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MODIFYING PURCHASE TREATMENT OF CERTAIN BARGAIN-PRICE OPTIONS
Mr. PAPPAS. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 2220) to amend title 40, United States Code, to modify the treatment of certain bargain-price options to purchase at less than fair market value, and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2220
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. LIMITATION ON DISCOUNTED PURCHASE OPTIONS.
Section 585 of title 40, United States Code, is amended by adding at the end the following:
``(d) Any bargain-price option to purchase at less than fair market value contained in any lease agreement entered into on or after January 1, 2021, pursuant to this section may be exercised only to the extent specifically provided for in subsequent appropriation Acts or other Acts of Congress.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New Hampshire (Mr. Pappas) and the gentleman from Mississippi (Mr. Guest) each will control 20 minutes.
The Chair recognizes the gentleman from New Hampshire.
General Leave
Mr. PAPPAS. Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on H.R. 2220.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from New Hampshire?
There was no objection.
Mr. PAPPAS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, H.R. 2220, introduced by Representatives Guest, Webster, and Pence, requires the General Services Administration to secure congressional authorization before it can exercise a prenegotiated purchase option in an operating lease.
Currently, OMB rules stipulate that a lease cannot be scored as an operating lease if it contains a prenegotiated bargain-price purchase option. Operating leases allow agencies to budget their rent outlays annually, whereas capital leases require the agency to budget, upfront, the entire net present value of all rental obligations it will incur over the duration of the lease term. Unless GSA has full, upfront appropriations in hand, the agency must rely on operating leases that can be paid for year by year.
But preventing an operating lease from containing a prenegotiated bargain-price purchase option means that if GSA wants to acquire the building at the end of the lease, the agency must pay fair market value instead of being able to negotiate a sales price at the beginning of the lease. In essence, the Federal Government ends up paying for the building twice, once when it leases the building and once when it purchases the building at the end of the lease at the current market rate.
The scoring rules are designed to ensure that ownership risk stays with the lessor and that the lease isn't a mechanism by which the government finances its ownership of the property. But the effect is that the Federal Government is overpaying for buildings and not getting the benefit of equity that it has created for private-sector landlords.
It is time to give GSA the flexibility it needs to make savvy financial deals for the Federal Government. I urge adoption of this bill, and I reserve the balance of my time.
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Mr. GUEST. Madam Speaker, I yield myself such time as I may consume.
I rise today in support of H.R. 2220, which would allow the General Services Administration, or GSA, to enter into bargain-price purchasing agreements in situations where the buying of Federal property is the cheaper alternative to a long-term lease.
Designed as a measure to bring free-market efficiency into Federal real estate, H.R. 2220 would save taxpayers from costly, long-term lease contracts where bargain purchases better suit the situation.
For example, the Tacoma Union Station purchase approved by the Transportation Committee earlier this year shows the benefits of allowing these bargain-price purchases. Prior to a scoring rule change, the GSA negotiated a $1 purchase price of the facility in order to undertake necessary seismic and building system modernizations.
By purchasing the property, the GSA will be making the needed investments to modernize the facility for Federal use while realizing a lease cost avoidance of approximately $6.4 million and protecting American taxpayer dollars.
This legislation provides a commonsense correction that will continue this committee's work in reducing the taxpayers' burden in Federal real estate.
I appreciate the chair and ranking member of the committee for bringing this legislation to the floor and my colleague and friend from Indiana, Congressman Greg Pence, and his office's work on this issue in the previous Congress.
I urge my colleagues to support this bill, and I reserve the balance of my time.
Mr. PAPPAS. Madam Speaker, I reserve the balance of my time.
Mr. GUEST. Madam Speaker, I yield such time as he may consume to the gentleman from Indiana (Mr. Pence).
Mr. PENCE. Madam Speaker, I thank my friend, the gentleman from Mississippi, for yielding.
Madam Speaker, I rise today in strong support of H.R. 2220.
As a champion of this legislation last Congress, we must continue to work toward giving the GSA the ability to negotiate a discounted or fixed price option on government leases like it happens in the private sector.
With our Nation's real infrastructure broken, which is too often ignored by this Congress, I am committed to getting a commonsense option like this one across the finish line.
H.R. 2220 will save billions of taxpayer dollars, reduce government waste, and free up money to invest in our crumbling roads and infrastructure.
Innovative, free market solutions like this bill have the potential to save $5 billion taxpayer dollars by bringing fair market practices to Federal real estate.
Hoosiers and all Americans deserve an efficient government that can meet our 21st century infrastructure needs.
By passing this bill, we are enacting real, commonsense infrastructure legislation that has bipartisan support across the aisle.
Mr. GUEST. Madam Speaker, in closing, H.R. 2220 ensures that the GSA is able to negotiate discounted purchase options and leases to save potentially billions in taxpayer dollars.
I urge support of this legislation, and I yield back the balance of my time.
Mr. PAPPAS. Madam Speaker, I urge adoption of this legislation, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the gentleman from New Hampshire (Mr. Pappas) that the House suspend the rules and pass the bill, H.R. 2220.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds being in the affirmative, the ayes have it.
Mr. ROSENDALE. Madam Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 8, the yeas and nays are ordered.
Pursuant to clause 8 of rule XX, further proceedings on this motion are postponed.
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SOURCE: Congressional Record Vol. 167, No. 193
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