Justification - Redacted - Project No. 2WV0146.pdf

Revised 10-23-2023

Justification for Other Than Full and Open Competition, Succeeding Lease

U.S. General Services Administration

GSA Region 3

Real Estate Acquisition Division

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

PROJECT NUMBER: 2WV0146

Agency Name: DHS United States Coast Guard (USCG)

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

The General Services Administration currently leases 20,838 ABOA / 21,655 rentable square feet (RSF) of office space at the Vessel Documentation Building, 792 T J Jackson Dr, Falling Waters, West Virginia (WV) under lease number GS-03P-LWV12191 for the USCG. The current lease expires December 6, 2025. Approval is requested to exercise a pre-existing/evaluated renewal option with the incumbent Lessor without full and open competition for continued occupancy at this leased location. The procedures for pursuing a renewal option are detailed in GSAR 570.401: Renewal Options.

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

(INCLUDING ESTIMATED VALUE).

USCG submitted a continuing need letter for 21,655 rentable square feet of office and related space.

This requirement is for 20,838 ABOA/21,655 RSF of office and related space located in Falling Waters, WV. The lease contains one evaluated five (5) year priced renewal option. Notice to exercise the renewal option must be given to the lessor 90 calendar days prior to lease expiration. The Government intends to exercise the renewal option as outlined in the original lease contract. There is no vacant Federal space available. The current rental rate is $21.26/RSF.

The estimated rental rate for the lease renewal option are as follows:

Renewal Option: $21.03/RSF ($13.79/RSF Shell Rate and $7.24/RSF Operating Expense Rate) x 21,655 RSF=$455,404.65 annual rent x 5 years = $2,277,023.25

Estimated Total Contract Value = $2,277,023.25

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 570.401 - Renewals.

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 would require relocation of the entire requirement and would cause USCG to incur move and replication costs that would not be recovered through competition. A cost-benefit analysis was completed following the procedures set forth in GSAR 570.402-6 and this justification demonstrates an aggregate cost savings to the Government of $2,807,248.00 by remaining in place. (Due to the lack of available alternatives in the market, the Cost Benefit analysis utilized the average market shell rate as the low cost alternative for 100 Summit Ave, Hagerstown MD 21740.)

(Filed Tab 2A in Grex- JOFOC) It would not be economically feasible to relocate the agency to a new location and exercising a lease renewal will protect occupancy and allow the agency to continue their mission without disruption.

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, the GSA Lease Contracting Officer placed an advertisement on the Contracting Opportunities domain of SAM.gov on April 8, 2024 for 14 days. In addition, PBS conducted market research using Co-Star.

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

GOVERNMENT WILL BE FAIR AND REASONABLE.

For the purpose of establishing market averages for the Falling Waters, WV area, the Lease Contracting Officer and Leasing Specialist referenced the listing rate of 1 building within the delineated area that has vacancies, but it is smaller than the minimum needed for this requirement. The rental rate of that building per CoStar is $22.00 plus utilities excluding Tenant improvements and Building Specific Amortized Security. In addition, a Co-Star report was completed for any location within 25-mile radius of the current location to find additional comparables to determine the rate to be fair and reasonable. These rates ranged from $12.90 to $19.00 per RSF for less than fully serviced and $15.77 to $30.74 per RSF for fully serviced with the average of fully serviced rate being $19.00 per RSF (assuming $12 per RSF for shell and $7 per RSF for operating costs) according to the Co-Star analysis, however that does not account for the additional costs for the Government’s “warm lit” shell rate, which is typical $2.00 per RSF.

Therefore, the proposed rental rates for this renewal option lease of $21.03/RSF, are within the current market range for this submarket and are 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 April 10, 2024, the Leasing Specialist conducted market research using CoStar and identified zero (0) potentially acceptable locations that might meet the agency’s needs within the delineated area. There were no buildings in the Delineated Area that could meet the USCG requirements. One (1) building located at 1176 T J Jackson Drive, Falling Waters, WV was available at $22.00+utilities, however it did not meet the Agency’s square footage requirement. In addition, PBS posted an advertisement conforming to GSAR 570.402-2 on the Contract Opportunities domain of SAM.gov website on April 8, 2024. The incumbent Lessor’s expression of interest indicated that the rate would be $21.03 per RSF. Finally, additional market research (attached) was conducted within a 25-mile radius to obtain additional compables.

See Figure 1 below for the results of the market research and SAM.gov advertisement, including the incumbent.

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

Matthew Johnson, Boyd Falling Waters GSA I LLC (Incumbent)

1 N Wacker DR

STE 4025

Chicago, Illinois 60606-2844

EOI $21.03

1176 T J Jackson Drive, Falling Waters, WV Co-Star $22.00+utilities

Hub Business Center 13511 Label LN Hagerstown, MD 21740

Co-Star $19.00NNN/RSF $30.74/RSF (fully serviced rate)

100 Summit Ave Hagerstown, MD 21740

Co-Star $12.90 - $15.77/RSF (Est)

14700 Citicorp Dr Hagerstown, MD 21742

Co-Star $19.72 - $24.11/RSF (Est)

Figure 1: Market Research Comparable

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

The USCG is satisfied with their current location and the Lessor’s performance under the existing lease has been acceptable. The Lessor has been responsive in addressing any lease administration issues. An Asset Tester was conducted with the results being positive, along with confirmation from the GSA Field Office regarding the Lessor’s outstanding past performance. In accordance with the requirements of GSAM 517.207 (b), the lessor’s performance under this lease has met the Government’s expectations for quality performance.

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

ACQUISITION.

The only Expression of Interest for this procurement was from the incumbent lessor.

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. Prepared by:

X_____________________ Michael Palermo: 3PRNC Leasing Specialist

Concurred by:

X____________________ Elizabeth McCullough signing for Dominic Innaurato (LCO): 3PRNC Reality Supervisor

X_______________________ Elizabeth McCullough: 3PRNC Reality Supervisor

X_________________________ Cathleen Ryer: 3PRN Real Estate Acquisition North Branch Chief

X__________________________ Renee Domurat: 3PR Real Estate Acquisition Division Director

Reviewed for Legal Sufficiency by:

Alexander Falciani: LD3 Regional Counsel

Approved by:

John Calhoun: 3P1 Competition Advocate

Approved by:

X_______________________ Tom Lyman:3P Acting HCA PBS Regional Commissioner