[Title 32 CFR 644.141]
[Code of Federal Regulations (annual edition) - July 1, 2003 Edition]
[Title 32 - NATIONAL DEFENSE]
[Subtitle A - Department of Defense (Continued)]
[Chapter V - DEPARTMENT OF THE ARMY (CONTINUED)]
[Subchapter J - REAL PROPERTY]
[Part 644 - REAL ESTATE HANDBOOK]
[Subpart C - Acquisition]
[Sec. 644.141 - Alterations and construction on leased real property.]
[From the U.S. Government Printing Office]


3242003-07-012002-07-01true644.141Sec. 644.141NATIONAL DEFENSEDepartment of Defense (Continued)DEPARTMENT OF THE ARMY (CONTINUED)REAL PROPERTYREAL ESTATE HANDBOOKAcquisition
Sec. 644.141  Alterations and construction on leased real property.

    (a) General. Division and District Engineers will be available to 
the military elements for consultation and review of requirements 
involving construction on leased land or in leased space. Detailed 
instructions are furnished in DOD Directives 4165.12, 4165.16, 4165.20, 
4270.24, 5160.58, 7040.2; DOD Instruction 5305.5; Army Regulations 140-
485, 405-10, 415-25, 415-35, 420-10. Section 644.135(b) covers the 
requirements of the Economy Act which are applicable to alterations and 
construction on leased real property. The work to be performed must be 
essential. Guidelines are furnished as follows:
    (1) The proposed alterations and improvements must be advantageous 
to the Government in terms of economy, efficiency, and, where 
applicable, to national security.
    (2) For office space, the cost should be less than the cost of other 
space that is available and which does not require alterations or 
improvements to any appreciable extent.
    (3) Due regard is to be given to the convenience of the public that 
is served and the maintenance and improvement of safe and healthful 
working conditions of employees.
    (4) Where the proposed temporary construction at a leased facility 
has an estimated cost equal to or in excess of the current market value 
of the property, the facts will be reported promptly to DAEN-REA-L.
    (b) Initial and Subsequent Alterations. (1) Initial alterations to 
facilities leased by the Corps are the responsibility of the appropriate 
Division or District Engineer.
    (2) Effort will be made to include all required alterations in the 
rental package with the lessor performing all of the work. Careful 
attention will be given to possible violations of the Economy Act. 
Payment for initial alterations may be in a lump sum or by the month 
with the rent, provided the provisions of the Economy Act are complied 
with and the alterations costs are stated separately in the file or in 
the voucher.
    (3) Alterations or improvements of any nature in GSA furnished space 
are the responsibility of GSA. Under certain circumstances, GSA may 
require a Certificate of Necessity in order to perform the required 
construction.
    (4) Although alterations and improvements subsequent to occupancy 
are not the responsibility of the Corps, the Division or District 
Engineer should always review subsequent alteration projects to 
determine whether or not the limitations of the Economy Act are 
applicable. See AR 415-34, AR 415-35, and AR 420-10 for procedures and 
instructions.
    (c) Army National Guard. No initial alterations regardless of cost 
will be made to properties leased for the Army National Guard without 
prior approval of the Chief, National Guard Bureau. (Funds will be made 
available by the National Guard Bureau.)
    (d) Air Force. All alterations to premises leased for the Department 
of the Air Force, including Air Force Reserve and Air National Guard 
Units, are the responsibility of that Department including the issuance 
of any Certificate of Necessity for Department of Air Force elements. 
The only exception is the leasing and modification of leased premises 
for recruiting facilities.
    (e) Recruiting Facilities. The Chief of Engineers, as the Department 
of Defense Executive Agent for recruiting facilities, is responsible for 
initial alterations for all recruiting facilities located on military 
reservations or leased by the Corps. This responsibility includes 
recruiting offices and recruiting main stations and detachments,

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whether single-service or collocated. However, as to recruiting 
facilities acquired by GSA, all alterations are the responsibility of 
GSA and processing is accomplished through the Division or District 
Engineer.
    (f) Permanent Construction Requirements. If permanent construction 
is to be placed on land, the Government must have fee title or acquire 
title to the land or a permanent easement must be secured, with the 
following exceptions:
    (1) Real property, including land or buildings, which the Government 
currently holds the right to reuse by exercise of the National Security 
Clause.
    (2) Real property, including land or buildings, which the Government 
holds the right to reuse by exercise of a National Emergency Use 
Provision.

Since such rights apply only during the period or periods of national 
emergency and are extinguished by the termination thereof, every effort 
will be made to negotiate a lease covering such property under terms 
that would provide the Government the right of continuous possession for 
a minimum of 25 years.
    (3) Real property required for installation of utility lines and 
necessary appurtenances thereto, provided a long-term easement or lease 
can be secured at a consideration of $1.00 per term or per annum.
    (4) Real property required for air bases, provided such property can 
be acquired by lease containing provisions for:
    (i) Right of continuous use by the Government under firm term or 
right of renewal for a minimum of 50 years.
    (ii) A rental consideration of $1.00 per term or per annum.
    (iii) Reserving to the Government, title to all improvements to be 
placed on the land and the right to dispose of such improvements by sale 
or abandonment.
    (iv) Waiver by the lessor of any and all claims for restoration of 
the leased premises.
    (v) Use of the property for ``Government purposes'' rather than for 
a specific military purpose.
    (5) Property required for facilities for the Reserve Components of 
the Armed Forces, provided such property can be acquired by lease 
containing provisions detailed in paragraph (f)(4) of this section. 
Whenever possible, the insertion in a lease of a provision restricting 
the use of land to a specific purpose will be avoided; use a term such 
as ``Government purposes''.
    (6) Property required for air defense sites, provided such property 
can be acquired by lease containing provisions in paragraphs (f)(4)(ii), 
(iii), and (iv) of this section and the right of continuous use by the 
Government under a firm term or right of renewal for as long as required 
for defense purposes.
    (7) Assistant Secretary of Defense (MRA&L) approval is required when 
leases for air bases, Reserve Components facilities, or air defense 
sites can be obtained containing some but not all of the above listed 
provisions. Such approval is also required for leases for all other 
types of installations upon which permanent construction is to be placed 
by the Government when leases can be obtained containing similar 
provisions. In all cases, it must be in the best interest of the 
Government to acquire a lesser interest than fee title.
    (8) Construction projects estimated to cost less than $25,000 will 
not be considered a permanent construction for purposes of the above 
policy.
    (g) GSA Reimbursement. Reimbursement to GSA for Standard Level User 
Charges (SLUC) and other costs incident to leasing will be in accordance 
with the applicable provisions of the Federal Property Management 
Regulation.
    (h) Nominal Rent Leases. (1) Where premises are occupied by the 
Government at a nominal rent or rent-free basis, any alterations, 
improvements, and repairs necessary for occupancy may be considered as a 
cost of occupancy, i.e., in lieu of rent, for each year of the rental 
term. However, the total cost of such alterations, improvements, and 
repairs, plus the nominal rental, during any year of the rental term may 
not exceed 15 percent of the fair market value at the date of the lease, 
unless the total cost plus nominal rental does not exceed $2,000 per 
annum.
    (2) When rental plus amounts to be spent by the Government for 
alterations, improvements, and repairs total more than $2,000 and more 
than 15

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percent of the fair market value of the premises at the date of the 
lease, a Certificate of Necessity is required.
    (3) A Certificate of Necessity is not required for the cost of 
installing equipment, apparatus, appliances, machinery, fixtures, 
movable partitions, etc., which are not intended to become an integral 
part of the building and which may be removed without injuring or 
defacing the item or the building. Such property is considered to be the 
property of the Government. The lease or a supplement thereto should 
provide for the installation and removal of such equipment, etc.
    (4) Under the limitations in 40 U.S.C. 278a, not more than 25 
percent of the net rental for the original lease period, if less than 
one year, may be expended before a lease is actually renewed. If the 
whole period, including renewals, is less than a year, not more than 25 
percent of the rent for such whole period may be expended for 
alterations, repairs, and improvements (20 Comp. Gen. 30; 29 Comp. Gen. 
299). Where a lease, entered into by the Government for an original term 
of less than a year, is renewed for the following fiscal year, the net 
rental for the first year of the rental term, as distinguished from the 
original term, is for consideration in the computation of the amount 
that may be paid under the 25 percent limitation, after the lease is 
actually renewed.
    (i) Items Not Within the Purview of the Economy Act. (1) The 
limitations in 40 U.S.C. 278a are not applicable to leases of unimproved 
land (38 Comp. Gen. 143).
    (2) Where fixtures, alterations, and improvements are of such 
characters to be of a temporary nature, and are not permanently attached 
to the realty so as to prevent removal thereof without destroying their 
usefulness or damaging them or the realty, they do not constitute 
alterations or improvements of the leased premises within the meaning of 
40 U.S.C. 278a and therefore do not fall within the 25 percent 
limitation of that Act. Title to such temporary fixtures, alterations, 
and improvements remains in the Government (18 Comp. Gen. 144; 20 Comp. 
Gen. 105).
    (3) Upon termination of leases, restoration of leased premises to 
the original condition is not considered an alteration within the 
purview of 40 U.S.C. 278a.
    (4) When the Government is required by the terms of the lease to 
maintain the leased premises, such maintenance, together with the cost 
of such improvements and alterations as may be made by the Government, 
may not exceed the 25 percent restriction of the Act.
    (5) Leaseholds acquired through condemnation proceedings are 
excluded from the purview of the Act of 30 June 1932, as amended (40 
U.S.C. 278a).
    (j) Architectural Barriers Act. The Architectural Barriers Act of 
1968 (Pub. L. 90-480), 82 Stat. 718, 142 U.S.C. 4151, et seq., as 
amended, requires that when Federal funding is used in the design, 
construction, or alteration of certain buildings or facilities, the 
buildings or facilities must be designed, constructed or altered to 
insure that physically handicapped persons will have ready access to, 
and use of, such buildings. In the Corps' leasing program, when Federal 
funds are used to make improvements to leased premises, it is necessary 
that the plans and specifications for the construction or alteration 
work be approved in accordance with guidelines published by the American 
National Standards Institute (ANSI), as implemented by DOD Construction 
Criteria Manual 4270.1-M, Section 5-1.6.