Leasing

Negotiating With the GSA

GSA realty specialists identify issues open for discussion.

When it comes to lease negotiations with the General Services Administration, the federal government’s real estate division, commercial real estate professionals must be prepared. Offerors – those who respond to GSA’s solicitations for space – must read solicitation and lease documents thoroughly and talk with the lease contracting officer or national broker contractors to clarify any terms and conditions that are uncertain to them. To comply with requirements for fairness in competition mandated by the Competition in Contracting Act of 1984, GSA provides significant detail in the solicitation concerning the lease acquisition negotiation process.

Offers must be responsive and address all aspects of the government’s request for lease proposals or they will not be considered. In order to be responsive, offers must provide exactly what is requested by the solicitation, in the format prescribed, when it is required.

Offers also must be responsible. Most prospective contractors believe that they can be determined responsible just by bidding on a government solicitation. That is far from correct. The Federal Acquisition Regulation Subpart 9.104-1 (www.gsa.gov/far) defines the general standards that prospective contractors must meet. The standards include not only demonstration of financial responsibility, but also satisfactory past performance, a support organization, and demonstrated business integrity, just to name a few.

GSA’s negotiation team

  • identifies negotiation issues and objectives and offerors’ probable approach to negotiations;
  • assesses the bargaining strengths and weaknesses of each offeror;
  • establishes negotiation priorities, trade-offs, or concessions;
  • determines a negotiation approach and prepares a negotiation plan; and
  • prepares a negotiation agenda prior to the start of negotiations that gives the offeror an overview of what the government feels is important.

Issues such as price, schedule, technical requirements, contract type, and other lease terms are open to negotiation.The process is defined in FAR Subpart 15.3.

For more on leasing opportunities with the federal government, read “The GSA Way” in the March/April 2011 issue of Commercial Investment Real Estate.

Brenda Johnson, CCIM, CPM, and Ted Mahoney

GSA Leasing StepsGSA receives a request for space from government agency.GSA prepares solicitation containing square footage, minimum requirements for lease award, instructions on how to offer, and method of lease award.Market survey is conducted to identify locations that meet minimum requirements.The solicitation is issued to all interested offerors. (Register at www.fbo.gov to receive notifications.)A technical evaluation is conducted to determine whether an offer meets minimum requirements, and a price evaluation based on analysis of comparative rents is made on each cost element of the offer.Final Proposal Revisions are requested if government is not awarding on initial offers. FPRs must be in writing and received by date and time established for closing of negotiations.All FPRs are evaluated. The most responsive, responsible offer that represents the best value to the government is chosen for award.GSA returns lease signed by LCO to the successful offeror (now lessor).If required, construction build-out schedule is established; layouts and drawings are approved by GSA and lessor. GSA monitors construction, conducts final inspection, identifies punch list items.After GSA accepts space as ready for occupancy, rent commences as agreed in the lease.

Recommended

Commitment: The Cornerstone of Net Lease

Summer 2021

One of the most appealing aspects of net lease is its focus on the long term. Since net leases are traditionally longer, investors can rely on stable continuous income, and tenants can count on predictable leasing costs. 

Read More

Surviving Volatility

Spring 2021

The coronavirus pandemic turned the world upside down, so CRE professionals will need creative options when it comes to renegotiating leases.

Read More

Fitting Plans for the Future

May.June.19

Three new FASB accounting standards with wide-ranging consequences are taking effect: revenue from contracts with customers, lease accounting, and current expected credit losses. An they may require substantial implementation efforts from corporate accounting and finance departments.

Read More

Evaluating Creditworthiness

January.February.18

 

Read More