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FAR and DFARS › FAR Part 52: Solicitation Provisions and Contract Clauses › Subpart 52.2

FAR 52.207-5 Option To Purchase Equipment.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This clause lets the Government buy equipment that it is currently leasing or renting under the contract. The Contracting Officer exercises the option by issuing a unilateral modification, and the purchase price is the contract price minus accumulated purchase option credits. It matters because a contractor's lease or rental charges stop the day before the purchase takes effect, and credits from prior continuous Government leases may count toward the purchase cost.

Applies to: Contractors leasing or renting equipment to the Government under a contract containing this clause

What it requires

  • Discontinue lease or rental charges on the day immediately preceding the effective date of purchase specified in the unilateral modification
  • Compute the purchase conversion cost as of the effective date using the contract purchase price minus accumulated purchase option credits
  • Include credits accrued during continuous lease or rental under any previous Government contract when determining accumulated purchase option credits

Key terms: unilateral modification · purchase conversion cost · purchase option credits · continuous rental · effective date of purchase

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

As prescribed in 7.404, insert a clause substantially the same as the following:

Option To Purchase Equipment (FEB 1995)

(a) The Government may purchase the equipment provided on a lease or rental basis under this contract. The Contracting Officer may exercise this option only by providing a unilateral modification to the Contractor. The effective date of the purchase will be specified in the unilateral modification and may be any time during the period of the contract, including any extensions thereto.

(b) Except for final payment and transfer of title to the Government, the lease or rental portion of the contract becomes complete and lease or rental charges shall be discontinued on the day immediately preceding the effective date of purchase specified in the unilateral modification required in paragraph (a) of this clause.

(c) The purchase conversion cost of the equipment shall be computed as of the effective date specified in the unilateral modification required in paragraph (a) of this clause, on the basis of the purchase price set forth in the contract, minus the total purchase option credits accumulated during the period of lease or rental, calculated by the formula contained elsewhere in this contract.

(d) The accumulated purchase option credits available to determine the purchase conversion cost will also include any credits accrued during a period of lease or rental of the equipment under any previous Government contract if the equipment has been on continuous lease or rental. The movement of equipment from one site to another site shall be “continuous rental.”

(End of clause)

Sections it refers to

Sections that refer to it

← 52.207-4 Economic Purchase Quantity—Supplies. · 52.207-6 Solicitation of Offers from Small Business Concerns and Small Business Teaming Arrangements or Joint Ventures (Multiple-Award Contracts). →

Rule changes for FAR Part 52

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 52.207-5 Option To Purchase Equipment · SpendQuery