Read below or listen here

IT Hardware Prices Are Rising FAST 

Across the public sector IT market, Hardware OEMs are issuing refreshed quotes for servers, laptops, storage, and networking infrastructure with substantial price increases. 

In many cases, we’re seeing 30–50% increases, with the possibility of additional double-digit increases in the second half of 2026.  This is NOT a "create urgency" sales tactic; this is a very real financial challenge as it relates to government IT budget alignment and mission success.   

The Problem: 

Federal agencies typically plan infrastructure refresh cycles 12–18 months in advance. Budgets are approved based on expected pricing that assumes relatively stable hardware costs. But the market conditions we’re seeing now are creating a growing misalignment between mission needs, approved budgets, and actual procurement costs.

Moving mission-critical workloads to the cloud doesn’t completely solve the hardware pricing issue either. Cloud providers purchase the same underlying hardware, and as infrastructure costs rise, those increases will eventually flow into service pricing as well.  Vendor lock-in gives the cloud service providers a major leverage point when their future price increases take place.

The Solution:

An underutilized cost-saving option that deserves immediate discussion and greater awareness across the federal IT technology, budget office, and acquisition teams is IT Equipment financing.

In an environment where hardware prices could increase 30-50% in a single year, the math becomes difficult to ignore. Leasing costs are currently in the 6-8% range; delaying procurement could expose agencies to significantly higher acquisition costs. 

The government cannot ignore the cost trade-off between paying massive hardware increases (30-50%) in 2026 and the current interest rates (6-8%).  The savings are immediate and significant!      

FEDERAL IT LEASING IS ALREADY AN APPROVED ACQUISTION MECHANISM - 

Did you know the federal government already can lease technology through GSA-approved programs with pre-negotiated lease terms, which include capital leases, operating leases, and lease-to-own structures. These lease options allow agencies to secure hardware at today’s pricing while spreading payments over time.

Even though IT Leasing is an approved item in the GSA schedule, unfortunately, federal contracting officers and procurement lawyers can sometimes view leasing negatively for some of the reasons cited below.   

Leasing IT to the federal government must contemplate 3 unique elements: 

1. Base plus Option Contracts - The government can Terminate for Convenience, Non-Renewal, or Non-Appropriations.
2. Contingent Liability - When the government has the potential for uncertain future obligations (e.g., lawsuits, pending claims, termination fees) that may arise depending on future events.
3. Anti-Deficiency - Prohibits government employees from obligating funds before or in excess of an appropriation. 

These are known realities in federal government leasing and are contemplated by lease terms and the FAR. 

With proper planning and when implementing risk mitigation best practices, the government could greatly benefit from IT Lease arrangements.  With the current surge in hardware pricing, this is the optimal time to consider leasing. 

POTENTIAL EQUIPMENT LEASE ROI EXAMPLE – 

ACME Hardware predicts it will increase its hardware cost 40% per year for the next 3 years.   

The government wants to purchase 100 units every 6 months at $100 each for 3 years.

1. PAY AS YOU GO OPTION (traditional model) 

   600 Units Total - 100 units purchased every 6 Months over 3 Years (assumes 20% cost increase) 

   Purchase 1 - 100 units at $100.00 = $10,000 

   Purchase 2 - 100 units at $120.00 = $12,000 

   Purchase 3 - 100 units at $168.00 = $16,800

   Purchase 4 - 100 units at $235.20 = $23,520 

   Purchase 5 - 100 units at $329.28 = $32,928

   Purchase 6 - 100 units at $460.99 = $46,099  

   Total Price = $141,077 

   W/estimated prorated maintenance Cost = $169,340

    

    

2. LEASE OPTION – 7% interest rate 

   Purchase 1 – Order 600 units at $100 each, financed over 3 years

   Annual Payment 1 $22,860.99 (includes interest) 

   Annual Payment 2 $22,860.99 (includes interest)

   Annual Payment 3 $22,860.99 (includes interest)

   Total Price = $68,582.97

   W/estimated 3-year Maintenance Cost = $109,732

    

The government in this circumstance would get full access to ALL of the hardware on “Day 1” while still saving approximately - 35%  

The government should consider leasing when the following three factors exist – 

1. Budgets are prohibiting the agency’s ability to deliver on its mission.
2. The hardware or software being leased is mission-critical to the government’s mission
3. The IT requirement is production-ready (i.e., ATO) and will remain essential to the mission for the full term of the lease.   

This is the time for open dialogue and creative problem-solving between:

• Federal technology and budget leaders

• Acquisition and contracting teams

• OEM manufacturers

• Systems integrators and VAR partners

The traditional buy-as-you-go procurement playbook does not fully address the market dynamics we’re now seeing. Government and Industry both need to engage earlier, share market research information more openly, and explore more flexible approaches to acquisition and financing.

Let’s Explore Option Together - Email us [email protected] to schedule a call.