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DEFENSE COMMUNITIES 360

Army Preparing to Lift EUL Suspension

  • May 9, 2011
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The Army plans to restart its enhanced use leasing (EUL) program within 45 days, as the Government Accountability Office (GAO) review that prompted the Army’s decision to temporarily freeze work on the program last November wraps up, according to a senior Army official.

The service still is assessing its options for responding to GAO’s conclusion that the master agreement used for one of the Army’s EUL deals fails to comply with the federal statute authorizing the program. Because it calls for cash payments from the developer to be deposited in an escrow account controlled by the Army rather than the U.S. Treasury, the agreement employed to lease property at Picatinny Arsenal, N.J., violates 10 U.S.C. Sec. 2667, GAO said in an opinion released March 30.

The Army asserted that the payment constituted in-kind consideration as the cash was used to compensate third-party contractors for permissible services under the statute. The congressional agency disagreed.

Cash payments the services receive for leasing property need to be deposited into a special account in the Treasury. In-kind consideration the military services receive, however, can be used at the discretion of the services.

The opinion pertains primarily to the Picatinny EUL, the agency said, but “to the extent the EULs for the other Army installations are on substantially similar terms as the Picatinny EUL, our conclusions here apply to those EULs as well.”

GAO did not uncover any other significant problems with the Army program, the official said. The agency has distributed its draft review to each of the services, the last step before publicly releasing its final report.

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