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Federal Acquisition Service U.S. General Services Administration Best Practices in Leasing Schedule 36 Gary Haag, Ryan Mathews, Shannon Stanford Integrated.

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Presentation on theme: "Federal Acquisition Service U.S. General Services Administration Best Practices in Leasing Schedule 36 Gary Haag, Ryan Mathews, Shannon Stanford Integrated."— Presentation transcript:

1 Federal Acquisition Service U.S. General Services Administration Best Practices in Leasing Schedule 36 Gary Haag, Ryan Mathews, Shannon Stanford Integrated Workplace Acquisition Center June 9, 2009

2 Federal Acquisition Service U.S. General Services Administration 2 Table of Contents  Overview  Office of Management and Budget (OMB) Guidelines  Lease Types and Examples  Time Periods and Funding  Continuance of a Lease  Monthly Payments  Add-on Items  Maintenance and Installation  Termination of Lease  Uninterrupted Use  Title  Loss or Damage  State and Local Taxes  Dos & Don’ts  The Lease Document

3 Federal Acquisition Service U.S. General Services Administration 3 Overview  Schedule 36 Solicitation, Refresh #14  Leasing Terms  Responsibilities of each party  Intent of the Lease

4 Federal Acquisition Service U.S. General Services Administration 4 Office of Management and Budget (OMB) Guidelines  Customer Agency Requirements  FAR 7.4 Equipment Lease or Purchase  Anti-Deficiency Act  OMB Circular A11 – Preparation and Submission of Budget Estimates  OMB Circular A34 – Instructions on Budget Execution

5 Federal Acquisition Service U.S. General Services Administration 5 Lease Types and Examples for Copiers and Equipment  Lease-to-Ownership Plan (LTOP), Special Item Number (SIN) 51-58 (Capital Lease)  Sales for Fiscal Year (FY) 2008 = $48,318,942  Operating Lease Plan for Copiers, SIN 51-58a  Sales for FY 2008 = $36,467,442  Operating Lease Plan for all other products under Schedule 36, SIN 51-58b  Sales for FY 2008 = $70,573  Lease Alternative  Rental

6 Federal Acquisition Service U.S. General Services Administration 6 Lease-to-Ownership Plan (LTOP), Special Item Number (SIN) 51-58 (Capital Lease)  Title  Includes Installation and Training  Does not include Maintenance and consumable supplies  SIN 51-57 – Maintenance Service Agreements (Copier)  SIN 51-100 – (supplies)  Payment of LTOP Calculation  Principal, Interest, Term

7 Federal Acquisition Service U.S. General Services Administration 7 Operating Lease Plan for Copiers, SIN 51- 58a  Residual Value  Payment of Operating Lease Calculation  Principal, Interest, Term

8 Federal Acquisition Service U.S. General Services Administration 8 Time Periods and Funding  Varies per contractor  Minimum 24 months or 2 years  Maximum 60 months or 5 years  Annual  All leases end on September 30th  Multi-year

9 Federal Acquisition Service U.S. General Services Administration 9 Continuance of Lease  Lease with Annual Funding automatically terminates at end of Government Fiscal year  Written notification to contractor thirty (30) calendar days prior to the lease expiration  Intent to renew lease

10 Federal Acquisition Service U.S. General Services Administration 10 Monthly Payments  Variables  Principal: Negotiated purchase price  Term: Length of lease  Lease Factor: Interest rate applied to the principal –Negotiated  Residual Value  Payment chart never changes  Operating Lease  Principal of Operating Lease = Principal – Residual Value  LTOP Calculation

11 Federal Acquisition Service U.S. General Services Administration 11 LTOP Calculation  Calculating the Monthly Payment for LTOP using Microsoft Excel

12 Federal Acquisition Service U.S. General Services Administration 12 Add-on Items  Modification of existing leased equipment  Mutually agreed upon by the ordering agency and the Contractor  Payment of modification  Full price upon acceptance  Coterminous with the original lease term (Coterminous is defined as the addition of equipment and it shall terminate with the original/base equipment lease.)  Modification calculations for LTOP and Operating Lease

13 Federal Acquisition Service U.S. General Services Administration 13 Lease Modification Calculations (add-ons)  Calculating the Modification Cost using Microsoft Excel

14 Federal Acquisition Service U.S. General Services Administration 14 Maintenance and Installation  SIN 51-57 – Maintenance Service Agreements (Copier)  SIN 51-100 – (supplies)  Separate Line Item  Maintenance and supplies are subject to the Economic Price Adjustment (EPA) clause  Maintenance coverage charges

15 Federal Acquisition Service U.S. General Services Administration 15 Termination of Lease  When the customer can cancel their lease (without early termination ceiling charge)  No longer have a bona-fide need –Documentation  Non-appropriation  When the customer can cancel their lease (will incur an early termination ceiling charge)  Termination Ceiling Rate

16 Federal Acquisition Service U.S. General Services Administration 16 Termination Ceiling Charge Calculation  Calculating the Termination Ceiling Charge using Microsoft Excel

17 Federal Acquisition Service U.S. General Services Administration 17 Uninterrupted Use  Equipment will remain with customer until the expiration or early termination of lease  Contractors continued obligation to the government regardless of: –Assignment –Sale –Bankruptcy –Other transfer of the leased equipment

18 Federal Acquisition Service U.S. General Services Administration 18 Title  Equipment remains property of the Contractor  For LTOP  Title transfers from Contractor to Customer after final payment

19 Federal Acquisition Service U.S. General Services Administration 19 Loss or Damage  Government is relieved from all risk of loss or damage, exceptions:  When loss or damage is due to the fault or negligence of the Government.  Government assumes responsibility during relocation of equipment.

20 Federal Acquisition Service U.S. General Services Administration 20 State and Local Taxes  Federal, State and Local Taxes are not included in the contract price  Contractor shall state taxes separately on its invoices  The Government will pay taxes unless they provide evidence of exemption (FAR 52.229-1) State and Local Taxes; (FAR 52.229-3) Federal, State and Local Taxes

21 Federal Acquisition Service U.S. General Services Administration 21 Dos & Don’ts Do’s  Provide documentation reason for early termination  Include the termination ceiling charge on purchase order  Prepare for the continuance of the lease Don’ts  Cancel the lease to exchange for a similar piece of equipment  Delay in obtaining the appropriation of funds

22 Federal Acquisition Service U.S. General Services Administration 22 The Lease Document  Mandatory items to include:  Cage Code  Serial Number  PO/Invoice/Delivery Order  Term in plan  Effective date  LTOP or Operating Lease  SIN

23 Federal Acquisition Service U.S. General Services Administration 23 PO/Invoice/Delivery Order Sample

24 Federal Acquisition Service U.S. General Services Administration 24 Contact Information  Gary Haag  gary.haag@gsa.gov  (703) 605-2786  Ryan Mathews  ryan.mathews@gsa.gov  (215) 446-5793  Shannon Stanford  shannon.stanford@gsa.gov  (215) 446-5058


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