MSHA_Morgantown_Project___5WV0154__(JOFOC)_-_February_22,_2018__-_Fully_Executed_.pdf

U.S. General Services Administration Region 3

South Service Center Justification for Other than Full and Open Competition

LEASE NUMBER: GS-03B-02357

PROJECT NUMBER: 5WV0154

Agency Name: Mine Safety and Health Administration (MSHA)

Office of Surface Mining, Reclamation and Enforcement (OSMRE)

Food and Drug Administration (FDA)

1. Nature and/or description of the action being approved.

The Mine Safety and Health Administration (MSHA) currently occupies 16,242 ANSI/BOMA Office Area square feet (ABOA SF), Office of Surface Mining, Reclamation and Enforcement (OSMRE) occupies 505 ABOA SF, and Food and Drug Administration occupies 1,169 ABOA SF for a total of 17,916 ABOA SF / 19,969 Rentable square feet (RSF), and eighty-five (85) surface parking spaces, at the Pierpont Professional Building, 604 Cheat Road, Morgantown, WV under Lease # GS-03B-02357. The current lease expires on June 4, 2018.

Approval is requested to renew the current lease, with the incumbent lessor without full and open competition, for continued occupancy at this leased location. The existing lease contains one (1), five (5) year renewal option, with the Government’s notice to exercise required to the Lessor upon seven (7) days prior to lease expiration (June 4, 2018).

All three (3) agencies (MSHA, OSMRE and FDA) submitted their requests for space to GSA on October 1, 2017. In their respective space requests, each agency expressed a desire to remain in place, with no changes to their existing space, as each of their agency missions remain unchanged. Space requirements beyond five (5) years were unable to be confirmed with each agency as well.

2. Description of the supplies or services required to meet the agency’s needs

(including estimated value).

The three (3) tenant agencies (MSHA, OSMRE and FDA) submitted space requests on October 1, 2017 to pursue a five (5) year lease renewal option at the incumbent leased building location. By pursuing a lease renewal, the agencies’ operations would not be interrupted and the Government would realize a significant cost savings.

MSHA, OSMRE and FDA are satisfied with their current leased spaces and the Lessor’s performance.

The current fully serviced lease rent is as follows: Annual Rent: $535,167.52 or $26.79* per RSF (*Shell: $19.49/RSF, Operating: $7.30/RSF).

The project requirement is to exercise a five (5) year renewal option listed under Lease # GS-03B-02357. The projected cost for the five (5) year lease renewal option is as follows:

$27.11* rental rate per RSF x 19,969/RSF =$541,546.63/annual rent ($30.22** rental rate per ABOA SF)

*Shell: $19.81/RSF; Operating Costs: $7.30 rate/RSF (**Shell: $22.08/ABOA SF, Operating Costs: $8.14/ABOA SF)

$541,546.63/annual rent x 5 years = $2,707,733.15

Total Contract Value - $2,707,733.15

3. Identification of the statutory authority

41 U.S.C. 253(c) (1) and FAR 6.302-1: 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 use of the authority cited.

In accordance with 41 U.S.C. 253 (c) (1), the agency’s minimum needs can only be satisfied by unique supplies or services available from only one responsible source and no other type of property or services will satisfy the needs of the agency.

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

A cost benefit analysis illustrates that pursuing a five (5) year lease renewal at the current leased building location would result in cost savings of $1,238,999.90 to the Government. Thus, it is in the best interest of the Government to pursue renewing the current lease at the existing building location. This procurement strategy will ensure that the Government will meet the agencies’ requirements.

See Attachment 1, Cost-Benefit Analysis

5. Description of efforts made to ensure that offers are solicited from as many potential sources as is practicable

An advertisement for this requirement was placed in FedBizOpps.gov on December 15, 2017. A result of this posting, a total of zero (0) offerors contacted the Government with an interest in housing the Government’s space need in Morgantown, WV.

On December 7, 2017, a database market search was also conducted in addition via CoStar.com and LoopNet.com, which revealed one (1) potential alternative space option (Suncrest Towne Center, 1000 Suncrest Town Centre Drive, Morgantown, WV) to house the agencies’ space requirements.

See Attachment 2, Market Research Report

6. Determination by the contracting officer that the anticipated cost to the

Government will be fair and reasonable.

REIS data available for this market is unavailable.

In evaluating the Morgantown, WV real estate market and inventory of GSA leases in this territory, the range of fully serviced rental rates was determined to be $30.85 to

$42.61 per RSF.

Based on the aforementioned rental factors, the anticipated fully serviced rental rate of $27.11 per RSF for the five (5) year lease renewal is within market range and determined to be fair and reasonable to the Government.

7. Description of the market research conducted

See Attachment 2, Market Research Report

8. Other facts supporting the use of other than full and open competition

MSHA, OSMRE and FDA have each indicated their desire to remain at their current leased building location. By securing a lease renewal, disruption of the agencies’ daily activities would be minimized. The incumbent Lessor and leased building is meeting the requirements of the lease.

9. List of any sources that expressed in writing an interest in the acquisition

No other source has expressed in writing an interest in the acquisition.

10. Statement of actions the agency may take to remove or overcome any barriers to competition

At the end of the proposed lease renewal term, a fully competitive lease action, if appropriate, will be initiated to fulfill the agencies’ long term space requirements.

Contracting Officer’s Certification:

I hereby certify that the above information is accurate and complete to the best of my knowledge.

Prepared by:

2/6/2018

X Patrick J. O'Brien

Lease Contracting Officer

Signed by: General Services Administration Concurred by:

2/12/2018

Sam Ruiz

Realty Section Chief

Concurred by:

2/13/2018

Laurie Ney

Real Estate Branch Chief

Signed by: LAURA NEY

Approved by:

2/22/2018

Dorothy Baratta

Regional Competition Advocate

Signed by: DOROTHY BARATTA

Reviewed for legal sufficiency:

2/22/2018

X Robert J. McCall

Robert John McCall

Regional Counsel

Signed by: ROBERT MCCALL

A. Local Construction Index State WEST VIRGINIA City Morgantown Construction Index 0.99

B. Current Location Building Name PEIRPONT PROFESSIONAL BUILDING Street 604 CHEAT RD City, State Morgantown, WV

Shell Rate (ABOA SF) 22.08$

Does Shell Rent Step? n Operating Rate (ABOA SF) 8.14$ Square Footage (ABOA SF) 17,916 Operating Rate Escalation 2.50% Discount Rate 0.00% Amortization Rate (TI) 5.00% Lease Term (years) 5 Estimated TI Buildout Costs (calculated from Section C) -$ TI Amortization Term (years) 5 Tenant Improvement Rate per usable square foot -$

C. Necessary Tenant Improvements for Current Location Yes (Y) / No (N) Cost

* Tenant Improvements Costs are calculated based on the FY10 Budgetary Estimates Tab New Phone system n -$ Carpet (broadloom) n -$ Carpet (tile) n -$ Vinyl Wall Base n -$ Paint n -$ VCT n -$ Vinyl Wallcovering n -$ Remove Carpet with System Furniture in place n -$ Space Planning n -$ Programing n -$ Government DID's n -$

Enter # needed Miscellaneous TI Costs Enter Actual Cost ($)

Unamortized (Lump Sum) TI Costs Enter Actual Cost ($)

Total Upfront Costs -$ Total Costs Amortized into Rent

D. Available Building with Lowest Rental Rate Building Name Suncrest Towne Center Street 1000 Suncrest Town Center City, State Morgantown, WV

Square Footage (ABOA SF) 17,916 Shell Rate (ABOA SF) 24.00$ Does Shell Rent Step? n Operating Rate (ABOA SF) 8.14$ Operating Escalation Rate 2.50% Amortization Rate (TI) 5.00% Lease Term 5 Estimated TI Buildout Costs (Use OA Tool Allowance Calculator) 805,965.40 Tenant Improvement Rate per usable square foot 10.19$ TI Amortization Term (years) 5

Yes (Y) / No (N) Cost E. Move Costs Building to Building Furniture & Systems Move y 79,878.94$ Floor to Floor Furniture & Systems Move n -$ Building to Building telephone systems move y 74,553.68$ Miscellaneous Move, TI or Personal Property Costs (Lump Sum) Enter Actual Costs ($)

*Based on TMP Level 1 Estimate Sheet Total: 154,432.62$

F. Cost Benefit Analysis Summary

Gross Aggregate Contract Value of Current Location $2,707,107.60 Gross Aggregate Contract Value of Available Building with lowest rental rate $3,946,107.50

Aggregate Cost Savings associated with Staying in Place $1,238,999.90 Aggregate Cost Savings / ABOA SF / Year associated with Staying in Place $13.83

Breakeven Shell Rate (Current Location) $35.91 Breakeven FS Rate (Current Location) $44.05

Cost Benefit Analysis

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

0 1 2 3 4 5

Ag gr eg at e Co nt ra ct V al ue

Year

Aggregate Annual Contract Value Comparison

Cost Current

Cost Alternate

$2,707,107.60

$3,946,107.50

$0 $500,000$1,000,000$1,500,000$2,000,000$2,500,000$3,000,000$3,500,000$4,000,000$4,500,000

Gross Aggregate Contract Value of Current Location

Gross Aggregate Contract Value of Available Building with lowest rental rate

Contract Value Comparison

MARKET RESEARCH REPORT

Project # 5WV0154

Lease Renewal Mine Safety and Health Administration (MSHA)

Office of Surface Mining Reclamation and Enforcement (OSMRE) Food and Drug Administration (FDA)

Morgantown, West Virginia

PROJECT:

5WV0154

AUTHORITY:

40 U.S.C. 585

BACKGROUND:

The Mine Safety and Health Administration (MSHA) currently occupies 16,242 ANSI/BOMA Office Area square feet (ABOA SF), Office of Surface Mining, Reclamation and Enforcement (OSMRE) occupies 505 ABOA SF, and Food and Drug Administration occupies 1,169 for a total of 17,916 ABOA SF / 19,969 Rentable square feet (RSF), and eighty-five (85) surface parking spaces, at the Pierpont Professional Building, 604 Cheat Road, Morgantown, WV under Lease # GS-03B-02357. The current lease expires on June 4, 2018, and contains one (1), five (5) year, lease renewal option.

MARKET RESEARCH:

On December 7, 2017, market search was conducted via CoStar.com and LoopNet.com, which revealed one (1) potential alternative space option (Suncrest Towne Center, 1000 Suncrest Town Center, Morgantown, WV) showing preliminary ability to house the agencies’ space requirements.

An advertisement for this project space requirement was also placed in FedBizOpps.gov on December 15, 2017. A result of this posting, a total of zero (0) offerors contacted the Government with an interest in housing the Government’s space need in Morgantown, WV.

Building Availability and Rate Information:

Suncrest Towne Center – 1000 Suncrest Town Center, Morgantown, West Virginia

Total Available Space: 21,471 Rentable Square Feet (RSF)

Proposed Rental Rate = $24.00 per RSF – Triple Net (NNN)

Summary of Market Rates:

One (1) available property (Suncrest Towne Center, 1000 Suncrest Town Center, Morgantown, WV) was identified as potentially having the capability to meet the agencies’ space requirements, via market research efforts utilizing CoStar.com and FBO.gov in December 2017.

This property offered an average rental rate of $24.00/RSF. GSA confirmed on December 7, 2017, the proposed rental rate listed on the CoStar.com report is truly “Triple Net” (NNN), or net of projected operating ($7.30/RSF), and tenant improvement rental ($9.14/RSF) costs, which would need to be factored into the calculation of the fully serviced rental rate.

In analyzing the Morgantown, WV real estate market and inventory of GSA leases in this territory (below), the range of fully serviced rental rates was determined to be $30.85 to $42.61 per RSF.

Real Estate Market Rental Range Morgantown, West Virginia

Building Location

Square Footage

(RSF)

NNN Rental Rate (per RSF)

Projected Operating and Tenant Improvement

Costs (per

RSF)

Fully Serviced

Rental Rate (per RSF)

1000 Suncrest Town Center

21,471 $24.00 $16.44 $40.44

Stewartstown

Road

2,642 $26.17 $16.44 $42.61

6 Canyon Road 13,650 $19.75 $16.44 $36.19

56 Mileground Road

7,000 $17.00 $16.44 $33.44

Existing GSA Leased Rental Range Morgantown, West Virginia

Agency/Lease Square Footage

(RSF)

NNN Rental Rate (per RSF)

Fully Serviced Rental Rate (per

RSF)

U.S. Department of Agriculture/GS-03B-

LWV08340

34,904 $23.74 $32.09

U.S. Department of Energy/GS-03B-

LWV08356

58,990 $22.92 $30.85

Cost Benefit Analysis:

In analyzing the offered NNN rental rate ($24.00/RSF) for the one (1) potential alternative property at 1000 Suncrest Town Center, Morgantown, WV, if the agencies’ were to relocate, an additional $16.44/RSF ($7.30/RSF Operating Costs, $9.14/RSF for Tenant Improvements costs) would need to be included in the calculation of the fully serviced rental rate.

Thus, relocating to the Suncrest Town Center building location would result in a fully-serviced rate of $40.44/RSF or $42.33 per ABOA SF.

The rental rate for the five (5) year lease renewal at the incumbent leased building location (604 Cheat Road, Morgantown, WV) is as follows: Shell: $19.81/RSF, Operating: $7.30/RSF, for a fully-serviced rental rate of $27.11/RSF.

In comparing the aforementioned rental rates above, by pursuing the five (5) year lease renewal option at the incumbent leased location would result in a cost savings of $1,238,999.90 to the Government.

Prepared and Approved by:

2/5/2018

Patrick J. O'Brien

Lease Contracting Officer