Criteria Applicable to Forthcoming Reappraisal of Eight Air Force Heavy Hammer and Press Leases

LCD-78-331: Published: Jun 12, 1978. Publicly Released: Jul 12, 1978.

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Eight contractors, including the Wyman-Gordon Company, lease government property under the Air Force heavy hammer and press program. A 1974 report noted that the rent negotiated with Wyman-Gordon was based on a value lower than the facilities special-use value and on depreciation over a longer period of time than the appraised useful life of the equipment and buildings. In December 1977, the General Services Administration (GSA) contracted with a private firm to appraise the special-use value and remaining useful life of the facilities leased to the eight companies under the heavy hammer and press program. GSA received the appraisals on April 14, 1978, and plans to review them for contract compliance and acceptability as to value methodology, reasonableness of appraised values, and validity of data. The Air Force plans to begin contract discussions in July 1978 to establish new rental charges for the 5 years beginning October 1, 1978, and expects to complete negotiations with all eight contractors by November 1, 1978. The 1974 report noted that the 3 percent charge for interest to Wyman-Gordon was low, but the Air Force plans to continue using the same rate for all eight of the contractors leasing government property under the program. This is because of a lack of clarity in the applicable contract clauses and the Air Force policy of treating all contractors in like manner. The Air Force also plans to continue its policy of funding capital-type rehabilitation projects as permitted under the authority by which the leases were negotiated.

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