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Handbook of Operating Procedures

Lease Purchase, Lease with Purchase Option, and Installment Purchases of Equipment

Policy Number: 82

Subject:

Processing of contracts for lease purchase, lease with purchase option or installment purchases

Scope:

Employees

Date Reviewed:
July 2021
Responsible Office:
Procurement Services; Office of Legal Affairs
Responsible Executive:
Senior Vice President, Finance and Business Services; Vice President & Chief Legal Officer

I. POLICY AND GENERAL STATEMENT

The University of Texas Health Science Center at Houston ("university") will process contracts for lease purchase, lease with purchase option or installment purchases only when all requirements have been met for compliance with state rules and regulations and with the Texas Bond Review Board.

These contracts should not be used when the total contract will exceed $250,000, exceed a five (5) year term, or when state-appropriated funds are used. When possible, efforts will be made not to enter into a lease, but rather procure the goods and then enter into an internal lease with the department.  The same rules and regulations that govern the purchase of goods and services govern lease purchases, lease with purchase options and installment purchases. Requirements for competitive bidding and for the authority to obligate institutional funds are the same for these types of contracts as they are for the purchase of goods and services.

Contracts for lease purchase, lease with purchase option or installment purchases may exceed 12 months duration or cross fiscal years only if a "funding-out" clause is included in the contract that protects the university by allowing for cancellation of the contract should funds not be available the following fiscal year. These contracts may exceed the biennium budget time frame; however, in such instances, a waiver of excess obligations will be required for appropriated funds.

It is the responsibility of the requesting department to encumber, on an annual fiscal year basis, the funds necessary to cover the payment obligations for lease purchases, leases with purchase options and installment purchases for that year.

II. PROCEDURE

Procedures are detailed at the following link: https://inside.uth.edu/finance/capital-assets-management.

III. CONTACTS