The Economic Development Administration of the Commerce Department has rejected an application by Columbus, Ga., for a $5.5 million grant to build a factory for NCR Corp. operations.

Columbus said it would lease the factory to the Duluth, Ga., automated teller machine maker and that the manufacturer would end up owning the facility, which violates the grant program's purpose, the federal agency said.

The agency, which administers federal stimulus grants under President Obama's economic recovery plan, rejected the grant on Aug. 12. It said that the city had not submitted the planned construction of the 338,000-square-foot factory to competitive bidding. "The city chose one contractor to build the factory," an official said.

The administration also rejected the plan because of the lease agreement Columbus signed with NCR.

Though the city would build the factory, NCR would own it, according to the lease agreement's language, the official said. "Money from the stimulus package is to assist public agencies and nonprofit groups but not a private, for-profit business," the agency said.

Becca Hardin, the building project manager, said NCR has the option of buying the factory after a 10-year lease.

Peter Tulupman, an NCR spokesman, said the rejection will not affect the company's plans. "NCR did not request stimulus money. Establishing a new manufacturing plant in the city of Columbus, Ga., is not dependant on stimulus funds, and NCR will continue with its plans that will create hundreds of net new U.S. jobs," he wrote in an e-mail message.