The OA&L Capital Equipment Lease Program eases the financial impact of significant one-time obligations for national equipment purchases. Instead of purchasing equipment outright, via an up-front, lump sum payment, the program enables equipment to be purchased by installment payments under a lease-to-own arrangement at a minimal service charge.
The Capital Equipment Leasing program is available to VA and Other Government Agency (OGA) customers. For details on the OGA Program, please see the section on Installment Purchase Program under Advantages of the Leasing Program.
Advantages of the Leasing Program:
A one-time, up-front budget obligation for the equipment's entire cost is not required; rather, the obligation of the office seeking the lease, the lessee, is spread over multiple years.
The lessee receives the same leveraged purchase discounts as those obtained in an outright purchase.
The lease payments can be made from either equipment or operating funds.
The 5% servicing rate (6% for DoD/Other Government Agencies) is extremely low.
The lessee is entitled to early buyout of the lease balance, which facilitates intelligent use of year-end funds.
The lessee has the option of initiating a local lease whereby the equipment is purchased from a local vendor, or utilizing the NAC to acquire the equipment. A local lease eliminates the 2% NAC service charge. However, if the equipment is purchased by the NAC, then the NAC becomes responsible for acquiring the equipment for the best price, and the equipment installation.
Terms of the Leasing Program:
The period of the lease will be from one to five years. Leases for equipment costing less than $100,000 are limited to terms of 1 year. (Note: the lease term must be less than the equipment’s useful life).
If the equipment is purchased through the National Acquisition Center (NAC) or the Acquisition Operations Service (AOS), the lessee will pay the standard markup (usually 2% with a cap of $25,000). If purchased via a national contract, such as FSS, the markup is 1%.
Lease payments will be made from the lessee’s funds (not from local VA Supply Fund dollars) to OA&L on a quarterly basis. There are also options for semi-annual and annual lease payments.
The annual lease servicing rate of 5% (6% for DOD/Other Government Agencies) is assessed only on the declining lease balance.
The lessee will be responsible for repair and maintenance.
The equipment title will pass to the lessee upon completion of lease payments or after early buyout.
Prior to submission to OA&L, as established by the A/S for Management (004), VA lease requests that exceed Capital Investment Proposal (CIP) thresholds or that represent high risk/visibility to VA must be approved through the requestor’s Administration in compliance with CIP procedures, to include verbal presentation to the VA Capital Investment Board.
Procedures to Access the Leasing Program:
The prospective lessee sends an electronic request to Don Hufford, Systems Accountant, OA&L (049F) at (202) 273-6125. This information can be also sent via fax at (202) 273-7158. The memorandum should include:
A description of the equipment.
The NAC, AOS, or open market cost of the equipment (net of any discounts, and/or trade-ins).
The useful life of the equipment.
The length of time for the lease (from one to five years).
If applicable, indication that the Capital Investment Board has approved the request.
The name and phone number of a point of contact.
The Official name of the facility applying for a Capital lease, e.g., VA Central Office, or VAMC Togus, Maine etc.
After determination that funding is available, OA&L's CFO Office will provide a proposed lease payment schedule and a draft MOU containing the lease terms.
The MOU is signed by the lessee, and the Deputy Assistant Secretary for OA&L. (If the lessee is a VAMC, then the signature required is usually that of the VAMC Director with an acknowledgement by the VISN Director or the VISN CFO).
The equipment may then be purchased, using Supply Fund resources, for delivery to the lessee.
Upon receipt of equipment, the lessee records thru AEMS/MERS "equipment under capital lease" at the present value amount (should match principal amount on repayment schedule). The lessee should depreciate the equipment just as if it had initially been purchased outright.
The lessee promptly sends copies of receiving reports to the NAC, OA&L Hines fiscal office, and VAMC fiscal office. The OA&L CFO office coordinates their lease efforts with the NAC and the Hines fiscal office. The NAC will purchase the equipment on behalf of the customer, negotiate the best price, and help coordinate the equipment installation. The Hines fiscal office assists with maintaining the collection of lease payments.
The lessee makes quarterly or annual payments to the Supply Fund. (Note: These payments are from the lessee's funds, not from local Supply Fund dollars).
Guidance for the VAMC fiscal office is contained in a separate document that will be forwarded to the Financial Officer identified in the MOU.
