Justification and Approval – 2NE0072 Notice of Award of Lease

Notice Type: Justification and Approval

Posted Date: 11-FEB-14

Office Address: General Services Administration; Public Buildings Service (PBS); Rocky Mtn Region, Colorado Service Center Division (8PSC); One Denver Federal CenterBuilding 41 PO Box 25546 Denver CO 80225-0546

Subject: 2NE0072 Notice of Award of Lease

Classification Code: X - Lease or rental of facilities

Solicitation Number: None Specified - 2NE0072 Notice of Award of Lease

Contact: Russell Furry, Phone (303) 236-2581, Email [email protected] - Sheri DeMartino, Phone 816-823-1558, Fax 816-926-1140, Email [email protected] 6.302-1

Description: General Services Administration

Public Buildings Service (PBS)

Rocky Mtn Region, Colorado Service Center Division (8PSC)

U.S. General Services Administration Region 6, West Leasing Services

Justification for Other Than Full and Open Competition

LEASE NUMBER: GS-06P-31015

REXUS PROJECT: 2NE0072

AGENCY NAME: U.S. Citizenship and Immigration Services (CIS)

1. Identification and Description of Action Being Approved

The General Services Administration (GSA) currently leases approximately 152,548 rentable square feet (134,662 ABOA sf)* of office and related space at 850 S Street in Lincoln, Nebraska under lease GS-06P-39062 for The U.S. Citizenship and Immigration Service (CIS). Approval is requested to negotiate a superseding lease with the incumbent lessor without full and open competition for continued occupancy at this leased location. A superseding lease replaces the current lease prior to the expiration of the lease term (10/13/2014). This space is utilized as a major service center for the processing of applications for citizenship with an anticipated workload expansion in connection with the Deferred Action for Childhood Arrivals (DACA) as directed by the President in June 2012.

*ABOA is ANSI BOMA Office Area square feet and is the area where a tenant normally houses personnel, and/or furniture, for which a measurement is to be computed. Rentable square feet (rsf) is the ABOA plus a tenant's share of the building common areas, such as lobbies, hallways, and bathrooms.

2. Description of Supplies and Services REQUIRED

CIS submitted a request for a continuing need at 850 S Street in Lincoln, NE on September 19, 2011. To satisfy the agency requirements, the facility must be located within the city limits of Lincoln and within a walkable distance of public transportation and services such as restaurants and retailers.

On September 24, 2012, CIS requested the assistance of GSA in expediting the project to accommodate the rapid growth of DACA applications. The basic requirements did not change. The requested term is ten (10) years, six (6) years firm to commence July 1, 2014. The estimated annual rent will be $20.57/rsf for an annual cost of $3,137,912 and a total contract value of $28,553,935**. The delineated area remains the city limits of Lincoln, NE.

**The total contract value also factors an anticipated rental decrease in years 7-10 because of the amortization of tenant improvements.

Page Two

Justification for Other Than Full and Open Competition

CIS -- Lincoln, NE

3. Identification of Statutory Authority

41 U.S.C. 253 (c) (1) provides that an executive agency may use procedures other than full competitive procedures when the property or services needed by the executive agency are available from only one responsible source and no other property or services will satisfy the needs of the executive agency, and award to another source would result in substantial duplication of cost to the Government that is not expected to be recovered through competition.

4. Demonstration That the ACQUISITION RequireS Use of the Authority Cited

The General Services Acquisition Manual (GSAM) Part 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.

In accordance with GSAM 570.402-2, an advertisement was placed on FedBizOpps.gov on December 14, 2012 seeking 130,000 ABOA sf to 150,000 ABOA sf. Three Expressions of Interest (EOI) were received -- one from the incumbent and two EOI's from investors who could not currently fulfill the requirement (see item #5 below). Rent proposals were received from the incumbent lessor and from a broker representing one of the other property investors.

The attached cost benefit analysis provides additional details of projected costs for both relocation and staying in place. The cost of relocating CIS using the lowest cost quote exceeds the cost of remaining at 850 S Street in Lincoln. The aggregate cost savings to the Government is $2.48 million, and the present value cost savings is $3.42 million. Based on this analysis, the Government cannot expect to recover relocation and duplication costs through competition. Therefore, the Government intends to negotiate a superseding lease and remain in the current location

5. Description of Efforts to Solicit AS MANY Offers AS PRACTICAL

Research of office and industrial space in the Lincoln market was conducted in November 2012 by GSA appraisal staff and the GSA leasing specialist. Fully serviced rates range from $14.75/rsf to $22.00/rsf for Class A and B office space.

Page Three

Justification for Other Than Full and Open Competition

CIS -- Lincoln, NE

Estimated rates for industrial space range from $7.00./rsf to $9.50./rsf and assumes $5.50./rsf for operating expenses, real estate taxes, and insurance. As the majority of the building at 850 S Street is office space, the best comparable rates are the office rates above. Information sources included CoStar, other GSA leases, and local real estate brokers.

In addition, an advertisement was placed on FedBizOpps.gov on December 14, 2012 seeking 130,000 ABOA sf to 150,000 ABOA sf.

Three expressions of interest were received:

1. The incumbent lessor of property at 850 S Street, Lincoln, NE where GSA currently leases space through 10/13/2014. The current property meets all the criteria requested in the advertisement;

2. A broker representing the current ownership of an existing building located at 6400 Cornhusker Highway in Lincoln -- for the sale of the property to an investor (undisclosed) who proposes to buy the building and execute a lease to the government. This property appears to be deficient in the amount of space available, number of parking spaces, and proximity to public transportation routes. The broker has indicated a willingness to correct all three deficiencies.

3. An investor interested in purchasing an existing building located at 6400 Cornhusker Highway in Lincoln (same building as above). It is not clear

whether this investor is the same party the broker and building ownership is working with above. For confidentiality reasons, it was not appropriate to inform either party of the other. This party later withdrew interest;

An analysis of the property offered at 6400 Cornhusker Highway reveals that the proposed space does not meet the 130,000 ABOA sf minimum requirement. Measurements taken from a set of plans provided by the owner indicate the building is approximately 116,285 ABOA sf.

The broker representing the ownership of the building and the investment group has indicated a willingness to build an addition in order to meet the requirement. For comparison purposes in the cost benefit analysis above, an assumption was made to expand the building by the amount of space necessary to make the ABOA sf of both buildings equal.

Page Four

Justification for Other Than Full and Open Competition

CIS -- Lincoln, NE

6. Demonstration that the Anticipated Cost WILL BE Fair and Reasonable

The anticipated rental rate for 850 S Street is as follows based upon initial asking rates**:

Shell Rent $ 8.83 / rsf

Operating Rent $ 7.11 / rsf

TI's $ 4.63 / rsf

TOTAL $20.57 / rsf

Anticipated rental rate for 6400 Cornhusker Highway based upon initial asking rates**:

Shell Rent $ 8.32 / rsf

Operating Rent $ 4.50 / rsf

TI's $ 7.08 / rsf

TOTAL $19.90 / rsf

**Rates have been converted to rsf for market comparison purposes and were provided by the building owner/representative with the EOI received. The attached Cost Benefit Analysis uses ABOA sf.

Both building owners offer rates within acceptable market ranges as outlined in Section 5 above.

7. Description of the Market Survey Conducted

In November 2012, market research was conducted to identify potential locations for lease in Lincoln. The following properties were identified:

Name/Address Bldg Type (Class) Available Space Full Svc Rate ***

Sharp Bldg, 206 S 13th St Office (B) 96,579 rsf $14.55/rsf

US Bank Tower, 233 S 13th St Office (B) 21,579 rsf $15.63/rsf

Atrium, 1200 N Street Office (B) 31,607 rsf $14.00/rsf

1221 Tower, 1221 N St Office (B) 71,266 rsf $16.00-21.50/rsf

Gold's Bldg, 1033 O Street Office (B) 7,174 rsf $16.47/rsf

Wells Fargo Center, 1248 O Street Office (B) 31,026 rsf $17.50-18.50/rsf

Pine Lake Medical, 3901 Pine Lake Rd Office (B) 35,500 rsf $22.00/rsf

3700 NW 12th St Industrial 286,000 rsf $16.00/rsf (est)

6000 Fulton Ave Industrial 168,000 rsf $15.20/rsf (est)

1200 Upland Ave Industrial 160,930 rsf $13.25/rsf (est)

***The only properties with the amount of space capable of meeting the requirement are the industrial buildings. They are primarily basic warehouse space and will require significant modifications to the building shell to meet Government standards. The rental rates for these buildings are estimates and may not fully account for shell upgrades.

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

The Deferred Action for Childhood Arrivals is an Executive Order of the President. Since implementation of DACA, CIS has experienced significant

Page Five

Justification for Other Than Full and Open Competition

CIS -- Lincoln, NE

increases in the volume of applications. Although the mission and name of this agency has changed since lease inception in 1994, the building has been modified numerous times and adapted well for current use. CIS and the present lessor also have invested heavily in the building in recent months in an effort to keep pace with the growing workload.

9. LIST OF SOURCES THAT EXPRESSED INTEREST IN THIS ACQUISITION

Listed in Section 5 above.

10. STATEMENT OF ACTIONS TO OVERCOME BARRIERS TO COMPETITION

It is the policy of this office to follow all applicable acquisition regulations. In this instance, however, the cost benefit analysis indicates the cost of relocation and duplication cannot be recovered through competition.

11. CONTRACTING OFFICER CERTIFICATION

This justification for other than full and open competition for the acquisition of approximately 152,548 rentable square feet of office and related space for USCIS is accurate and complete to the best of my knowledge and belief.

It is in the best interest of the Government to award a superseding lease for all the reasons stated herein.

Date Russell Furry, Leasing Specialist / Contracting Officer

Page Six

Justification for Other Than Full and Open Competition

CIS -- Lincoln, NE

GSA Concurrences:

Date Mark Warnick, Regional Counsel

Date Cindy Jackson-Kiley, Branch Chief, West Leasing Services

Date Bill McGowan, Director, Leasing Division

Date Theresa Wells, Regional Procurement Officer

Date Tim Pfohl, Competition Advocate

Date Cy Houston, Acting Regional Commissioner

Link/URL: https://www.fbo.gov/notices/28cc688442a0b41cf59d4071ffeb4cb8