Procurement Procedures:

3.19- Lease versus Purchase

PURPOSE

To determine the most cost effective method for acquiring equipment.

POLICY

Equipment is generally acquired by outright purchase. The Purchasing Department, in conjunction with the Finance Division (Treasury & Investment), may recommend leasing as being more advantageous based on a case by case evaluation of comparative costs and other factors.

When considering lease versus purchase, the following factors may be considered:

• Cumulative lease payments versus net purchase cost;
• Determine life expectancy of equipment (i.e. computers 3 years, photocopiers 5 years);
• The right to cancel prior to the end of the lease term and any penalties involved;
• Maintenance and other service costs;
• Trade-in or salvage value;
• Imputed interest;
• Impact on overall Institute debt load;
• Funding availability.

PROCEDURE

The requesting department must complete a requisition. Depending on the type of equipment requested, the Purchasing Agent may consider performing a lease versus purchase analysis. The analysis is commonly performed for vehicle and photocopier acquisitions. All requests are subject to bidding and contractual requirements. Refer to Bid Solicitation, policy 2.2 and Contractual Review, policy 3.17 for additional information.

Rev 12/05