Improved Analysis Needed To Evaluate DOD's Proposed Long-Term Leases of Capital Equipment

Gao ID: PLRD-83-84 June 28, 1983

Pursuant to a congressional request, GAO reviewed the practices and procedures which are followed by the government in its long-term leasing of capital equipment. GAO limited its review to those long-term leasing programs which the Navy and the Air Force have announced for noncombatant auxiliary cargo and tanker ships and trainer and Tanker Transport Bomber aircraft.

GAO found that, contrary to the conclusion of the services, purchasing the assets was less costly than leasing. This conclusion was due to assumptions regarding discount rates, residual value, and tax revenue from investors which were different than those used by the services in their analyses.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Werner Grosshans Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-6504


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