Dell adds leasing to GSA schedule

Looking to capitalize on the growing interest in leasing rather than buying PCs, Dell Computer Corp. last week announced a new leasing program on its General Services Administration schedule.

Dell, which has been the top-selling vendor on the GSA schedule in recent quarters, offers four options under the new program that will be available with the company's entire GSA product line. All leasing deals must be for $50,000 or more, the company said.

Dell expects agencies to be more willing than ever to take advantage of this alternative approach to information technology financing, company executives said.

"Historically from the '70s on, the federal government has been very anti-leasing," said Rocky Mountain, senior marketing manager with Dell Federal, Austin, Texas.

But government users are spending enormous amounts of money on "technology rotation," or buying entirely new systems every few years, which makes leasing an attractive option, he said. "In the last 16 months there's been a heck of a lot more interest in leasing, and Dell is a company that tries to be very responsive to its customers," he said.

"Leasing is being considered as more of an option," said Bill Gormley, assistant commissioner for acquisition at GSA's Federal Supply Service. "It is kind of a significant change...a philosophical change...but it's becoming more common."

In fact, GSA approached Dell about putting in a leasing option in its package on the schedule, and then when Dell went to the GSA with a proposal, the deal was struck within a month.

With an operating or "fair market value" lease, a buyer figures out the useful life of the product, and "if they think there won't be anything better than say a 450 MHz or 500 MHz machine on the market in the next 36 months, they can purchase the computer at the end of the lease for the current fair market value," Mountain said.

The capitol lease provides the most flexibility by giving users the option of purchasing the equipment at the end of the lease at 10 percent of the original cost, extending the lease on a month-to-month basis, renewing for a fixed period of time or returning the equipment altogether.

A step lease "is at the opposite end from an operating lease," Mountain said. Users can cancel a lease at the end of the government fiscal year.

While this leaves the door open for a lease on all new equipment, the initial monthly payments are higher "because the option puts the leasing entity more at risk," he said.

Then there is the full-payment lease, for users who know exactly what they want and for exactly how long. Buyers start out knowing that they will be turning in the equipment at the end of the lease.

"The [hook] is, whichever option the customer chooses, the fact that Dell is the only [leasing company] with direct sales will be a benefit," Mountain said.