Acquisition methods
Choose the equipment acquisition method—purchase, rent, or lease—based on cost-effectiveness and government advantage, ensuring clear terms for purchase options in contracts.
Overview
FAR 7.402 outlines the appropriate methods for acquiring equipment, focusing on when to use purchase, rent, or lease options. The regulation provides criteria for selecting the most cost-effective and advantageous method for the government, emphasizing that agencies should not dismiss purchasing solely due to potential technological advances. It also details when renting or leasing is suitable, especially as a short-term solution or when immediate needs arise, and sets requirements for agreements that include options to purchase.
Key Rules
- Purchase Method
- Use the purchase method if equipment will be used long enough that buying is more cost-effective than renting or leasing. Agencies should not avoid purchasing just because future technology may change.
- Rent or Lease Method
- Rent or lease if it is more advantageous or necessary for immediate needs, but acquisition by purchase is not currently feasible. Prefer agreements with an option to purchase, and avoid long-term rentals unless favorable terms (like purchase options) are included. Contracts with purchase options must specify the price or a formula for determining it.
Responsibilities
- Contracting Officers: Must evaluate and document the most advantageous acquisition method, ensure contracts with purchase options specify pricing, and avoid unnecessary long-term leases.
- Contractors: Must comply with contract terms, especially regarding purchase options and pricing disclosures.
- Agencies: Should assess cost-effectiveness and document rationale for chosen acquisition method.
Practical Implications
This section ensures agencies select the most cost-effective and flexible method for equipment acquisition, balancing immediate needs with long-term value. Contractors should be prepared to offer clear purchase options and pricing in rental or lease agreements. Common pitfalls include failing to justify long-term leases or omitting required purchase price details in contracts.