Mississippi Administrative Code
Title 12 - Finance and Administration
Part 6 - Office of Purchasing, Travel and Fleet Management
Chapter 3 - Source Selection and Contract Formation
Sec2 12-6-3.117 - Lease Contracts
Sec2 12-6-3.117.03 - Option Provisions
Section 12-6-3.117.03.3 - Lease with Purchase Option

Because a purchase option changes the nature of the procurement, it has been determined that agencies shall not enter into lease contracts which contain a purchase option.

Commentary

The justification for prohibiting the lease with an option to purchase has several issues. If an agency were to solicit bids and enter into a contract based upon the lowest lease cost, and then, at the end of the contract period, determine that they desire to take advantage of a purchase option, it is possible that the change from a lease to a purchase would have caused a different bidder to actually be the lowest bidder. In addition, during a lease, funds generally come from a contractual service fund while in a purchase, funds come from the "equipment" budget. If an agency were to lease an item for a period of time and then take advantage of the purchase option, they would have used "contractual service" funds to purchase equipment. Finally, since all lease/purchase by state agencies shall fall under the Master Lease Purchase Program, t he implementation of the purchase option would create a situation where the agency has lease/purchased the item without using the Master Lease Purchase Program.