MDA ARC Succeeding Lease, Huntsville, AL

GENERAL SERVICES ADMINISTRATION

PROPERTY ACQUISITION AND REALTY SERVICES DIVISION

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

Missile Defense Agency ARC Huntsville, AL



Identification and Description of Action Being Approved:

To negotiate non-competitively for a new leasehold interest for the Missile Defense Agency (MDA, Advanced Research Center (ARC) in Huntsville, AL. This facility is currently under a Department of Defense (DoD) Service Contract, and will be new to the General Services Administrations (GSAs) leased inventory.

Description of Requirement:

The space under the DoD Lease measures 95,000 BOMA Office Area or 109,250 rentable square feet of space. The requirements were received by GSA in December 2008 for the DoD lease that expires August 31, 2009. There is no further option or authorization from the Under Secretary of the DoD to continue leasing this facility under their own authority. This lease was initially done by the DoD, but it was later determined that service contracts were not the appropriate way to cover the lease of real property.

The agency has expressed a need to remain in this location as it contains the ARC for the Ballistic Missile Defense System (BMDS). This facility plays an integral part in missile defense engineering, development, integration, testing and analysis in the support of the national defense strategies. The initial cost of building out this ARC was $45.5 million. This value does not include other research equipment produced and installed by Raytheon, a defense contractor. To relocate the facility during active wartime would be detrimental to the national defense program. Any disruption would result in substantial delays and significant additional costs to the agencys demanding test schedules, and its ability to complete key research and development BMDS and its component elements.

A relocation would entail a complete replication of the existing ARC in another location and then taking the old ARC off-line once the new building was fully operational. Based on the agencys cost benefit analysis, this could reach costs of over $100 million and it would take 18 months to complete. In addition, the operating expenses could increase from $11.6 million (current estimates) to well over $45 million annually, quadrupling the costs. The labs and test beds communicate with Redstone Arsenal and other DoD facilities and to relocate the labs would mean a complete re-accreditation which could take months.

The General Services Administration National Office has issued a policy statement which outlines its interpretation of OMB Circular No. A-11. This document states that "for prospectus-level leasing actions, if the OMB approved rental rate is not adequate to cover the costs of the desired Building Specific Security countermeasure(s), the countermeasure(s) must be funded lump sum". The MDA does not have access to any funds that can be used to fund such an extensive

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JUSTIFICATION FOR OTHER THAN FULL

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MDA ARC - Huntsville, AL





replication of the infra-structure and the ISC Level IV security standards currently in place.



Finally, under a new procurement the agency would be entitled to a Tenant Improvement Allowance of $4 million, which would dramatically inflate the rent rate. The projected rent rate of $19.00 per rentable square foot for a fully serviced lease is competitive with the documented SIOR and market trend rent rates. (See attached rates for Huntsville from NAI Chase Commercial - Exhibit 1).



The GSA, through the U. S. Army Corps of Engineers, has requested and has been waiting for the Title X approval from the DoD in order to proceed with this procurement. This level of approval is required for all D0D transactions that exceed $750,000.00 in rent per annum. The projected annual rent for the new lease is approximated at $2,075,000.00. We are cognizant of the fact that the new lease cannot be awarded until such time as it is received.



This program office is slated to remain in placed through 2017 or an eight-year lease term, or until a military construction project can be completed. Two moves within an eight-year timeframe would severely impact the MDAs military operations budget.



The total contract value of the proposed new lease action is $16,606,000.00 for the eight (8) year term.



Identification of Statutory Authority:

41 U.S.C. 253 (c)(1)

Demonstration that the Acquisition Requires Use of Authority Cited:

As demonstrated herein, Only One Responsible Source is available in the best interest of the Government.

Description of Efforts to Solicit as Many Offers as Practicable:

An advertisement was placed on FedBizOpps on May 12, 2009, with no viable responses. (See attached advertisement Exhibit #2). Two development firms did respond with an interest in constructing a new facility, but the time and cost constraints would not permit us to consider this as a viable alternative. A review of the Commercial Property Directory.com and the LoopNet sites on the Internet did not divulge any existing properties with sufficient space to accommodate the MDAs expanded space requirements in Huntsville, AL.



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JUSTIFICATION FOR OTHER THAN FULL

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MDA ARC - Huntsville, AL

Demonstration that the Anticipated Cost Will be Fair and Reasonable:

Based on knowledge of the market and recent new leases completed in this market, including a new construction project for the Defense Acquisition University, it has been determined that the anticipated cost of $19.00 per rentable square foot is within the SIOR market rates for space outside the CBD, and is fair and reasonable. In addition, the prospectus rent rate for renewal of the Ballistic Missile Center in Huntsville is $21.00 per rentable square foot for a 3 year lease.

A proposal for new construction would invariably result in a rate of $28 35.00 PRSF due to the high Tenant Allowance for this client agency, as well as the Level IV ISC security requirements. Land costs in Huntsville have escalated considerably and a minimum of 6 acres would be required to accommodate the building, parking, the 100-foot setback requirement and other infra-structure needs.

Other Factors Supporting Justification:

Not applicable.

List of Sources that Expressed an Interest in the Acquisition:

No other viable sources responded to any of the mediums utilized to solicit competition.

Statement of Actions to Overcome Barriers to Competition:

Every effort was made to solicit competition for this procurement, but in light of GSAs intention to enter into a new lease contract at the current location, the local brokers that I contacted indicated that they could not compete with relocation costs as a factor for comparison of offers. This is a valid cost comparison that could not be avoided with a current Lessor that wants to retain the tenant.





Prepared by:



_____________________________ ____________

Cheryl Miller Date

Realty Specialist (4PEA)

Contracting Officers Certification:

I hereby certify that the above information is accurate and complete to the best of my knowledge and hereby request approval to negotiate a new Lease Contract for the MDA-ARC.





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JUSTIFICATION FOR OTHER THAN FULL

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MDA ARC - Huntsville, AL



/s/

________________________ ____________

Cheryl Miller. Date

Contracting Officer (4PEA)





Concur:



/s/



_________________________________________

Lizzie A. Williams, Branch Chief (4PEA) Date





/s/

_________________________________________

Rosemary C. Phillips

Director (4PE), Realty Services Division Date



Concurrence:

I have reviewed the foregoing case to form, technical accuracy for non-competitive justification, and general accuracy of the supporting evidence. I concur with the Contracting Officers determination and approve it for legal sufficiency.



/s/

_______________________________________

Office of Regional Counsel (4L) Date





Concurrence:





/s/.

_______________________________________

Gary M. Mote

Contracting Activity

Competition Advocate (4AA) Date



Approved:



/s/

_______________________________________

Jimmy H. Bridgeman

Acting Regional Administrator (4A) Date