Federal agencies sometimes use leases or special-purpose public/private ventures to acquire capital assets without recording their full costs as obligations and outlays up front in the budget. That budgetary practice increased in the 1990s with the Department of Defense's military housing privatization ventures and the Department of Veterans Affairs' enhanced-use leasing ventures. This paper examines agencies' recent use of leases and special-purpose public/private ventures to finance the acquisition of federal assets. It reviews how the Congressional Budget Office (CBO) scores budget authority and outlays for the legislation that provides agencies with the authority to enter into those arrangements and how the Office of Management and Budget records the obligations and outlays associated with specific leases and public/private ventures.

This paper was prepared as part of CBO's continuing analysis of federal budget concepts. Recent papers include Evaluating and Accounting for Federal Investment in Corporate Stocks and Other Private Securities (January 2003), The President's Proposal to Accrue Retirement Costs for Federal Employees (June 2002), and Accrual Budgeting for Military Retirees' Health Care (March 2002). CBO's Budget and Economic Outlook: Fiscal Years 2004-2013 (January 2003) also includes a discussion titled "Is It Time for a New Budget Concepts Commission?" In keeping with CBO's mandate to provide objective analysis, this report makes no recommendations.

Deborah Clay-Mendez of CBO's National Security Division prepared this paper with significant contributions from Kathleen Gramp of CBO's Budget Analysis Division and Jennifer Smith of CBO's Office of the General Counsel. J. Michael Gilmore, Robert Sunshine, and Robert Murphy supervised the project. Ian MacLeod provided research assistance. The authors gratefully acknowledge the useful comments of many others within CBO, including Kim Cawley, Kent Christensen, Richard Farmer, Peter Fontaine, Deborah Lucas, Marvin Phaup, and Jo Ann Vines. The work also benefited from reviews provided by Richard Kogan and other budget analysts outside of CBO.

Joseph Foote and John Skeen edited the manuscript, with assistance from Christine Bogusz and Leah Mazade. Cindy Cleveland typed the many drafts. Chris Spoor prepared the report for publication, with help from Kathryn Winstead, and Annette Kalicki produced the electronic versions for CBO's Web site.

Barry B. Anderson
Acting Director
February 2003