0NC2148 Redacted JOTFOC.pdf

Justification for Other Than Full and Open Competition, Succeeding Lease

U.S. General Services Administration

GSA Region 4

Leasing

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

PROJECT NUMBER: 0NC2148 Durham, NC

Agency Name: Environmental Protection Agency

1. NATURE AND/OR DESCRIPTION OF ACTION BEING APPROVED.

The General Services Administration currently leases 43,436 ABOA/49,951 rentable square feet (RSF) 1,500 ABOA of office space and 48, 451 of warehouse floor space, at the Grand Slam Building, 4930 Old Page Rd, Durham, NC under lease LNC62665 for the Environmental Protection Agency (EPA) which expires June 15, 2024. Approval is requested to negotiate a succeeding lease with the incumbent Lessor without full and open competition for continued occupancy at this leased location. The procedures for pursuing a succeeding lease are detailed in GSAR 570.402:

Succeeding Leases.

2. DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED TO MEET THE AGENCY’S NEEDS

(INCLUDING ESTIMATED VALUE).

The EPA submitted a continuing need letter on June 13, 2022, for 49,951 rentable square feet of office and related space. To satisfy the EPA’s mission requirements, the space must provide a minimum of 1,500 ABOA of office space and 48,451 of warehouse floor space for the equipment required to conduct Fluid Modeling testing.

The agency’s mission requirements are to support specialized research using Fluid Modeling testing for the Office of Research and Development (ORD) and Office of Mission Support (OMS) to research data and studies of air-quality, human-exposure, and emergency-response modeler. The location, configuration and adaptability of the current lease space meets the agency two primary functions of testing and research and collaboration with the ORD and OMS partners.

The Fluid Modeling Facility (FMF) employs two specially designed Meteorological wind tunnels, a Modeling testing shop, and Convection Lab to perform the required mission.

This requirement is for 49,951 RSF/43,436 ANSI BOMA of space for a 10-year firm term fully serviced lease to commence on June 16, 2024. The estimated cost of this lease is $11.00 per rentable square feet per year for an annual cost of $549,461.00 and a total contract value of $5,494,610.00

The delineated area is N: I-85, E: SR-70, S: I-540 TO I-40, W: I-85/SR-15. There is no vacant Federal Space available.

3. IDENTIFICATION OF STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION.

41 U.S.C § 3304(a)(1): Only one responsible source and no other supplies or services will satisfy agency requirements. This statutory authority is implemented through GSAM/R 570.402., Specifically, GSAR 570.402-4 allows direct negotiation with the Lessor if the contracting officer does not find any potentially acceptable locations through advertisement or the market survey.

4. DEMONSTRATION THAT THE PROPOSED CONTRACTOR’S UNIQUE QUALIFICATIONS OR NATURE OF

THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY CITED.

No other potentially acceptable locations were identified through public advertisement or market research besides the incumbent. The GSA Lease Contracting Officer placed an advertisement under the identification number 0NC2148 on the Federal Contracting Opportunities website SAM.GOV on September 21, 2022, for 5 days, but received no expressions of interest other than from the incumbent lessor. The LCO further reviewed a recent Costar market report for all available property within the delineated area that could meet EPAs requirements but did not identify any potentially acceptable locations. Because no potentially acceptable locations were identified, GSA 570-402-4 applies.

5. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE SOLICITED FROM AS MANY

POTENTIAL SOURCES AS IS PRACTICABLE.

Per the requirements of GSAR 570.402, the GSA Lease Contracting Officer placed an advertisement on the Contracting Opportunities domain of SAM.gov on September 21, 2022, for 5 days. In addition, PBS conducted market research using CoStar database for alternate sites.

6. DEMONSTRATION BY THE CONTRACTING OFFICER THAT THE ANTICIPATED COST TO THE

GOVERNMENT WILL BE FAIR AND REASONABLE.

A recent review of the CoStar Market Report produced by PBS for flex space (office and warehouse) space, approximately 1,500 ANSI/BOMA dedicated office space is located on the second floor and approximately 48,451 warehouse floor space in the Durham NC showed the rental rate within the delineated area range from $6.46 to $16.50 per RSF

Therefore, the proposed rental rate for this succeeding lease of $11.00 / RSF, is within the current market range for this submarket and is deemed fair and reasonable by the GSA Lease Contracting Officer.

7. DESCRIPTION OF MARKET RESEARCH CONDUCTED AND THE RESULTS.

On July 14, 2022, Government conducted market research using CoStar database. Six locations with the required rentable area were located excluding the incumbent. Office space would have to be built out at each alternate location except for the space offered by the incumbent lessor. A total of seven locations were identified including the incumbent.

8. OTHER FACTS SUPPORTING USE OF OTHER THAN FULL AND OPEN COMPETITION.

The EPA’s current warehouse serves as a Fluid Modeling Facility (FMF) where the agency conducts laboratory studies of fluid flow and pollutant dispersion in support of the Agency’s air research programs. FMF is a unique facility, one of only a few atmospheric dispersion modeling facilities in the world, replicating the space in a new location would not yield any cost savings to the Government. A Cost Benefit Analysis results show an expected anticipated succeeding lease savings of $9,944,314.00 or 45% saving by staying in place.

The requirements to replicate the current site requires the construction of two wind tunnels, the large wind tunnel whose estimated cost in 2010 was $4,000,000.00 would be the equivalent of about $5,479,018.121 in 2022 and a small wind tunnel estimated at $2,000,000.00 in year 2010 is the equivalent of $2,739,509.06 in 20222. The agency was unable to provide the There is no firm cost estimate in today’s dollars to construct the tunnels, the current wind tunnels constructed but similar in scale/cost was approximately four million dollars would be arguably higher in today dollars.

1. Bureau of Labor Statistics CPI Inflation Calculator. http://data.bls.gov/cgi-bin/cpicalc.pl

2 Bureau of Labor Statistics CPI Inflation Calculator. http://data.bls.gov/cgi-bin/cpicalc.pl

9. LIST OF SOURCES, IF ANY, THAT EXPRESSED, IN WRITING, AN INTEREST IN THE ACQUISITION.

http://data.bls.gov/cgi-bin/cpicalc.pl http://data.bls.gov/cgi-bin/cpicalc.pl

Forty Page Properties, LLC (incumbent lessor) expressed an interest in the acquisition in a communication dated October 3, 2022, to GSA. The expression of interest outlined the terms and conditions in which the landlord would be willing to enter in a lease renewal agreement.

10. STATEMENT OF ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE OR OVERCOME ANY BARRIERS

TO COMPETITION BEFORE ANY SUBSEQUENT ACQUISITION.

In advance of an existing lease contract’s expiration, considerations will be given to allow for sufficient time to conduct a full and open procurement. The Government will consider the time and cost of moving from the existing location, and the time and cost to build out new space when deciding whether it is economically advantageous to stay at the existing building or to undergo a competitive action.

Additionally, consideration will be given to the customer agency’s mission and security requirements (if applicable) to include limiting any agency space requirements that may be deemed unduly restrictive and thus favor the incumbent. The Government will remain conscious of the effort to continuously encourage competition when practicable.

11. CONTRACTING OFFICER CERTIFICATION.

By signature on this Justification for Other than Full and Open Competition, the GSA Lease Contracting Officer certifies that the award of a succeeding lease of 49,951 RSF is in the Government’s best interest and that this Justification is accurate and complete to the best of the GSA Lease Contracting Officer’s knowledge and belief.

X Desi Clinton

Lease Contracting Officer

12. PREPARER’S TECHNICAL CERTIFICATION.

I certify that the supporting data used to form the basis of this Justification is complete and accurate to the best of my knowledge and belief.

X Desi Clinton

Lease Contracting Officer

X Ryan Y. Johnson

Branch Chief

Heather Driskell

LAO

Sabrina A. Sims

Director of Leasing

Pamela Mitschke

Competition Advocate

Version: May 2021 Current Location

Current Location Anticipated Square Footage (ABOA SF) AB Code 43,436

Agency Name Custom TI Tier Map It!

Reis Market Reis Submarket Reis Rate CBRE Market CBRE Submarket CBRE Rate

ENVIRONMENTAL PROTECTION AGENCY

3 Custom TI % Increase 30%

Raleigh-Durham Asking Rate per RSF Effective Rate per RSF

RTP $ 24.42

$ 24.42 $ 19.64

Raleigh Asking Rate per RSF Effective Rate per RSF

RTP / RDU

Expected Full Service Asking Rate for Succeeding Lease *Rental payment calculations use Average Asking rates; Effective Rates are provided for information only.

$ 24.76 $ 24.76

$ 24.73

$ 24.59

Tenant Improvements for Current Location Local Construction Index (LCI)- State LCI- City LCI Adjustment to TI

New Phone system

North Carolina Raleigh

0.87 Yes (Y) / No (N) Cost*

N $0 Carpet (broadloom) Carpet (tile)

VCT

Remove Carpet with System Furniture in place Vinyl Wall Base Paint Vinyl Wallcovering Space Planning Programing Government DID's Floor to Floor Furniture & Systems Move Known Unique TI Costs

0% 0%

N N

$0 $0

0% N N

$0 $0

N N

$0 $0

N N

$0 $0

N N

$0 $0

N $0 Enter Actual Cost ($)

(Optional BSAC) $0 (Optional) $0 (Optional) $0 (Optional) $0

Total ROM TI Cost for Current Location (includes 32% for overhead, profit, GCs, and Bonds) $0

Rough Order of Magnitude Cost Benefit Analysis = User Input

Required

Current Lease Data

Lease Number Street Address City State Current Lease

USF

Current Lease RSF Lease Effective

Date Lease

Expiration Date Lease

Termination Rights Date

LNC62665 4930 OLD PAGE RD DURHAM NC

43,436

49,951

6/16/2014 6/15/2024 6/16/2019 https://agsivvwa.gsa.gov/da_capture/

Alternate Location Based on Market Data Market Average based on REIS and CBRE Data Anticipated Square Footage (ABOA SF) Map It!

43,436 Reis Market Reis Submarket Reis Submarket (Optional) Reis Submarket (Optional) Reis Averages CBRE Market CBRE Submarket CBRE Submarket (Optional) CBRE Submarket (Optional) CBRE Averages

Raleigh-Durham Asking Rate per RSF Effective Rate per RSF

RTP $ 24.42

$ 24.42

Raleigh Asking Rate per RSF Effective Rate per RSF

RTP / RDU $ 24.76

$ 24.73

$ 24.76

$ 24.73

Market Average $ 24.59

Tenant Improvements for Alternate Location

Local Construction Index (LCI)- State LCI- City LCI Adjustment to TI Agency TI cost per foot (National Average) Known Unique TI Costs

North Carolina Raleigh

0.87 $6 $209,112

Enter Actual Cost ($) (Optional BSAC) $0 Large Wind Tunnel Small Wind Tunnel $5,479,018

$2,739,509 (Optional) Total ROM TI Cost (includes 32% for overhead, profit, GCs, and Bonds)

$0 $8,494,555

E. Move Costs Building to Building Furniture & Systems Move Floor to Floor Furniture & Systems Move Building to Building telephone systems move Known Unique Move or Personal Property Costs (Lump Sum)

Yes (Y) / No (N) Cost* Y $187,519 N Y

$0 $159,107

Enter Actual Costs ($) Large Wind Tunnel $0 Small Wind Tunnel $0 Warehouse Pallet Rack System $0 (Optional) $0

Total ROM Move Cost for Alternate Location $346,625

$9,944,314

Anticipated Succeeding Lease Savings: 45% Note: GSA's default position for all lease procurements is Full and Open Competition. Procurements using Other Than Full and Open Competition should be only pursued only when comparatively significant savings are shown, as outlined under GSAM 570.104 and FAR 6.302-1(a)(2)(ii)(A) ["Substantial duplication of cost to the Government that is not expected to be recovered through competition.”]. While there is no established standard or hurdle rate for the level of anticipated cost savings required, a minimum figure of 20% is a good indicator for project teams to use when working with client agencies in outlining preliminary procurement strategies. Project teams, in consultation with the LCO, should also take into consideration other factors such as mission requirements, location policy, anticipated competition, existing space conditions, past performance, and similar due diligence information before finalizing any lease procurement strategies.

Current Location - ROM Total of Rent Payments Over Term (Excluding TI) Total of TI Amortization Payments Over Term Lump

Sum Portion of TI Aggregate Total Project Cost

$12,283,049 $0 $0

$12,283,049

Rates & Data F actors Amortization Rate (TI) Common Area Factor Lease Term (years) Estimated TI Buildout Costs Amount to be Amortized TI Amortization Term (years) Lump Sum TI Amount

8.00% 1.15

$8,494,555 $2,419,520

$6,075,035

Rates & Data Factors Amortization Rate (TI) Common Area Factor Lease Term (years) Estimated TI Buildout Costs Amount to be Amortized TI Amortization Term (years) Lump Sum TI Amount

8.00% 1.15 $0 $0 $0

Alternate Location Based on Market Data - ROM Total of Rent Payments Over Term (Excluding TI) $12,283,049 Total of TI Amortization Payments Over Term $3,522,654 Lump Sum Portion of TI $6,075,035 Total Move Cost $346,625 Aggregate Total Project Cost $22,227,363

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