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Research

Core in a Box

Core Equipment

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Do you need new or replacement equipment for your core facility? Part of our research mission at Johns Hopkins is to use resources across Johns Hopkins Medicine to accelerate collaboration, innovation, quality and impact of all research. Access to cutting-edge technology, equipment and expertise is critical to this mission. Please use the links below to help you better understand the process for obtaining equipment. There is also a helpful guide that walks you through what you should consider when deciding to buy or lease your new equipment.

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Process for Obtaining New Equipmentxt in field]

Should I Purchase or Lease Equipment?

Should your research core facility purchase or lease equipment? The answer depends on your situation. Leasing equipment can be a good option when there is limited capital or for research cores that need equipment that must be upgraded every few years, while purchasing equipment can be a better option for established cores or for equipment that has a long, usable life.

When you start narrowing down the type of equipment your core facility needs, it’s a good idea to thoroughly consider the pros and cons of leasing versus buying. In certain circumstances, the cost benefit of one option may strongly outweigh the other.

After reviewing the information below, please contact Debbie Newlon in the Purchasing department to discuss your specific needs. The department will partner with you to negotiate the best purchase price, leasing terms, interest rates and service-level agreements on behalf of you and your research core facility.

There are two types of leasing options: operating (also known as fair market value) and capital (or $1 buyout-type lease).

  1. An operating-type lease is where the university will not own the equipment at the end of the lease and an annual Baltimore City personal property tax invoice will be charged as a pass-through charge to the university. Other taxes/fees may also apply depending on the location of the leasing company. You have the option to own, upgrade or replace the equipment at the end of the lease. If you decide to purchase at the end of the lease period you will be responsible to pay the fair market value of the equipment. 
  2. A capital-type lease is not subject to the Baltimore City personal property tax because Johns Hopkins will own the equipment at the end of the lease usually for the cost of $1.00.

Leasing is just the finance arm. Maintenance is purchased separately and is handled by the company that manufacturers or sells the equipment. Lease term should match the expected useful life of the equipment.

The core facility should be aware of the lease term end date. Notification to the leasing company needs to be ninety (90) days prior to the end of the lease terms. The lease company needs to prepare for the end of the lease and possible rollover terms that may or may not be suitable to your specific situation.

Leasing

Pros:

  • Leasing is good for equipment that needs to be updated often because you can acquire updated technology easier and quicker. Leasing allows businesses to address the problem of obsolescence. If you lease to obtain equipment that may be outdated in a short period of time, such as high-end instrumentation where there are rapid changes in technology, a lease passes the burden of obsolescence onto the lessor. You are free to lease new, higher-end equipment after your lease expires, and you won’t be stuck with outdated equipment.
  • Even though there may be more upfront expense, this will allow you to preserve capital funds and budget for the other equipment over a longer period of time.
  • Leasing is flexible and offers more options when it comes to the type of equipment you get.
  • With leasing, you pay for maintenance directly to the manufacturer. For routine maintenance or unexpected repairs, the core or the lessee will contact the manufacturer directly for service or repairs. Maintenance services are acquired from the equipment vendor, not the leasing company. The leasing company is only the finance arm.

Cons:

  • With leasing you usually pay higher costs over time than you would if you purchased the equipment up front. Lease agreements require interest to be paid as part of the lease payments. Procurement can help find the best interests rates, which sometimes involves a company other than the original equipment manufacturer.  Keep in mind that increased costs will directly affect your chargeback rates.  Will you be able to cover your expenses through your revenue?
  • Since you don’t own the equipment, it gives you absolutely no equity. Depending on the type of lease agreement, you may not have the option to sell the equipment once you are finished with it. Your potential to recover costs through selling can be limited.
  • The length of lease terms may be longer than you need. Lease agreements require you to pay for and keep a piece of equipment for the life of the agreement.  This may result in wasted funds and space. This can be especially difficult for larger pieces of equipment that you may need for a short period of time and may not have the storage space.

Purchasing

Pros:

  • Buying the equipment outright, you can make any alterations necessary . The most obvious advantage of purchasing scientific equipment is that you gain ownership of it. This is especially true when the property has a long, useful life and is not likely to become technologically outdated in the near future.
  • You have the option to sell the equipment when you are finished with it, allowing you to recover some of the cost.
  • You do not pay finance or interest charges. When you make a capital purchase, the University will pay for the equipment.  The equipment is then depreciated over its assigned life expectancy.  Basically what this means is that the core will pay back the University by monthly payments over the life expectancy period.  Keep in mind that the assigned life expectancy is usually much longer than a lease agreement.  This will mean lower costs which will be easier to recover through your chargebacks.  Purchasing is easier because you usually don’t have to deal with lengthy agreements and contracts, but rather the simple purchasing/pricing agreement. Most of the time, once you’ve decided what you need, you get quotes from the appropriate vendors This works great for smaller equipment that is easy to store and equipment that has a long life. Please contact Supply Chain if you have additional questions.  
  • For more information on capital purchases please contact Fixed Assets.

Cons:

  • If you purchase technology that is quickly outdated, you are stuck with it because you own it. As a core facility you then have to make a business decision as to whether to continue to use the equipment, repair it, store it or sell it.
  • Service agreements/warranty extensions may require negotiation and review of the terms and conditions by Purchasing.

If you decide to purchase, see the Purchasing Questionnaire and the Process for Obtaining New Equipment.

Trade In, Sell or Dispose of Equipment

Vendor often offer trade in opportunities when equipment upgrades are pursued.  If trading in, selling or disposing of equipment is required, please complete a C824 form. The vendor’s quote must explicitly indicate the trade-in amount and information.