Lease-Purchase:

Corps of Engineers Acquisition of Building in New Orleans District

AFMD-88-56FS: Published: Jun 7, 1988. Publicly Released: Jul 7, 1988.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

In response to a congressional request, GAO reviewed the Army Corps of Engineers' acquisition of a district office building in New Orleans, Louisiana, specifically the: (1) interest rate it used to determine the lease payments; (2) total cost to the government of the lease-purchase compared to the outright purchase of the building; (3) legislation pertaining to expenditure controls in purchasing capital items through the Corps' revolving fund; and (4) year in which the Corps would report the principal portion of the lease payments to Congress as a capital expenditure.

GAO found that: (1) although the contract did not contain the interest rate, the Corps determined that the interest rate was approximately 15 percent; (2) the use of the lease-purchase option instead of purchasing the building directly would result in a loss to the federal government of $23.5 million over the 25-year lease term; (3) with the addition of about $26,000 per month for taxes and insurance, the total cost was about $31.3 million; (4) H.R. 12928 provided no limit to the fund's capital expenditures; and (5) if the Corps continues to report all planned capital expenditures over $700,000, it should report the principal portion of the lease payments in its fiscal year 2000 budget submission.

Oct 12, 2017

Oct 11, 2017

Oct 10, 2017

Sep 29, 2017

Sep 28, 2017

Sep 27, 2017

Looking for more? Browse all our products here