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Strategies for Obtaining Ship Services: Alternatives for NOAA (1988)

Chapter: Appendix F: Contracting Capability and Procedures

« Previous: Appendix E: Project Descriptions
Suggested Citation:"Appendix F: Contracting Capability and Procedures." National Research Council. 1988. Strategies for Obtaining Ship Services: Alternatives for NOAA. Washington, DC: The National Academies Press. doi: 10.17226/1920.
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Page 95
Suggested Citation:"Appendix F: Contracting Capability and Procedures." National Research Council. 1988. Strategies for Obtaining Ship Services: Alternatives for NOAA. Washington, DC: The National Academies Press. doi: 10.17226/1920.
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Page 96

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APPENDIX F CONTRACTING CAPABILITY AND PROCEDURES Present executive branch policy permits leasing of capital assets, but based on a full-cost comparison of lease versus buy. This policy is explicitly set forth in the Office of Management and Budget (OMB) Circular No. A-104, which ''prescribes a method for the economic analysis that should be conducted [by federal agencies] when con- sidering whether to use leasing in place of direct government purchase and ownership as a means of acquiring the use of assets." The current circular was issued on June 1, 1986. The circular only applies to new contracting, that is, contracting to have a new ship constructed by the private sector to government specifications and then leased by an agency. But OMB would generally expect the same type of analysis to be undertaken in any proposal to ' ~ , v i. While the guidelines are "suggested" for use by agencies, they are required for use in "all prospectuses, proposed legislations, budget justifications or other proposals submitted to the Office of Management and Budget and to the Congress." The economic analysis prescribed under Circular No. A-104 is a lease-versus-buy analysis with the objective of determining the method of acquisitions that is least expensive to the federal government. The lease-versus-buy cost comparisions should be made on the basis of discounted (present-value) cost over the term of the lease. The cost of leasing should include any special tax benefits to the charter organization, for example, investment tax credits and accelerated depreciation (largely done away with by the Deficit Reduction Act of 1984). Finally, it should be noted that A-104 does not require an agency to demonstrate that buying is more economical than leasing. tease an exlsClne vessel versus ouYln~ a new vessel 95

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