Revised 10.docx

Revised 10-23-2023

Justification for Other Than Full and Open Competition, Succeeding Lease U.S. General Services Administration (GSA) Region 7 Leasing Division

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

PROJECT NUMBER: 3TX1168

Agency Name: ENVIRONMENTAL PROTECTION AGENCY (EPA)

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

The General Services Administration currently leases 34,979 ABOA SF / 41,126 rentable square feet (RSF) of lab space at 10625 Fallstone Rd., Houston, TX under lease number LTX16761 for the Environmental Protection Agency (EPA). The current lease expires 06/30/2025. Approval is requested to negotiate a succeeding lease with the incumbent Lessor without full and open competition for continued occupancy at this leased location. The procedures for pursuing a succeeding lease are detailed in GSAR 570.402: Succeeding Leases.

2. DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED TO MEET THE AGENCY’S NEEDS (INCLUDING ESTIMATED VALUE).

The EPA submitted a continuing need letter on 07/25/2022 for 41,126 rentable square feet of lab and related space.

This requirement is for 34,979 ABOA SF / 41,126 RSF of space for a 10-year term to commence on 07/01/2025. The estimated cost of this lease is $64.60 per rentable square feet per year for an annual cost of $2,656,739.60 and a total contract value of $26,567,396.00.

The current lease space consists of highly specialized tenant improvement finishes to support the EPA’s mission. This facility consists of Organic and Inorganic Laboratories and HAZMAT storage space. Below is an itemized list identifying the type of lab space already provided at the current location:

● ABN GC/MS Lab

● Organic Extraction Labs (2)

● Bacti 1 (Filtration & Microscope) Lab

● Bacti 2 (Media Preparation) Lab

● Chemistry Labs (3)

● Extraction & Inorganic Prep Lab

● Trace Metal Lab

● X-Ray Fluorescent Lab

● I-Cap Lab

Revised 10-23-2023

● Bio-Assay Lab w/ HAZMAT Storage

The delineated area is North: Bissonnet St.; South: W. Airport Blvd.; East: Sam Houston / Southwest Fwy.; West: Dairy Ashford Rd.

There is no vacant Federal Space available.

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 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 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 the EPA to incur move and replication costs that would not be recovered through competition. Relocation costs are estimated to be $224,796.00. Additionally, this allows the Government to make use of existing tenant improvements, avoiding replication costs of $20,799,251.00. The EPA has unique requirements for this lab space such as safety showers, eyewash units, exposure control devices including but not limited to fume hoods, ventilated balance enclosures, easy-to-clean countertops, sinks, and benches, appropriate plumbing, unique mechanical systems, specialized refrigeration, and fire alarms and extinguishers that would all have to be replicated if they were to move. A cost-benefit analysis was completed following the procedures set forth in GSAR 570.402-6. The cost of relocating EPA using the low cost quote exceeds the cost of remaining at 10625 Fallstone Rd., Houston, TX. The total savings to the Government is $15,353,223.00. Documents related to the cost benefit analysis and other market research can be found in the GREX project file.

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 09/25/2024 for 17 calendar days. In addition, the GSA Lease Contracting Officer (LCO) conducted market research using a CoStar Report and the online resource Loopnet.com.

6. DEMONSTRATION BY THE CONTRACTING OFFICER THAT THE ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE.

Recent market surveys conducted by the GSA Lease Contracting Officer in Houston, TX showed rental rates for office space within the delineated area average around $29.97 per RSF. However, considering this requirement is for special use lab space, it is fair to anticipate paying a premium of approximately $20.00 per RSF. Therefore, for the purposes of the Cost Benefit Analysis and Section 7 of this document, $20.00 has been added to the office space average rate per SF of $29.97 for a total of $49.97. Source: CoStar, online research specific to lab costs Additionally, another cost benefit analysis was completed using the average office rate of $29.97, without the addition of the lab premium of $20.00 per RSF. This analysis still showed a total cost savings of $3,434,126.00.

While the proposed rental rate for this succeeding lease of $64.60 per RSF is high compared to the current office space market range for this submarket, it is deemed fair and reasonable by the GSA Lease Revised 10-23-2023

Contracting Officer. Given the unique nature of the Incumbent’s property, which is special use lab space, direct comparables in terms of shell and operating rent cannot be found in the market. The Incumbent Lessor has included in his shell, residual Tenant Improvements (TI’s) which continue to have value. The Government acknowledges that those residual TI’s continue to have value and therefore substantiate a higher asking rent. The LCO’s determination that the anticipated cost will be fair and reasonable is further supported by the above-referenced cost benefit analysis.

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 October 7, 2024, the GSA LCO conducted market research using CoStar and Loopnet.com and identified 2 potentially acceptable locations (1 plus the incumbent) that might meet the agency’s needs within the delineated area. A property located at 9960 W Sam Houston Pky, Houston TX was found on Loopnet.com; it meets the square footage requirement and is considered flex space. In addition, PBS posted an advertisement conforming to GSAR 570.402-2 on the Contract Opportunities domain of SAM.gov website on 09/25/2024. There were no expressions of interest in response to the advertisement, except for the incumbent. The incumbent Lessor’s expression of interest indicated that the rate would be $64.60 per RSF.