Completed_Renewal_OFOC_Redacted.pdf

U.S. General Services Administration

GSA Region 5

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

Project Number: 7IL2422

Agency:

1. Nature and/or Description of the Action Being Approved.

The General Services Administration currently leases 384,528 ANSI/BOMA Office Area (ABOA) square feet or 429,728 rentable square feet (RSF) of office and special space, plus 805 structured and 30 surface parking spaces at 2111 W. Roosevelt Road, Chicago, IL, under lease number LIL17010 for the

. The current lease expires March 31, 2020. This Lease has not been previously succeeded, extended, or renewed. The initial lease included two 10-year renewal options but was amended to maximize cost saving by Lease Amendment to include a single 20-year renewal option. The renewal option required congressional authorization to exercise. Additionally, due to common area factor leveling, the rentable square footage was determined to be 439,522, while the ABOA square footage was determined to be 387,944. Approval is requested to exercise the 20-year renewal option with the incumbent Lessor without full and open competition for continued occupancy at this leased location. The right to pursue a renewal option is detailed in GSAR 570.401: Renewal Options.

2. Description of Supplies or Services Required to Meet the Agency’s Needs (Including Estimated Value):

submitted a continuing need letter on December 22, 2017, for 429,728 RSF of office and related space. To satisfy mission requirements, the facility must be in accordance with Program of Requirements including but not limited to physical security requirements and interior improvements. The Building is a specialized building that was built to the specifications of the agency, including setback, perimeter security, and parking.

The site also provides 835 parking spaces (805 structured/secured and 30 surface parking spaces) for exclusive use by the agency.

The mission of is to protect and defend the United States against terrorist and foreign intelligence threats, to uphold and enforce the criminal laws of the United States, to provide leadership and criminal justice services to Federal, State, municipal and international agencies and partners; and to perform these responsibilities in a manner that is responsive to the needs of the public and faithful to the Constitution of the United States.

The Office serves the counties of Cook, Lake, Boone, Carroll, DeKalb, JoDavies, Lee, McHenry, Winnebago, Whiteside, Stephenson, Grundy, Kendall, LaSalle, Will, DuPage, Ogle, and Kane. The Office investigates terrorism, cyber-crime, pubic corruption, civil rights, organized crime, white collar crime, violent crime, and conducts counter-intelligence. The unique nature of operations requires levels of security not easily acquired on the open market and holds a very high probability of resulting in new construction to replicate the single tenant, Interagency Security Committee (ISC) facility.

Prospectus Number PIL-01-CH19 was approved by the House of Representatives on May 18, 2019, and by the Senate on June 19, 2019, granting authority for a maximum square footage of 439,522 RSF and a lease term of up to 20 years, at an annual rent of per RSF. The approval also included 835 parking spaces. This requirement is to commence on 4/1/2020. The estimated annual cost of this renewal is per RSF for the first 10 years ( ) and per RSF for the second 10 years ( ). The total contract value is

. The delineated area is North: North Avenue, East: Lake Michigan, South:

22nd Street/Cermak Road, West: Damen Avenue.

There is no vacant Federal space available to accommodate this requirement.

3. Identification of Statutory Authority Permitting Other Than Full and Open Competition:

In accordance with 41 U.S.C. 253 (c)(1), only one responsible source and no other supplies or services will satisfy agency requirements. In accordance with General Services Administration Acquisition Regulation (GSAR) 570.401 and 570.402, it is determined that the renewal price is fair and reasonable and that award to any other offeror would result in substantial duplication of costs to the Government that are not expected to be recovered through competition.

4. Demonstration that the Proposed Contractor’s Unique Qualification or Nature of the Acquisition Requires 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 would require relocation of the entire requirement and would cause to incur move and replication costs that would not be recovered.

Based on the Move & Replication Cost Estimate prepared for the prospectus package, the relocation costs are estimated to be . Additionally, the proposed renewal allows the Government to make use of existing tenant improvements, avoiding replication costs of . Special use spaces—

—would all have to be replicated if the agency were to move.

5. Description of Efforts Made to Ensure that Offers are Solicit From as Many Potential Sources as is Practicable:

Following prospectus approval on June 19, 2019, an advertisement was placed on Federal Business Opportunities (FBO) website on June 26, 2019 for a 10-year term.

The ad stated that the Government was running the ad to gather information to determine if it was economically advantageous to exercise a renewal option or to consider relocation options. With approval granted to seek up to a 20-year term, the Lease was subsequently amended to provide a 20-year year renewal option. An amended ad was posted on July 31, 2019, for a 20-year term seeking the same information. While there were several inquiries in response to the ads, the most prominent inquiries came from a representative for the Old Post Office Building in Chicago, and a building at 800 W. Fulton. Interstate 290 runs through the ground level of the Old Post Office Building. Since does not accept buildings with a drive-through canopy, a building with an interstate running through it would not be accepted. The building located at 800 W. Fulton was eliminated from consideration because of inadequate parking and an inability to provide any setback distance from the street.

6. Demonstration by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable:

Research on comparable rental rates was conducted by using data from CoStar and REIS. The market established for the area generally showed rates in the range of per RSF, but no buildings of similar size were found, nor were any buildings with the land setback and parking requirements located. Factoring the additional land and parking values, a bullseye rate of per RSF was established, and that rate was submitted for the prospectus. Additionally, the rental rate that was established in the lease for the first renewal option was set at per RSF as base rent, for carry over amortized tenant improvements, plus operating expenses and taxes to be reset based on current actual expense. The current annual cost for operating expenses is approximately per RSF, and the most recent tax bill lists the taxes currently at approximately per RSF. Adding these expenses to the base rent established in the lease increases the total annual rent for the first 10 years to

RSF. The base rent for the second renewal option was set at per RSF, but contains the same language pertaining to the additional expenses being reset based upon actual expense. Thus, it can reasonably be assumed that the total annual rent for the second renewal option would be in the range of per RSF.

By renegotiating the initial lease renewal options from two 10-year options to one 20-year renewal, the Government was able to reduce costs for a total rental savings of approximately . The rates of RSF for the first 10 years and RSF for the second 10 years are below the prospectus approved rate of RSF.

7. Description of the Market Research Conducted and the Results:

In 2018 market research was conducted using CoStar and REIS. The research was not able to identify any potentially acceptable locations other than the incumbent that might meet the agency’s needs within the delineated area. There are no comparisons available in South Chicago. Tenants are having a tough time finding large blocks of space in 4 & 5 Star buildings in South Chicago. The vast majority of 100,000 SF buildings are 1, 2, & 3 Star office buildings that were constructed prior to 1960 and would never meet the Government minimum requirements. The average lease size was about 2,500 SF.

In addition, the Contracting Officer placed an advertisement conforming to GSAR 570.402-2 on the Federal Business Opportunities Website (fedbizopps.gov) on June 26, 2019, for a 10-year term. The ad stated that the Government was running the ad to gather information to determine if it was economically advantageous to exercise a renewal option or to consider relocation options. With approval granted to seek up to a 20-year term, the Lease was subsequently amended to provide a 20-year renewal option. An amended ad was posted on July 31, 2019, for a 20-year term and seeking the same information. A market survey was not conducted because none of the locations that responded met the security or parking requirements of .

Address Source [EOI/CoStar, etc.] Asking Full Service Rental Rate

2111 W Roosevelt Road [incumbent] Unsolicited Offer $51.40

Old Post Office Building advertisement

800 West Fulton advertisement

The Chicago Illinois asset manager confirmed that, at this time, there is no vacant Federal or leased premises in the market, and none were identified that would meet the agency’s requirements. Additionally, information from the advertisement and relevant market data was used to verify the proposed rate is reasonable.

8. Other Facts Supporting the Use of Other Than Full and Open Competition:

A. The Building is a specialized building that was built to the specifications of the agency. The building is tailored to the needs of , including setback, perimeter security and parking. Based upon the unique security requirements, setback and parking requirements, the estimated move and replication costs are estimated to be approximately .

B. There were no major deficiencies or maintenance issues identified with the space.

C. There are no alternative spaces available or offered that meet the requirements within the delineated area and current congressional district.

9. List of Sources that Expressed in Writing, an Interest in the Acquisition:

Post Office Building, 433 W. Van Buren, Chicago, IL 800 W. Fulton, Chicago, IL

10. Statement of Actions, if Any, the Agency may Take to Remove or Overcome Barriers to Competition before any Subsequent Acquisition:

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.