[Federal Register Volume 61, Number 30 (Tuesday, February 13, 1996)]
[Notices]
[Pages 5552-5554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3130]



=======================================================================
-----------------------------------------------------------------------

FEDERAL DEPOSIT INSURANCE CORPORATION


Policy Statement on Securing Leased Space

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Statement of policy.

-----------------------------------------------------------------------

SUMMARY: The FDIC has adopted a statement of policy which establishes 
the procedures that the FDIC will use when it leases space. The 
procedures have been designed to generate sufficient competition to 
ensure a good economic deal for the FDIC while providing a level 
playing field for all competitors. Most of the procedures contained in 
the policy have been in use for the past five years.

EFFECTIVE DATE: February 6, 1996.

FOR FURTHER INFORMATION CONTACT: Lynn T. Anderson, Chief, Leasing & 
Insurance Unit, Facilities Development Section, (202-942-3259), 
Division of Administration, 550 17th Street NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: The text of the policy statement follows: 

[[Page 5553]]


Policy Statement on Securing Leased Space

    I. Purpose. To establish:
    A. The procedures that the FDIC will follow when leasing space; and
    B. Official written guidance for FDIC personnel who have the 
responsibility of carrying out those procedures.
    II. Applicability. The procedures outlined in this policy statement 
will be used for all FDIC lease acquisitions over 10,000 square feet, 
except for those executed by the FDIC when acting as the conservator of 
a failed financial institution or when operating as a bridge bank.
    III. Policy. It is the policy of the FDIC to lease space which 
provides a safe, efficient and pleasant work environment for its 
employees, meets the programmatic needs of the organization and 
provides the FDIC with the best value in terms of cost and other 
factors. Further, the method of competition used to select space will 
be fair for all offerors that meet the basic criteria.
    IV. Procedures. Depending on whether the lease acquisition 
represents a new lease, a lease renewal or a lease extension, the 
process for securing leased space will be as follows:
    A. New Leases.
    (1) Define Geographic Boundaries. Once the general location for a 
new office has been determined or it is determined that an existing 
office should remain in a general metropolitan area, the FDIC will 
define the specific geographic boundaries.
    The FDIC will conduct a survey to determine the general market 
conditions, including current rental rates, vacancy rates and a listing 
of buildings with sufficient space to fulfill the FDIC's requirements. 
This information enables the FDIC to set the geographic area in which 
the space will be competed so that there are a reasonable number of 
buildings to ensure sufficient competition.
    The geographic boundaries are set based on the information in the 
market survey and the following criteria:
    (a) Access to other FDIC offices.
    (b) Access to other financial and/or regulatory agencies.
    (c) Access to public transportation (walking distance).
    (d) Access to major highways and airport.
    (e) Located in an area with a low crime rate in order to assure the 
safety of the FDIC's employees and visitors.
    (2) Advertise. Once geographic boundaries have been established, 
the FDIC will advertise in the local newspaper and the local commercial 
real estate paper to solicit letters of interest for space meeting the 
following minimum criteria:
    (a) The location must be within the described geographic 
boundaries; and
    (b) The building must meet the minimum space requirements.
    (3) Issue the Request For Proposal (RFP). Upon receipt of all 
letters of interest, the FDIC will call each of the interested parties 
to verify that they meet the minimum criteria, and if they are a 
broker, they will be required to submit evidence that they represent 
the owner of the particular building. RFP's which detail the basic 
space and facility requirements and include the FDIC's Standard Lease 
and the Leasing Representations and Certification forms will then be 
mailed to all offerors who meet the minimum criteria.
    (4) Review Responses. When the responses to the RFP are received, 
an initial review will be made to determine if all basic information is 
included, especially the Leasing Representations and Certifications 
Form. The information provided on this form is the basis for 
determining the fitness and integrity of each of the respondents and 
whether or not they can do business with the FDIC. Each offeror must 
submit the form correctly and completely prior to the request for Best 
and Final Offers (BAFO).
    Also, a preliminary financial analysis is made on each proposal.
    (5) Tour Buildings. The FDIC tours all buildings that submit a 
response to the RFP, accompanied by a licensed independent appraiser 
who is familiar with the local real estate market. The appraiser 
determines the designation of each building (Class A, B, C, etc.). 
During this tour, specific issues with each building are noted so that 
they can be addressed in the request for BAFO's.
    (6) Issue Request for BAFO's. The FDIC will compile a short list of 
potential landlords based on their proposals and the results of the 
tours. This list will be developed using the below listed items to 
qualify or disqualify landlords:
    (a) Did the ownership clear all conflict and fitness and integrity 
issues?
    (b) Did the space qualify for FDIC use? (Typically, the FDIC 
utilizes Class A space. In some cases, however, due to market 
conditions, the FDIC may consider Class B space.)
    (c) Are the economics of the proposal in the competitive range?
    (d) Is there enough contiguous space to meet the requirement?
    (e) Will the space be available within the required time frame?
    (f) Does the landlord offer the required flexibility for early 
termination or downsizing?
    It should be noted that when requests for BAFO's are issued, any 
offeror who has not provided the required fitness and integrity 
information on the Representations and Certifications Form will be 
disqualified from further consideration. Unless there is sufficient 
information to determine that the building owner has no conflicts, it 
will be assumed that one or more conflicts exist.
    (7) Review Best and Final Offers. An economic analysis including 
all cost factors and using the same criteria/assumptions will be 
performed for each proposal. To assure each proposal is judged fairly, 
and to take into consideration the time value of money, a net present 
value analysis is performed.
    The following items are factored into the financial analysis:
    (a) Cost per square foot.
    (b) Efficiency of the building in rentable vs. actual useable 
square feet.
    (c) Rent abatement or lease assumption offered (if any).
    (d) Cash concessions, incentives, and non-cash concessions, such as 
construction, materials, etc.
    (e) Estimated cost of architectural fees.
    (f) Estimated cost to build-out the space.
    (g) Estimated relocation costs for the office move.
    (h) Estimated cabling and telecommunication costs.
    (i) Estimated increases in operating expenses over the base year 
amount.
    (j) Estimated cost of parking, when applicable.
    The location of the office and the availability of public 
transportation will determine whether or not parking will be included 
in the financial analysis. If parking is included, participants in the 
RFP process will be advised in the initial RFP of the approximate 
number of spaces needed.
    A financial analysis is prepared for each building for which a BAFO 
has been received. In addition, the FDIC performs calculations from 
building plans to verify each offeror's stated usable square footage.
    (8) Award Lease. Based on the financial analysis of the BAFO's, the 
FDIC awards the lease to the offeror whose proposal is the most 
favorable to the FDIC, considering cost and other factors, after 
obtaining appropriate approvals in accordance with the Corporate 
Delegations of Authority.
    B. Lease Renewals. Normally, when the need for space will continue 
beyond the lease expiration date, the FDIC will begin the process of 
seeking competitive offers for the continuing requirement 

[[Page 5554]]
prior to lease expiration. However, if the lease contains an option to 
renew and the FDIC determines that it is in its best interest to remain 
at the same location, the option can be exercised provided the 
following information is collected and shows that remaining in the same 
location is the best alternative:
    (1) Market Survey. Contract with a local real estate professional 
to perform a market survey that will report on current vacancy rates, 
current asking rates, and the effective rates of recently completed 
comparable deals.
    (2) Proposal from Landlord. Solicit a proposal from the current 
landlord that addresses the criteria and needs of the FDIC.
    (3) Fitness and Integrity. Obtain a new Representations and 
Certifications form from the landlord to check fitness and integrity.
    (4) Cost Comparison. Compare the cost of staying at the current 
location under the renewal option to the estimated cost of relocating.
    If it appears that the best option is to remain at the current 
location after gathering and analyzing this data, the FDIC will attempt 
to renegotiate any terms of the current lease that caused problems 
during the initial lease term.
    If the economic terms of the proposed extension prove that it will 
be less expensive to stay in the existing space, and if there are no 
remaining problems with the terms of the lease, a lease amendment will 
be prepared and executed after appropriate approvals are obtained in 
accordance with the Corporate Delegations of Authority.
    C. Lease Extensions. A lease extension differs from a lease renewal 
because (1) There are no options to exercise and the FDIC needs to 
remain in the space beyond the lease expiration date, or (2) the 
existing option(s) are unacceptable and the FDIC needs to remain in the 
space beyond the lease expiration date.
    A lease extension is not meant to be a long-term solution to a 
space acquisition problem or to circumvent the competitive space 
acquisition process. It is meant to provide the FDIC additional time to 
determine its long-term requirements, which will then be included in a 
formal competition. Therefore, a lease extension will not be longer 
than three years.
    (1) Long-Term Lease Extensions. As with a lease renewal, the 
following requirements need to be fulfilled if the lease is to be 
extended for a period longer than six months:
    (a) Market Survey. Contract with a local real estate professional 
to perform a market survey that will report on current vacancy rates, 
current asking rates, and the effective rates of recently completed 
comparable deals.
    (b) Proposal from Landlord. Solicit a proposal from the current 
landlord that addresses the criteria and needs of the FDIC.
    (c) Fitness and Integrity. Obtain a new Representations and 
Certifications form from the landlord to check fitness and integrity.
    (d) Cost Comparison. Compare the cost of staying at the current 
location versus the estimated cost of relocating.
    (e) Negotiate. Renegotiate any terms of the lease that may have 
caused problems during the initial term.
    (f) Obtain Approvals and Execute Lease Amendment. Since a long-term 
lease extension could be considered a non-competitive procurement, the 
Board of Directors must approve all such extensions before the lease 
amendment is executed.
    (2) Short-Term Extensions. When the term of the proposed lease 
extension will be six months or less, the lease amendment can be 
executed after appropriate approvals are obtained in accordance with 
the Corporate Delegations of Authority.
    By order of the Board of Directors, dated at Washington, DC, this 
6th day of February, 1996.


Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-3130 Filed 2-12-96; 8:45 am]
BILLING CODE 6714-01-P