Material & Disbursement Services (MSD)
POLICY 32
Effective Date: 07/01/1995
Last Modified Date: 11/18/2003
General
The State does not generally lease or rent equipment, although there is no specific rule prohibiting this practice. If equipment is to be required on a continuing basis, purchase is generally more economical than lease or rental.
Rental/Lease Agreements
It may be desirable to rent equipment for a short duration for a specific requirement. Rental agreements are similar to lease agreements, except that rental agreements are normally for an indefinite period and can be terminated by the renter after giving notice. The initial cost of some equipment is so great that when required, it may be more economical to rent on an indefinite basis. Also, if updated versions of this type of equipment are constantly placed on the market, it may be unwise to invest large sums in equipment that may soon be obsolete. Rental/lease contracts do not include any intent for ownership.
Lease/Purchase Agreements
Lease/purchase agreements (installment buying agreements) are entered into with the intent of ownership by the State/agency. Lease/purchase agreements are for a definite period of time, usually one to three years, and cannot be cancelled without significant financial penalties. Extra lead time is needed for a lease agreement, as, in most cases, a contract must be negotiated with a third-party financial institution.
Rental/Lease or Lease/Purchase Requests
Departmental rental/lease or lease/purchase requests should be submitted to Purchasing Services on a Purchase Requisition with a memorandum justifying the need for renting/leasing rather than an outright purchase, a copy of the agreement, and any other available communication concerning the request.
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