Navy Acquisition via Leasing: Policy, Politics, and Polemics with the Maritime Prepositioned Ships

Abstract

In recent months, leasing has been prominent in the press in connection with the Air Force's ill-fated attempt to obtain the use of Boeing re-fueling tankers without buying them. Gone from memory is the early 1980's controversial Navy leasing program of Maritime Prepositioned Ships that had a different result. This paper presents an analysis of the various issues and parties to the very creative and innovative financing on behalf of the Navy's Military Sealift Command. Still in existence today, the 1983 contracts for thirteen TAKX ships were valued at approximately $2.6 billion. While the decision is often framed as a lease versus purchase choice, the facts indicate that the option to purchase was not seen as viable at the time. In hindsight, the TAKX leasing program was successful and cost effective, despite the whirlwind of political commentary and intrigue and the dueling quantitative analyses surrounding it. However, as an unintended (or, perhaps, intended) consequence, laws and policies have since been changed so that leasing is no longer viable for financing military assets. The case presented here considers altering existing laws and regulations to once again permit leasing of military resources.