BNUMBER:  B-274676.2; B-274676.3
DATE:  January 8, 1997
TITLE:  1301 New York Avenue Associates

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DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a 
GAO Protective Order.  This version has been redacted or approved by 
the parties involved for public release.
Matter of:1301 New York Avenue Associates

File:     B-274676.2; B-274676.3

Date:January 8, 1997

Douglas L. Patin, Esq., Catherine R. Baumer, Esq., and Robert J. 
Symon, Esq., Spriggs & Hollingsworth, for the protester.
Richard J. Conway, Esq., and Karen Lau, Esq., Dickstein Shapiro Morin 
& Oshinsky, for Square 140 Associates, an intervenor.
Barry D. Segal, Esq., and Jeffrey M. Hysen, Esq., General Services 
Administration, for the agency.
Paula A. Williams, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that agency improperly evaluated the protester's best and 
final offer for the lease of office space is denied where the record 
shows that the agency's evaluation of the protester's rental rate that 
included required tenant alterations was reasonable notwithstanding 
the protester's expectation that its lower rate which excluded these 
alterations would be used for evaluation purposes.

DECISION

1301 New York Avenue Associates Limited Partnership protests the award 
of a contract to Square 140 Associates under solicitation for offers 
(SFO) No. 96-012, issued by the General Services Administration (GSA) 
for the lease of approximately 167,000 to 177,000 occupiable square 
feet (osf)[1] of office and related space in Washington, D.C. for use 
by the Department of Agriculture's Economic Research Service (ERS).  
The protester argues that the evaluation of its offer and that of the 
awardee was unreasonable in several specific areas.

We deny the protests.

The amended SFO solicited offers for a 5-year base period with a 
5-year renewal option and a 10-year firm lease term.  Among other 
things, the SFO stated that award would be made to the lowest-priced 
offeror whose proposed space conforms to the requirements of the SFO.  
It also stated that price evaluation would be based on the "net 
present value" of the annual rent per osf and explained how that 
figure would be calculated for price evaluation purposes.  In this 
regard, paragraph 1.9 of the SFO entitled, "Price Evaluation (Present 
Value)" reads, in pertinent part:

     "Evaluation of offers will be on the basis of the total annual 
     present value per occupiable square foot including any option 
     periods and concessions.  The Government will make independent 
     present value price evaluations on the five year firm term with 
     five year option and the ten year firm term  The government 
     reserves the right to make an award based upon either term."  
     (Emphasis in original.)
     
                  .          .          .         .        .
     
     "The Government will make present value price evaluation by 
reducing the prices offered to a total annual present value price per 
occupiable square foot, as follows:

     (D)  In the event the government competes an expiring lease for 
     the possibility of relocation, the cost per occupiable square 
     foot for relocation expenses shall be added to the total price 
     per occupiable square foot of all offers with the exception of 
     the offer submitted for the existing leased facility.  Such 
     relocation costs may include but are not limited to physical move 
     costs, telecommunication costs, alterations cost and the 
     estimated cost of agency disruption.  The sum of the total 
     present value price per occupiable square foot and the relocation 
     cost per occupiable square will be the basis for price evaluation 
     in determining if the Government shall relocate."  (Emphasis in 
     original).

Offers were received from nine firms in response to the SFO.  1301 New 
York Avenue, the incumbent lessor, offered the existing building which 
it has leased to GSA for 11 years on an "as is" basis, while Square 
140 offered a building located at 1800 M Street in Northwest 
Washington, D.C.  During discussions, each offeror was advised that 
the tenant agency's needs included kitchenettes (the SFO was silent on 
this feature).  The protester was specifically advised of this 
requirement as well as others that would  require modifications to the 
existing occupied space.  
Best and final offers (BAFOs) were received by June 21.  In its BAFO, 
1301 New York Avenue submitted two rates:  a base rental of [deleted], 
which did not include the required tenant alterations and [deleted] 
which did include the alterations which the protester identified in 
its cover letter as:
     "1.  The entire premises will be painted.

     "2.  All tenant space (not to include the public space) will 
     receive new carpet.

     "3.  1301 New York Avenue Associates will assume responsibility 
     for the repair and maintenance of all above building standard 
     items to include but not be limited to the air handling unit 
     located in the garage servicing the computer room, air 
     conditioning for the LAN units and the lift for the mail room. 
    
     "4.  1301 New York Avenue Associates will install seven 
     kitchenette  units. . . ."

In evaluating BAFOs, the contracting officer considered 1301 New York 
Avenue's pricing of [deleted] since this was the only rental rate 
under which the protester proposed to provide the tenant alterations 
GSA had identified as necessary for continued occupancy of that space.  
1301 New York Avenue's evaluated BAFO was priced at [deleted] (i.e., 
net present value per osf) for a 5-year base with a 5-year renewal 
option; Square 140's evaluated BAFO price was $20.36 for the same 
lease term.  After completing its review of BAFOs, the contracting 
officer decided to award a 5-year base with a 5-year renewal option 
lease to Square 140 whose offer was the lowest priced and met the 
requirements of the tenant agency.  Award was made to Square 140 on 
September 12.  The protester, debriefed by the agency on September 26, 
filed this protest with our Office on September 30.  We have been 
advised by the agency of its determination that it is in the 
government's best interest to continue performance of the contract.  

The crux of the protest is that GSA's evaluation of its BAFO and that 
of the awardee's was flawed.  Specifically, 1301 New York Avenue 
alleges that GSA failed to utilize a tenant alterations allowance 
contained in the amended SFO to evaluate the present value of Square 
140's rental rate.  In addition, the protester asserts that GSA acted 
unreasonably because its evaluation of 1301 New York Avenue's BAFO was 
improperly based on the higher BAFO rental rate (that included the 
costs for the required tenant alterations) which the protester 
believed would only be utilized by GSA in subsequent negotiations if 
1301 New York Avenue was selected for award.  The protester also 
challenges the agency's estimate of relocation expenses as arbitrary 
and unreasonable and alleges that the agency waived a 3-year  
termination option requirement for the awardee.  However, the 
protester concedes that its BAFO would be low only if GSA both 
improperly used the protester's higher rental rate in evaluating its 
BAFO and did not apply the correct tenant alterations allowance factor 
to the awardee's price.[2]     

We have no basis to question the agency's evaluation of the 
protester's BAFO using the rental rate of [deleted] which represents 
the cost for its offered space to satisfy the current needs of the 
tenant agency.[3]  As the record shows, the protester was asked during 
discussions to include in its rental rate the costs for certain 
alterations required to bring the offered space in line with ERS' 
current needs and which other offerors were also required to meet.[4]  
While the protester asserts that it expected GSA to use its lower BAFO 
rate of [deleted] for evaluation purposes and would use the higher 
rate only as a basis to negotiate the cost of the required alterations 
after award of the lease, the protester has not shown, nor is there 
any evidence, that this expectation was reasonable.  In fact, it is 
entirely inconsistent with the SFO evaluation scheme which envisioned 
evaluated rental rates that included the cost of any alterations to 
satisfy tenant needs.  In short, we find nothing in the record, 
including the hearing testimony, which shows that the agency acted 
improperly in evaluating 1301 New York Avenue's rental rate of 
[deleted].

As stated, the protester concedes that if GSA correctly used the 
higher rental rate contained in its BAFO, it is not low under any 
circumstances no matter how we resolve the remaining protest issues.  
Therefore, since we conclude that GSA properly considered the 
protester's BAFO rate of [deleted], we need not consider whether GSA's 
application of the tenant alterations allowance factor to the 
awardee's price was proper or whether GSA's estimate of relocation 
expenses was reasonable.[5]  See Alascom, Inc., B-227074 et al., Aug. 
10, 1987, 87-2 CPD  para.  144.   

The protests are denied.

Comptroller General
of the United States   

1."Occupiable space" is defined by the SFO to include only the portion 
of rentable space that is available for the tenant's personnel, 
equipment, and furnishings. 

2. In addition to the issues above, the protester has also alleged, in 
a supplemental protest filing, that Square 140 breached a restrictive 
covenant in another lease agreement between Square 140 and one of its 
tenants in the 1800 M Street building  which prevents GSA from 
occupying the space at 1800 M Street.  In response to this allegation, 
GSA and Square 140 both seek to have this issue dismissed asserting 
that the issue is a matter of contract administration and is the 
subject of litigation before a court of competent jurisdiction.  We 
agree that, to the extent this matter affects this subject lease, it 
relates to contract performance which is a matter of contract 
administration not for review by our Office.  Bid Protest Regulations,  sec.  
21.5(a), 61 Fed. Reg. 39039, 39042 (1996) (to be codified at 4 C.F.R.  sec.  
21.5(a)).     

3. A hearing was conducted for the purpose of receiving testimony from 
GSA's contracting officer, realty specialist, and a representative of 
1301 New York Avenue.  See Bid Protest Regulations,  sec.  21.7, 61 Fed. 
Reg. 39039, 39042 (1996) (to be codified at 4 C.F.R.  sec.  21.7)).

4. Any challenge to the agency's request to price the cost for these 
tenant alterations which the protester describes as "above standard 
tenant alterations," is now untimely.  Since the request was made 
during discussions with 1301 New York Avenue, challenges to this 
requirement had to be filed prior to the time set for receipt of 
BAFOs.  Bid Protest Regulations,  sec.  21.2(a)(1), 61 Fed. Reg. 39039, 
39040 (1996) (to be codified at 4 C.F.R.  sec.  21.2(a)(1)).   

5. The protester also maintains that Square 140's offer failed to 
include a required    3-year termination option.  This allegation is 
simply incorrect.  Although Attachment 2 of the SFO does include 
language in block 10 that reads, in pertinent part, "[lease] firm with 
termination is for a five year firm term, but with the government 
having the right to terminate the lease any time after 36 months . . . 
" the SFO, when read as a whole and in a manner that gives effect to 
all its provisions, simply does not require offerors to submit a 
rental rate for a lease with a 3-year termination option.  Indeed, as 
quoted above, in paragraph 1.9 of the SFO, GSA advised offerors that 
it intended to perform a price evaluation only on the basis of a "five 
year firm term with five year option and the ten year firm term" and 
specifically reserved the right to make award "based upon either 
term."  That being so, we find the protester's contention that the 
agency improperly awarded the lease to Square 140 without the right of 
termination option is premised on an unreasonable reading of the SFO.