organizations were considered, and changes were made in the development

of the final rule.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities under the Regulatory Flexibility Act, 5 U.S.C.

601, et seq., because the change does not impose any new requirements

on contractors, large or small, and serves only to clarify existing

regulatory coverage. No public comments were received which addressed

the statement to that effect which was published as a proposed rule.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 7 and 52

Government procurement.

Dated: December 7, 1994.

Albert A. Vicchiolla,

Director, Office of Federal Acquisition Policy.

Therefore, 48 CFR parts 7 and 52 are amended as set forth below:

1. The authority citation for 48 CFR parts 7 and 52 continues to

read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 7--ACQUISITION PLANNING

2. Section 7.402 is amended by adding paragraph (b)(4) to read as

follows:

7.402 Acquisition methods.

* * * * *

(b) * * *

(4) If a lease with option to purchase is used, the contract shall

state the purchase price or provide a formula which shows how the

purchase price will be established at the time of purchase.

3. Section 7.404 is added to read as follows:

7.404 Contract clause.

The contracting officer shall insert a clause substantially the

same as the clause in 52.207-5, Option to Purchase Equipment, in

solicitations and contracts involving a lease with option to purchase.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

4. Section 52.207-5 is added to read as follows:

52.207-5 Option to purchase equipment.

As prescribed in 7.404, insert a clause substantially the same as

the following:

Option to Purchase Equipment (Feb 1995)

(a) The Government may purchase the equipment provided on a

lease or rental basis under this contract. The Contracting Officer

may exercise this option only by providing a unilateral modification

to the Contractor. The effective date of the purchase will be

specified in the unilateral modification and may be any time during

the period of the contract, including any extensions thereto.

(b) Except for final payment and transfer of title to the

Government, the lease or rental portion of the contract becomes

complete and lease or rental charges shall be discontinued on the

day immediately preceding the effective date of purchase specified

in the unilateral modification required in paragraph (a) of this

clause.

(c) The purchase conversion cost of the equipment shall be

computed as of the effective date specified in the unilateral

modification required in paragraph (a) of this clause, on the basis

of the purchase price set forth in the contract, minus the total

purchase option credits accumulated during the period of lease or

rental, calculated by the formula contained elsewhere in this

contract.

(d) The accumulated purchase option credits available to

determine the purchase conversion cost will also include any credits

accrued during a period of lease or rental of the equipment under

any previous Government contract if the equipment has been on

continuous lease or rental. The movement of equipment from one site

to another site shall be ``continuous rental.''

(End of clause)

[FR Doc. 94-30664 Filed 12-27-94; 8:45 am]

BILLING CODE 6820-34-P