Lease 75,000 RSF warehouse space in Charleston, SC

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION LEASE NUMBER: GS-04P-LSC60050 PROJECT NUMBER: 1SC2011 Agency Name: U.S. Air Force 1. IDENTIFICATION AND DESCRIPTION OF ACTION BEING APPROVED. The General Services Administration currently leases 75,000 Rentable Square Feet (RSF) with a Common Area Factor (CAF) of 0, yielding 75,000 ANSI BOMA Warehouse Area square feet (ABOA) at 3120 Ashley Phosphate Road, North Charleston, SC 29418 under lease number GS-04P-LSC47134 for the United States Air Force. The current lease expires July 14, 2014. Approval is requested to negotiate a succeeding lease with the incumbent Lessor without full and open competition for continued occupancy at this leased location. 2. DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED. The U.S. Air Force submitted a continuing needs letter and SF-81 Request for Space on July 11, 2013 to remain in their currently leased 75,000 (RSF) rentable square feet of warehouse space. To satisfy the U.S. Air Force mission requirements, the facility must be proximate to the Charleston Air Force Base and the Charleston International Airport. This warehouse facility is in support of the U.S. Air Force Consolidated War Readiness Material Storage and Deployment Center which is organized, trained, and equipped for prompt sustained defensive and offensive air operations in accordance with integrated joint mobilization plans. This requirement is for 75,000 RSF of space with a Common Area Factor (CAF) of 1.0 CAF yielding 75,000 ABOASF for a one (1) year firm term with four (4) automatic renewals commencing July 15, 2014. GSA is pursuing a five (5) year lease, one (1) year firm term with early termination rights after the first year. The estimated annual cost of this lease is $7.30 per RSF (full service) based on quotes obtained through September 25, 2013 CoStar and LoopNet market research, historic rent data, and preliminary discussions with the Lessor for an annual cost of $546,969.00. Bullseye concluded on September 30, 2013 there was insufficient market data available on Charleston, SC warehouse facilities; therefore, they excluded this assessment. The first year and a total contract value of $2,652,977.28 (gross aggregate contract value from the CBA spreadsheet) incorporating expected rental adjustments over the term of the lease. The delineated area is North Charleston, SC (map and written description attached). 3. IDENTIFICATION OF STATUTORY AUTHORITY 41 U.S.C. 253(c) (1): Only one responsible source and no other supplies or services will satisfy agency requirements. 4. DEMONSTRATION THAT THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY CITED. GSAM 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. Award to other than the current Lessor would require relocation of the entire requirement and would cause the U.S. Air Force to incur move and replication costs that would not be recovered through competition. The United States Air Force, Consolidated War Readiness Material Storage and Deployment Center supports the U.S. Air Force which includes aviation forces both combat and service not otherwise assigned. It is organized, trained, and equipped primarily for prompt and sustained offensive and defensive air operations. The Air Force is responsible for the preparation of the air forces necessary for the effective prosecution of war except as otherwise assigned and, in accordance with integrated joint mobilization plans, for the expansion of the peacetime components of the Air Force to meet the needs of war. The agency requested a one (1) year lease with four (4) one (1) year automatic renewals. This short term request is with respect to the uncertainty of future budget reductions within the Department of Defense and the USAF. In the interest of negotiating leverage, helping the agency with funding, and reduction of administration processes, GSA recommends a five (5) year lease with early termination rights after the 1st year and 120 days written notice. USAF will be responsible for reimbursement of any unamortized Tenant Improvement Allowance (if any). USAF is requesting only HVAC upgrade for entire facility and roof replacement/repair. Regardless, roof condition should be a Lessor responsibility and not a government expense. USAF expressed they may provide RWA funding for HVAC upgrade. Cost Benefit Analysis REDACTED An ad was placed for Expressions of Interest in FedBizOps. There were several inquiries and initial EOI's; however, upon follow-up phone conversations and personal meetings with potential offerors, EOI's were withdrawn due to the short (1 year) firm term duration. Contracting Officer conducted a hypothetical Cost Benefit Analysis using the lowest priced per SF warehouse facility that could provide minimum required square footage as if owner submitted a potential offer. The cost of relocating U.S. Air Force using the low cost quote significantly exceeds the cost of remaining at 3120 Ashley Phosphate Road, North Charleston, SC. The Gross Aggregate Savings to the Government is $1,120,099.15 [from the CBA workbook Summary page attached]. Based on this cost-benefit analysis, the Government cannot expect to recover relocation and duplication costs through competition. 5. DESCRIPTION OF EFFORTS TO SOLICIT AS MANY OFFERS AS PRACTICAL. The incumbent Lessor's initial expression of interest indicated that the rate would be $8.00 per ABOASF/RSF. $5.47 Shell plus $2.03 Operating Cost = $8.00. Shell Rent includes Taxes and Insurance of $0.56 / ABOASF. GSA placed an advertisement conforming to GSAM 570.402-2 on the Federal Business Opportunities Web site (fedbizopps.gov) on October 22, 2013 with a closing deadline date of November 14, 2013. There were two (2) Expressions of Interest (EOIs) in response to the advertisement posted other than the incumbent. One of the two was outside the delineated area. The other EOI was new construction and could not deliver by the required date. Upon further communication (personal and phone), the potential offeror(s) of the 2 EOI's withdrew interest due the short 1 year lease term duration. The lowest cost quoted rate of $5.53 per RSF used in the Cost Benefit Analysis was derived from CoStar and LoopNet market research provided by the Bullseye Team on September 25, 2013. GSA received only one (1) Expression of Interest as follows: Incumbent only. 3120 Ashley Phosphate Road, North Charleston, SC Shell Rent: $5.47 (includes taxes and insurance of $0.56 / ABOASF) Operating Cost: $2.03 / ABOASF 6. DESCRIPTION OF MARKET RESEARCH CONDUCTED. On September 30, 2013 The Bullseye Team (GSA Central Office) issued an "insufficient market data" email (attached), but provided CoStar and LoopNet data to assist with the assessment. Insufficient Market Data email excluded this procurement from an assessment. The CoStar and LoopNet market research identified five (5) potentially acceptable locations (plus the incumbent) that might meet the agency's needs within the delineated area. However, none of the owners of the potentially available locations identified in the market research expressed interest in the procurement due to their anticipated move and replication costs recovery for a lease with early termination rights after the 1st year. The following five (5) locations were identified in CoStar, but were non-responsive: Address Asking Full Service Rental Rate 2550 W 5th North Street, Summerville, SC $3.50 / RSF Shell plus taxes, insurance, and operating costs TBD International Center II, 1301 Charleston Regional Parkway, Charleston, SC 29492 $4.40 / RSF Shell plus taxes, insurance, and operating costs TBD Crosspoint I, 4249 Crosspoint Drive, Palmetto Commerce Park, Ladson, SC 29456 $5.75 / RSF Shell plus taxes, insurance, and operating costs TBD 4500 Leeds Avenue, North Charleston, SC 29405 $4.80 / RSF Shell only - Operating Costs TBD North Rhett Commerce Park, 5801 N. Rhett Avenue, Bldg 1, Charleston, SC 29410 $4.25 / RSF Shell plus taxes, insurance, and operating costs Figure 1: Market Research Comparables 7. OTHER FACTS SUPPORTING USE OF OTHER THAN FULL AND OPEN COMPETITION. Not applicable. 8. LIST OF SOURCES THAT EXPRESSED INTEREST IN THE ACQUISITION. Incumbent only. 3120 Ashley Phosphate Road, North Charleston, SC 9. STATEMENT OF ACTIONS TO OVERCOME BARRIERS TO COMPETITION. Not applicable. 10. TECHNICAL REQUIREMENTS PERSONNEL CERTIFICATION I certify that the supporting space requirements data used to form the basis of this Justification is complete and accurate to the best of my knowledge and belief. 11. CONTRACTING OFFICER CERTIFICATION AND DETERMINATION THAT THE ANTICIPATED COST WILL BE FAIR AND REASONABLE. Recent market research conducted by GSA in Charleston, SC, for comparable properties showed that the rental rate within the delineated area for those properties ranges from $3.38 to $5.75 per RSF Shell Rate. The cost quoted to the Government by the current Lessor, at the existing location, is $7.50 per RSF and ABOASF (warehouse space). Shell: $5.47 + Op Cost: $2.03 per RSF. Additionally, it is anticipated that the Government will save approximately $574,075 in duplication (move and replication) costs which it could not reasonably expect to recover through full and open competition, as demonstrated by the cost benefit analysis in section 4 of this document. Therefore, as the rate quoted by the existing Lessor falls within the market range found through the market research and due to the fact that the Government will save approximately $1,120,099 in duplication costs which it could not reasonably expect to recover through full and open competition, the Contracting Officer determines that the anticipated cost to the Government of $7.50 per ABOASF/RSF for the entire requirement is fair and reasonable. Concurrence: