7.402 Acquisition methods
Source: FAR 7.402 on acquisition.gov
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.
(a) Purchase method.
(1) Generally, the purchase method is appropriate if the equipment will be used beyond the point in time when cumulative rental or leasing costs exceed the purchase costs.
(2) Agencies should not rule out the purchase method of equipment acquisition in favor of renting or leasing merely because of the possibility that future technological advances might make the selected equipment less desirable.
(b) Rent or lease method.
(1) The rent or lease method is appropriate if it is to the Government's advantage under the circumstances. The rent or lease method may also serve as a short-term measure when the circumstances—
(i) Require immediate use of equipment to meet program or system goals; but
(ii) Do not currently support acquisition by purchase.
(2) If a rent or lease method is justified, a rental or lease agreement with option to purchase is preferable.
(3) Generally, a long term rental or lease agreement should be avoided, but may be appropriate if an option to purchase or other favorable terms are included.
(4) If a rental or lease agreement 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.