Lease-Purchase Agreements by Air Force

B-154420-O.M.: Jul 7, 1964

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This decision concerns the legality and enforceability of similar provisions in a Quit Claim Deed and lease-purchase agreement obligating the Air Force to purchase its electricity from the grantor and lessor respectively, so long as the County sells electricity at rates no greater than otherwise available through the local Public Utility District. Also, the inquiry concerns the legality and enforceability of the Government's obligation under the lease-purchase agreement to receive and treat the County's sewage without charge under the conditions therein specified.

For the reasons stated in the decision, and because in this particular instance the Government's undertaking furnished part of the consideration for the purchase option in favor of the Government's option to purchase and the possibility that any affirmative audit action might operate to nullify such purchase option, we suggest that audit action in the matter to be confined to the report referred to in the last paragraph of the memorandum of May 13, 1954.

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