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The Federal Government of the Unites States spends billions of dollars on equipment and real estate annually; both directly and through contractors and sub-contractors. Given budgetary constraints, the desire to match payments with use, as well as the Office of Management and Budget’s indication that leasing is a desirable vehicle to fund equipment acquisition; many agencies, contractors and sub-contractors of the government are turning to lease financing.
Federal Leasing type programs may also be utilized by state and municipal governments and their agencies as well. Leasing thus enables the Federal, state and municipal governments and their contractors to access financing that minimizes large cash outflows and matches payments with the useful life of equipment.
The Federal Lease
The Federal Lease allows the government entity to finance equipment, real property, or a project, over time rather than absorb the full cost of the acquisition on day one—without any meaningful use. Virtually all types of property and assets can be financed with a Federal Lease including defense and aerospace equipment, transportation equipment, IT and office equipment, communications equipment, construction equipment, etc.
Federal leasing can be utilized by the various Federal government agencies and their contractors and sub-contractors as well as state and municipal governments. See list of Federal Agencies etc., below.
Federal Leasing Options
Lease to Own Plan (LTOP)—With an LTOP, the Federal agency makes regular payments for the term of the lease. At the end of the lease term, the agency owns the property.
Lease with Option to Purchase—Under an LWOP, the agency makes regular payments for the term of the lease and maintains the option to purchase the property at the end of the lease term for a pre-determined price. If the agency chooses not to exercise its option to purchase, the property is returned to the leasing company.
Straight Lease—With a straight lease (or rental), the agency makes regular payments for the term of the lease. At the end of the lease term, the agency either renews the lease for an additional term or returns the property to the lessor.
Government Entities that Use Federal Lease Financing
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Interior
- Department of Labor
- Department of Justice
- Department of State
- Department of Transportation
- Department of Treasury
- Senate and House of Representative
- Library of Congress
- General Accounting Office
- Government Printing Office
- The Federal Courts
- The Internal Revenue Service
- NASA
- Federal Aviation Agency
- US Postal Service
- State and municipal Governments
- And their Agencies
- Contractors and Sub-contractors to all the above
- And many others
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