9DC2824 OTFO (Redacted).pdf

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U.S. General Services Administration

GSA Region 11 – Nation Capital Region (NCR)

Office of Real Estate Delivery / Lease Execution Division / Public Building Services

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

LEASE NUMBER: GS-11B-LDC12549 (current lease)

PROJECT NUMBER: 9DC2824

Agency Name: National Endowment for the Arts (NEA)

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

The General Services Administration (GSA) currently leases a total of 375,260 rentable square feet (RSF) / 307,332 ANSI BOMA Office Area square feet (ABOA SF) of office and related space at Constitution Center, 400 7th Street, SW, Washington, DC, under GSA lease number LDC12549 for multiple separate Government agencies. The current lease expires February 29, 2024. The NEA currently occupies 56,352 RSF / 46,152 ABOA SF of the space and requires continued occupancy to support their mission.

Approval is requested to negotiate a succeeding lease for 56,352 RSF / 46,152 ABOA SF with the incumbent Lessor without full and open competition for continued occupancy at this leased location for a firm term of 15 years. The procedures for pursuing a succeeding lease are detailed in GSAR 570.402:

Succeeding Leases (48 C.F.R. 570.402).

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

(INCLUDING ESTIMATED VALUE).

The NEA signed a Client Project Agreement (CPA) on March 30, 2023, indicating a continuing need for 56,352 RSF / 46,152 ABOA SF of office and related space. GSA and the NEA decided to split this requirement out of the larger requirement because the agencies have no need to be collocated. In addition, the NEA occupied space is separately demised space under the larger existing lease. To satisfy the NEA’s mission requirements, the facility must be able to accommodate ISC Level III Security Requirements and be within 2,640 walkable linear feet of a Metrorail station. The required delineated area is the Washington, D.C., Central Employment Area (CEA).

This requirement is for 56,352 RSF / 46,152 ABOA SF of space for a 15-year term to commence March 1, 2024. The incumbent lessor is required to provide a tenant improvement allowance (TIA) of $20.00/ABOA SF and $0.00/ABOA SF for Building Specific Amortized Capital Allowance (BSAC), as the existing buildout only requires minimal enhancements. Based on the expression of interest submitted by the incumbent location, the estimated cost of this succeeding lease is

There is no immediate vacant Federal Space available to accommodate this requirement.

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 GSAR 570.402. In accordance with GSAR 570.402, use of the sole source authority is appropriate where it is determined that award to any other

The cost of relocating the NEA using the low-cost quote exceeds the cost of remaining at 400 7th Street, SW, Washington, DC. The total aggregate cost savings to the Government over the 15-year full term is

Based on the above cost-benefit analysis, the Government cannot expect to recover relocation and duplication costs through competition. Therefore, the Government intends to negotiate a succeeding lease and remain at the incumbent location.

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

MANY POTENTIAL SOURCES AS IS PRACTICABLE.

Per the requirements of GSAR 570.402-2, the GSA Lease Contracting Officer placed an advertisement on the Contracting Opportunities domain of SAM.gov on June 1, 2023, with EOIs due June 15, 2023, and an amended advertisement on October 13, 2023, with EOIs due October 20, 2023, to determine if there were any potential acceptable locations that could satisfy the Government’s requirements, at a cost below that which would be obtained at the existing location. GSA received 13 responses in response to the amended advertisement, including one from the incumbent, which are listed in further detail in Sections 7 and 9 below. In addition, market research was conducted using CoStar.

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

GOVERNMENT WILL BE FAIR AND REASONABLE.

On October 12, 2023, the broker for this project, CBRE, Inc., performed market research for comparable buildings in the delineated area with at least 50,000 RSF available. This market research showed the asking rental rate for comparable properties ranged from $45.00 to $65.00 per RSF, with an average asking rental rate of $53.44 per RSF, as shown in the attached market research and described in Section 7 below.

The incumbent Lessor responded to the advertisement with a rental rate of $48.50 per RSF, full service, with 25 months rental abatement and $20.00 per ABOA SF in TIA. This rate, which is still subject to negotiation, falls within the range identified above and is thus considered fair and reasonable. Therefore, in accordance with FAR 6.303-2(b)(7), the Contracting Officer determines by certifying this document that the anticipated cost to the Government of $48.50 per RSF is within the current market range for this submarket and is deemed fair and reasonable.

7. DESCRIPTION OF MARKET RESEARCH CONDUCTED AND THE RESULTS.

On October 12, 2023, CBRE, Inc. conducted market research using CoStar, market knowledge and broker inquiry and identified 29 potentially acceptable locations, including the incumbent, which could meet the agency’s needs within the delineated area. The market research showed an asking rental range between per RSF, full service, with an average of $53.44 per RSF, for office space. A copy of the market research supporting this is attached.

In addition, GSA placed an advertisement conforming to GSAR 570.402-2 on the SAM.gov website from June 1, 2023, to June 15, 2023 and an amended advertisement from October 13, 2023 to October 20, 2023. The Government received thirteen (13) EOIs, eleven (11) of which appeared to be compliant with the requirements stated in the amended advertisement. The incumbent Lessor’s EOI indicated that the rate would be , inclusive of $20.00 per ABOA SF in TIA and

The interested party that provided the lowest rental rate, 500 E Street, SW, Washington, DC, quoted a rate of of free rent, inclusive of $58.956 per ABOA SF in TIA, $25.00 per ABOA SF in BSAC, and in its EOI.

See Figure 1 below for the results of the market research and the SAM.gov amended advertisement responses received by October 20, 2023, including the incumbent’s. Thirteen (13) of the potentially acceptable locations identified in the market research of October 12, 2023, did not provide asking rates, or withheld asking rates, and have been omitted from the list below.

*Incumbent building

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

ANY BARRIERS TO COMPETITION BEFORE ANY SUBSEQUENT ACQUISITION.

There are no systemic barriers to competition. If the agency has a continuing need for space upon lease expiration, GSA will follow all authorities, regulations and policies applicable to lease acquisition. Should there be remaining useful life in the Government’s tenant improvements, the Government will consider the cost of moving from the existing location and the cost to build out new space when deciding whether to undergo a competitive action.

Additionally, objective scrutiny will be given to the customer agency’s mission and security requirements (if applicable) to eliminate unnecessary agency space requirements that may be deemed unduly restrictive.

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 56,352 RSF / 46,152 ABOA SF 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.

11/27/2023

Date

Kevin Terry, 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.

11/21/2023

Richard Downey, GLS Plus Broker (CBRE)

Concurred by:

11/27/2023

Glenn Harvey Director, Lease Execution Division

11/28/2023

Marisol Medina

Lease Acquisition Officer (LAO), NCR

11/28/2023

Office of the Regional Counsel

11/30/2023

Aimee Whiteman

Director, Office of Real Estate Delivery

12/1/2023

Michael Spriggs

Competition Advocate

Approved by:

12/11/2023

Melanie Gilbert

Regional Commissioner for PBS, NCR