JOTFOC__-_Redacted.pdf

GSA – LEASING DIVISION

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

INTERNAL REVENUE SERVICE (IRS)

LNY23008

The purpose of this action is to extend the above referenced lease for a three (3) year, one (1) year firm term in order to provide office and related space to the Internal Revenue Service (IRS) at 210 E. Post Road, White Plains, NY.

DESCRIPTION OF REQUIREMENTS (INCLUDING ESTIMATED VALUE):

(IRS) currently occupies 26,375 Rentable Square Feet (RSF) yielding 22,935 ANSI BOMA Office Area square feet (ABOA) of office space at 210 E. Post Road, White Plains, NY under Lease No. GS-02B-23008. This lease expires on October 31, 2015. GSA conducted a full and open competitive lease procurement and awarded a new/replacing 10 year, 5 year firm lease to the incumbent Lessor on August 16, 2013 under lease number GS-02B-23913. The new lease requires a reduction of square footage. The reduced square footage will be 19,469 RSF, 18,351/ABOA with 30 secured parking spaces for annual rental amount of $720,827.28 ($37.02/RSF) which includes $8.91/RSF and $1.27/RSF for Tenant Improvements and Building Specific Security Costs, respectively. As part of the post award phase of the project, the IRS was to submit a block plan to the Lessor in order to designate the area they wish to keep and to assist in adequately phasing the construction such that disruption to the agency mission is minimized.

After several months of GSA reaching out to the IRS for their block plan reflecting the reduced square footage, on March 24, 2015, the IRS requested a 3 year extension of the existing lease, with the existing square footage. They requested the extension until they receive funding in order to enact the new lease for the reduced square footage. Based on the new standards, furniture acquisition and construction that must be done in order to reduce the footprint and since the IRS is operating on a limited budget, only the projects with a high return on investment are receiving funding. Unfortunately the White Plains office does not have a high enough return on investment to fund at this time. This extension will protect the Agency’s occupancy while funding is in place and the new lease build-out is completed. This lease is to be extended from November 1, 2015 to October 31, 2018 at an estimated annual rent of $635,637.50 ($24.10/RSF), net of utilities.

IDENTIFICATION OF STATUTORY AUTHORITY:

41 U.S.C. 3304(a) (1): Only one responsible source and no other supplies or services will satisfy agency requirements.

UNIQUE QUALIFICATIONS:

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The IRS office at this location delivers a broad range of services for the citizens of White Plains. Remaining at the current location allows IRS to continue its operation without interruption until the build-out of its long term lease is completed.

Further, GSAM 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. GSA placed an advertisement conforming to GSAM 570.402-2 on the Federal Business Opportunities Web site (febizopps.gov) on March 24, 2015 for two weeks indicating its intent to enter into an extension with the incumbent landlord with Other Than Full Competition. GSA received no responses to its advertisement.

Moreover, award to other than the current Lessor would require relocation of the entire requirement and would cause the IRS to incur move and replication costs that would not be recovered through competition. Although no other location responded to the Government’s advertisement, attached is a cost-benefit analysis for similar office space in the White Plains, NY area.

The current location is already constructed to meet the needs of IRS’ office. If GSA were to conduct competitive lease procurement for this extension, approximately $1,275,658.46 ($55.62 per ABOA x 22,935/ABOA) worth of Tenant Improvements would be required to duplicate the existing space.

Additional costs would be required to replicate telecommunications service and physically move the IRS Office.

The cost of relocating the IRS using the average market rental rate exceeds the cost of remaining at 210 E. Post Road, White Plains, NY location. The saving to the Government is approximately $2,588,236.66 over the life of the extension term, see attached cost benefit analysis. Based on this cost-benefit analysis, the Government cannot expect to recover relocation and duplication costs through competition. Therefore, the Government intends to negotiate an extension and remain at its current location.

EFFORTS TO ENSURE SOLICITATION FROM MAXIMUM SOURCES

PRACTICAL:

Not required.

DETERMINATION THAT ANTICIPATED COST WILL BE FAIR AND

REASONABLE:

The average quoted rate for office space in the White Plains market area of New York City is $30.19/RSF, as per the latest Bullseye report dated 3/18/2015, attached hereto. Quoted rates do not take into account the following:

1. Private sector Landlords typically do not offer warm lit shells in the base rental rate; this means that GSA shell rental rates do not equally translate to the scope of work required for the shell requirements as defined by GSA procurements; i.e.

EduardoJVidal Text Box in Metro New York, Landlords will add $5.00-$7.00 per RSF to the base rent in order to adhere to the GSA standard of shell requirements. Some of which are above and beyond private standards include the cost to prepare ceiling grids, tiles, and finished lighting,

2. GSA requires Base Building work above that required in the private sector which also impacts the shell rate. Such additional above standard work includes retro-fitting existing restrooms, or installing new restrooms, to meet ABAAS standards which are more stringent than that of the ADA code typically found in Office Buildings.

3. The term of the lease can also impact the final annual rental rate. Shorter terms create more risk for Lessors, and thus they pass on that risk to the market in the form of higher rental rates.

The current fully serviced rental rate of this location is $22.95/RSF. The proposed objective rental rate for this extension is $24.10/RSF. The objective rental rate is approximately 20% below the average rental rate for the White Plains area.

Further, it is GSA’s objective to have this rate remain flat throughout the term of the extension. Based on the foregoing, the $24.10/RSF rate can be considered to be a fair and reasonable rate and the best value to the Government.

DESCRIPTION OF MARKET SURVEY/RESEARCH AND RESULTS:

On March 18, 2015, GSA conducted market research using CoStar and located 14 buildings within the White Plains section of New York that can accommodate the Agency’s square footage requirement. The asking rental range for the available buildings is $23.00/RSF - $32.00/RSF, net of electricity.

OTHER FACTORS SUPPORTING JUSTIFICATION: N/A

LISTING SOURCES EXPRESSING INTEREST IN SOLICITATION: N/A

FUTURE ACTIONS TO OVERCOME BARRIERS TO FULL AND OPEN

COMPETITION:

As a result of a full and open competitive lease procurement, GSA awarded a new/replacing lease to the incumbent Lessor on August 16, 2013 under lease number GS-02B-223913. The new lease is for a 10 year, 5 year firm lease which will follow this lease extension. GSA is waiting for the IRS to receive funding necessary to complete the build-out of its new long term lease. This extension will protect the Agency’s occupancy until the build-out is completed.

I hereby certify that the above information is accurate and complete to the best of my knowledge. Agency requirements supporting this justification for other than full and open competition are certified as accurate.

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Eduardo Vidal (2PRM) Date Lease Contracting Officer

Maria DiFedele (2PRM) Date Manhattan Branch Chief

Warren Hall Date Division Director (2P1PR)

Leigh Erin-Izzo (LR) Date Regional Counsel

Louis M. Lozito (2P1PG) Date Program Management Officer Competition Advocate

Project number: 5NY0518 Location: Project number not found Agency: RSF: -

TI Allowance (new): TI Allowance (succeeding) Free Rent: Average Lease Term

$29.12 /sf $18.01 /sf 6.5 Months 5.13 Years

Market Concessions

$30.29

* Dark black circular boarders indicate "Effective Rates" for CBRE and Reis. These rates are not factored into the Bullseye Target Rate.

Project number not found

$22 $28 $34

AVG Market Rate per RSF 30.29$ Total Est. Const Cost* 55.62$

Tenant Electric Cost (if rate above is not Fully Serviced) 3.00$ Cost of Physical Move 4.00$

Cost of Non-Market Shell Items (Warm Lit vs Cold Dark) 5.00$ Voice & Data Replication 4.00$

Gov't Comparable AVG FS Rate per RSF 38.29$

Anticipated FS Rate per RSF to Stay in Place 24.10$

Present Location Alternate Location

Aggregate Rent 1,834,612.50$ 2,914,826.25$

Rentable SF 25,375 New Amortized TI -$ 1,324,542.91$

Usable SF 22,935 Cost of Physical Move -$ 91,740.00$

TI Allowance (TIA) 1,275,658.46$ Voice & Data Move -$ 91,740.00$

TIA per USF for Expenditure 55.62$ Estimate RWA Needed* -$

Total Aggregate Cost 1,834,612.50$ 4,422,849.16$

TI Amortization Rate 7%

Soft Term (months) 24 Full Term Savings 2,588,236.66$ Firm Term (months) 12

36 months

3.00 years

Cost Benefit Analysis of a Lease Extension

Total Term

*Please check box above if

NO RWA will be needed to replicate space if moved.

Move Costs per USF

Full Term Analysis

Contract Scope

Market Analysis