1NY2495 Holtsville Childcare Center RENEWAL JUSTIFICATION redacted.pdf

U.S. General Services Administration

GSA Region 2

Northeast and Caribbean Region Leasing Division

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION – Unevaluated Lease Renewal 5 Years

PROJECT NUMBER: 1NY2495

LEASE: LNY22975

Agency Name: Internal Revenue Service (BSC Kids Child Care Center at Holtsville, NY)

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

The General Services Administration (GSA) currently leases 9,999 ABOA / 12,200 rentable square feet (RSF) of office space, approximately 6,500 square feet1 of outdoor playground space and furnishings, and twenty-five (25) reserved outdoor parking spaces at 2 Corporate Drive, Holtsville, NY under lease LNY22975 to house the BSC Kids Childcare Center funded by IRS and managed by GSA’s Office of Childcare. The current lease expires September 30, 2022. Approval is requested to negotiate a five-year unevaluated renewal with the incumbent Lessor without full and open competition for continued occupancy at this leased location. The right to pursue a lease renewal without full and open competition is detailed in GSAR 570.401: Renewal Options.

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

(INCLUDING ESTIMATED VALUE).

GSA is currently finalizing requirements and pending assignment of a project manager for the new/replacing competitive lease action for this location under 6NY0452 issued under the GLS Contract. A five year renewal is therefore needed to secure the BSC Kids Childcare Center’s occupancy while GSA completes a new/replacing lease project and associated tenant improvements unique to a child care center under full and open competition. The GSA is currently paying $35.08 per RSF or $427,988.39 per annum for the childcare center under the current lease agreement the lessor, net of utilities. The potential addition and exercise of a lease renewal is expected to maintain the existing rates at $427,988.39 per annum / $35.08 per rsf and will include refinishing work needed by GSA’s office of childcare for the outdoor play area in the rental consideration. The total contract value for this lease action is expected to be $2,139,941.95.

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.

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

NATURE OF THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY CITED.

It is in the best interest of the Government to remain at the current location. Award to other than the current Lessor for a 5 year lease would require relocation of the entire requirement and would cause IRS and the GSA Office of Childcare to incur significant move and replication costs that would not be

1 Approximately 7 square meters per child, approximately 85 children per draft BSC Kids Center Requirements recovered through competition. Relocation costs (furniture and IT) are estimated to be $147,821.00 at $14.78/USF2. Additionally, remaining at the current location allows the Government to make use of existing costly childcare oriented buildout, furniture, and playground equipment, avoiding replication costs of $2,499,750.00 at approximately $250.00/USF3. Cost of replicating Building Specific Amortized Capital for an FSL II lease is estimated to be approximately $149,985.00 or $15.00/USF. Furthermore, the Childcare Center is required to be located within 5 drivable minutes from the IRS Holtsville campus located at 1040 Waverly Ave, Holtsville, NY in order to satisfy the childcare needs of IRS employees, a location unique to the incumbent location at 2 Corporate Drive and similarly comparable location at 5000 Corporate Court. A cost-benefit analysis was completed following the procedures set forth in GSAR 570.402-6 and is attached to this justification. The cost of relocating the Childcare Center using the low cost quote building within a 5 minute drive to 1040 Waverly Ave at 5000 Corporate Court, exceeds the cost of remaining at 2 Corporate Drive. The total savings to the Government, if the option is exercised, is estimated to be approximately $2,538,011.00.

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

MANY POTENTIAL SOURCES AS IS PRACTICABLE.

Per the requirements of GSAR 570.401, the GSA Lease Contracting Officer placed an advertisement on SAM.gov on June 22, 2022 for fourteen (14) days seeking sources to provide asking rents for the cost benefit analysis and received no responses.

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

THE GOVERNMENT WILL BE FAIR AND REASONABLE.

Recent market surveys conducted in and near Holtsville, NY via LoopNet.com for buildings within 5-15 minute drive to 1040 Waverly Ave with the available space showed the rental rate ranges from $22.00 - $32.00 net of utilities and janitorial services. Adding $7.50/RSF for enhanced janitorial services for a child care center to buildings within the range to compensate for a similarly serviced GSA lease to the existing lease will bring the potential costs of a lease at a comparable location to $29.50/RSF - $39.50/RSF.

Additionally, typical costs associated with shell buildout, parking for 25 reserved spaces at approximately $50.00/month, BSAC for FSL II, and buildout for an outdoor play area are not factored into the above market comparables which would otherwise increase the asking rents.

Therefore, the proposed rental rate for the proposed renewal of $35.08/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.

GSAR 570.402-5 allows for negotiation with the incumbent Lessor when a cost-benefit analysis shows that the Government cannot expect to recover relocation and duplication costs through competition.

On 7/7/2022, GSA conducted market research on LoopNet.com identifying three (3) potentially acceptable locations that might meet the agency’s needs, located within 5-15 minute drivable distance from 1040 Waverly Ave. In addition, PBS posted an advertisement conforming to GSAR 570.402-2 on sam.gov on June 22, 2022. No responses to the advertisement were generated from said posting.

See Figure 1 below for the results of the market research, including the incumbent.

2 Estimate provided by Succeeding Lease Analysis Tool based upon Riverhead, NY LCI 3 Estimate provided by Office of Childcare for comparably sized Childcare location at Auburn, WA, dated 3/9/2021

Address Source [EOI/CoStar, etc.] Asking Rental Rate net of Utilities

2 Corporate Drive, Holtsville, NY Estimate (existing lease rental) $35.08/RSF

700 Sunrise Highway, Patchogue, NY LoopNet $30.00RSF plus $7.50/RSF Op cost

2410 North Ocean Ave, Farmingville, NY LoopNet $32.00/RSF plus $7.50/RSF Op Cost

5000 Corporate Court, Holtsville, NY LoopNet $22.00/RSF plus $7.50/RSF Op Cost

Figure 1: Market Research Comparables

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

The proposed five year lease renewal will provide GSA with enough time to staff and conduct a lease acquisition for full and open competition, perform associated design and construction activities, and if applicable, relocate the Childcare Center to a new building within five drivable minutes from 1040 Waverly Ave, Holtsville, NY. Additionally, the existing lessor has historically been responsive to GSA’s Office of Childcare with respect to any deficiencies identified at the location. There are no outstanding lease administration deficiencies reported at this location and a lease renewal is anticipated to include refurbishing the outdoor play area at the lessor’s sole cost and expense.

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

ACQUISITION.

N/A.

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 negotiation and award of a lease renewal option consisting of 12,200 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.

__________________________________________ Date_____________________

Alfonso Yau, 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.

________________________________________ Date______________________

Alfonso Yau, Leasing Specialist

Concurrence:

Daren Marshall, Branch Chief, 2PRM

Raffaela Battiloro, Lease Acquisition Officer, 2PR

Joseph Passero, Acting Director, 2PR

Approved for Legal Sufficiency:

Leigh Erin-Izzo, Senior Assistant Regional Counsel, LD2

Approved:

Warren Hall, Jr., Regional Competition Advocate, 2PG