TITLE: B-400107; B-400107.2, Exec Plaza, LLC, August 1, 2008
BNUMBER: B-400107; B-400107.2
DATE: August 1, 2008
*****************************************************
B-400107; B-400107.2, Exec Plaza, LLC, August 1, 2008

   DOCUMENT FOR PUBLIC RELEASE

   The decision issued on the date below was subject to a GAO Protective
   Order. This redacted version has been approved for public release.

   Decision

   Matter of: Exec Plaza, LLC

   File: B-400107; B-400107.2

   Date: August 1, 2008

   Fernand A. Lavallee, Esq., Jeffery R. Keitelman, Esq., and Eric M.
   O'Neill, Esq., DLA Piper US LLP, for the protester.
   Edith Toms, Esq., and Elizabeth Johnson, Esq., General Services
   Administration, for the agency.
   Jonathan L. Kang, Esq., and Ralph O. White, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest challenging terms of a solicitation for lease of office space that
   apply only to the incumbent lessor is denied where the agency demonstrates
   that the requirements are reasonable, despite imposing unequal burdens on
   the protester.

   DECISION

   Exec Plaza, LLC (Exec) protests the terms of solicitation for offers (SFO)
   08-008, issued by the General Services Administration (GSA) for the lease
   of office space for the National Cancer Institute (NCI), a division of the
   National Institutes of Health (NIH). The protester contends that the
   solicitation is unduly restrictive of competition because it contains
   burdensome requirements that apply only to the incumbent lessors.

   We deny the protest.

   BACKGROUND

   The SFO seeks offers for the lease by GSA of approximately 574,164 square
   feet of office space in Rockville, MD, on behalf of NCI. GSA currently
   leases office space for NCI under multiple leases in four buildings in
   Rockville at 6120 and 6130 Executive Boulevard (these two buildings are
   owned by the protester and are collectively known as "Executive Plaza"),
   6116 Executive Boulevard, and 2115 East Jefferson Street. The office space
   for NCI is provided under [deleted] separate leases: [deleted] leases for
   Executive Plaza, [deleted] lease for 6116 Executive Boulevard, and
   [deleted] leases for 2115 East Jefferson Street. Contracting Officer (CO)
   Statement at 1. The current leases at Executive Plaza were entered into in
   April 1986 for a 10-year term, and were subsequently extended through
   non-competitive lease extensions. The leases are due to expire in
   September 2009.

   The SFO was issued on February 29, 2008. The SFO states that offers will
   be evaluated on the basis of four non-price technical factors, in
   descending order of importance: building characteristics, location, site
   parameters, and key personnel and past performance.[1] SFO sect. 2.3. The
   SFO states that the award will be made to the offeror "whose offer will be
   most advantageous to the Government and provides the best value to the
   Government." Id. In selecting the successful offer, the "technical
   evaluation factors, when combined, are significantly more important than
   price." Id. The SFO anticipates the award of a lease for a 10-year term
   beginning "anytime between August 2011 and February 2012." SFO sections
   1.5, 1.7. The solicitation requires the proposed office space to have a
   single owner, and be managed by a single management group. SFO sect. 1.4.

   Exec filed this protest on April 25. The agency subsequently received
   [deleted] offers by the April 28 closing date, including Exec. In its
   protest, Exec argued that the SFO was unduly restrictive of competition
   because it placed numerous requirements on Exec as an incumbent lessor
   that did not apply to other offerors. On May 28, the agency submitted its
   report on the protest. On June 6, Exec submitted its comments on the
   agency report, arguing that the agency's report did not provide a
   reasonable basis for the restrictive SFO provisions. On June 19, GSA
   submitted a supplemental agency report addressing the protester's initial
   arguments, as well as its comments on the initial agency report. As part
   of this supplemental report, GSA stated that it had issued amendment No. 2
   to the SFO, which revised the solicitation regarding certain of the
   requirements challenged in Exec's protest. GSA's June 19 supplemental
   report also contained a justification and approval (J&A) for extension of
   the Executive Plaza leases on a non-competitive basis. The J&A states that
   extension of the Executive Plaza leases is required to establish a common
   termination date with the other lessors of NCI office space, and to avoid
   costs that would be incurred by a short-term relocation of NCI prior to
   the new lease. Supp. Agency Report (AR), attach. 1, J&A for Lease
   Extension, at 2-3.

   Based on the revisions to the SFO, GSA argued that certain of Exec's
   arguments were rendered moot. In its comments on the agency's June 19
   supplemental report, as well as in other briefings to our Office, Exec
   argues that the changes in SFO Amendment No. 2 do not resolve its protest
   grounds, and that the solicitation remains unduly restrictive of
   competition.[2]

   The solicitation, as amended, contains general requirements that apply to
   all offerors, as well as specific provisions in SFO amendment No. 2 sect.
   1.20 that apply only to the incumbent lessors. The SFO requires offerors
   to propose office space as a "warm lit shell," meaning that the space must
   provide basic construction elements such that the base structure, common
   areas such as lobbies, stairwells and elevators, power, heating, cooling,
   and ventilation systems, garages, and restrooms.[3] SFO amend. 2 sect.
   1.9, 1.20. The warm lit shell does not include "tenant improvements,"
   i.e., completed interior office space required to meet the tenant agency's
   program of requirements (POR). SFO sect. 1.10. After award, the SFO
   anticipates that GSA and the lessor will negotiate construction of new
   tenant improvements to meet the POR, utilizing a tenant improvement
   allowance of $42.08 per square foot. SFO sect. 1.10. The tenant
   improvement allowance is an amount per square foot that a lessor must
   provide for construction of improvements for the tenant agency. Although
   the lessor must perform the work at the outset of the lease, the
   government pays the lessor the allowance amortized over a period set forth
   in the lease. SFO sect. 1.8(E); see also, 41 C.F.R. sect. 102-85.90-.100
   (2008).

   With respect to non-incumbent offerors who propose buildings with existing
   tenant improvements, the SFO states that these offerors must assume that
   the existing improvements will be demolished, as follows:

     Demolition. All required demolition is at the Lessor's expense and
     offers should be priced accordingly. Notwithstanding sect. 1.11(A)(4)
     [concerning credits towards the tenant improvement allowance], any
     offeror proposing an existing building with existing tenant improvements
     must assume that all existing improvements must be demolished in order
     to provide for the Government's new POR.

   SFO amend. 2 sect. 1.9(A)(15).

   With respect to incumbent offerors, the initial SFO explained that the
   "majority of this requirement is currently located at 6116, 6120 and 6130
   Executive Boulevard, Rockville, MD (the `Executive Boulevard
   Properties')," and that the incumbent lessors' buildings will require
   "modernization" to meet the requirements of the solicitation. SFO sect.
   1.20(A). Despite renovations over the course of approximately 23 years of
   tenancy, GSA states that the Executive Plaza buildings do not meet all of
   the current warm lit shell requirements, and that the interior space
   requires new tenant improvements to meet the anticipated POR for office
   configurations. CO Statement at 1-2. In particular, GSA states that
   renovation of Executive Plaza will be required to address the
   consolidation of the NCI office space from the numerous current locations
   to the consolidated requirements of the new lease. Id. at 2.

   The SFO also advised the incumbent offerors to "assume that all existing
   tenant improvements must be demolished in order to provide the
   Government's new POR." SFO amend. 2 sect. 1.20(A). Because the
   modernization of the incumbent offerors' properties will require all or
   portions of the building to be vacant from time to time during
   modernization, the incumbent offerors must also propose, at their own
   expense, swing space for the NCI staff, as follows:

     During modernization, the Lessor(s) of the Executive Boulevard
     Properties will be responsible for providing and paying for swing space
     (temporary alternate space) equal in size to the amount of space vacated
     from time to time in the Executive Boulevard Properties ("Swing Space").

   SFO sect. 1.20(B).

   Additionally, the incumbent-specific solicitation provisions state that
   "the Executive Boulevard Properties must meet all of the requirements of
   the SFO, including all security requirements outlined in Section 9.0 of
   this SFO." SFO amend. 2 sect. 1.20(G).

   DISCUSSION

   The protester argues that the SFO is unduly restrictive of competition
   because it contains numerous requirements which unreasonably place Exec at
   a competitive disadvantage.[4] As discussed in detail below, we address
   the protester's arguments that the terms of the SFO unreasonably: (1)
   require Exec to demolish its existing tenant improvements, (2) apply
   materially different and unequal security requirements to Exec, (3)
   require Exec to provide swing space during the renovation of Executive
   Plaza, and (4) require offerors to have single ownership of the proposed
   properties. We find no merit to any of the protester's arguments.[5]

   While a contracting agency has the discretion to determine its needs and
   the best method to accommodate them, those needs must be specified in a
   manner designed to achieve full and open competition. Mark Dunning Indus.,
   Inc., B-289378, Feb. 27, 2002, 2002 CPD para. 46 at 3. Solicitations may
   include restrictive requirements only to the extent they are necessary to
   satisfy the agency's legitimate needs. 41 U.S.C. sections 253a(a)(1)(A),
   (2)(B) (2000). Where a protester challenges a specification as unduly
   restrictive of competition, the procuring agency has the responsibility of
   establishing that the specification is reasonably necessary to meet the
   agency's needs. Chadwick-Helmuth Co., B-279621.2, Aug. 17, 1998, 98-2 CPD
   para. 44 at 3. A protester's mere disagreement with the agency's judgment
   concerning the agency's needs and how to accommodate them does not show
   that the agency's judgment is unreasonable. USA Fabrics, Inc., B-295737,
   B-295737.2, Apr. 19, 2005, 2005 CPD para. 82 at 5.

   As a general matter, we have previously addressed arguments by incumbent
   lessors that requirements in a solicitation that apply only to the lessor
   are unduly restrictive of competition. While we recognize that, in certain
   instances, incumbent lessors may face unique and unequal burdens as
   compared to non-incumbent offerors when solicitations require demolition
   and renovations, such disadvantages are not necessarily unreasonable or
   unduly restrictive of competition. See Paramount Group, Inc., B-298082,
   June 15, 2006, 2006 CPD para. 98 at 5.

   The government is also not required to perpetuate a competitive advantage
   that an offeror may enjoy as the result of its performance of the current,
   or a prior, government contract. Inventory Accounting Serv., B-286814,
   Feb. 7, 2001, 2001 CPD para. 37 at 4. Conversely, an agency is not
   required to neutralize a competitive advantage that a potential offeror
   may have by virtue of its own particular circumstances where the advantage
   does not result from unfair action on the part of the government. Military
   Waste Mgmt., Inc., B-294645.2, Jan. 13, 2005, 2005 CPD para. 13 at 4. As
   long as an agency reasonably identifies its needs and allows offerors the
   opportunity to meet those needs, the fact that an offeror may have an
   advantage based on its ability to more readily meet the government's
   needs, as compared to another offeror, does not mean that the solicitation
   is unduly restrictive of competition. See HG Props. A, L.P., B-280652,
   Nov. 2, 1998, 98-2 CPD para. 104 at 4-5.

   Demolition of Existing Tenant Improvements

   Exec argues that the requirement to demolish existing tenant improvements
   is unreasonable. The protester contends that (1) the SFO requires Exec,
   but not non-incumbent offerors, to demolish its existing tenant
   improvements, and (2) the demolition requirement is prejudicial to the
   protester's ability to compete for the lease because it imposes additional
   costs and does not allow Exec to take advantage of existing, high-value
   tenant improvements in Executive Plaza. The agency argues that the SFO
   demolition requirements apply equally to all offerors, and that the
   requirements are a reasonable way to meet the agency's requirements. For
   the reasons below, we conclude that the record does not support Exec's
   arguments, and that the demolition requirement is reasonable.

   The SFO, as amended, requires offerors to propose office space as a warm
   lit shell, without tenant improvements. The SFO states that offerors must
   assume that existing tenant improvements will need to be demolished. The
   demolition requirements are set forth in two provisions, one that applies
   generally to all offerors, and one that applies to Exec:

     Demolition. All required demolition is at the Lessor's expense and
     offers should be priced accordingly. Notwithstanding sect. 1.11(A)(4),
     any offeror proposing an existing building with existing tenant
     improvements must assume that all existing improvements must be
     demolished in order to provide for the Government's new POR.

   SFO amend. 2 sect. 1.9(A) (generally applicable requirements).

     In addition, all required demolition will be at the Executive Boulevard
     Properties expense and its offer should be priced accordingly.
     Notwithstanding sect. 1.11(A)(4), since the Executive Boulevard
     Properties will be proposing to offer an existing building with existing
     tenant improvements, the Executive Boulevard Properties must assume that
     all existing tenant improvements must be demolished in order to provide
     the Government's new POR.

   SFO amend. 2 sect. 1.20(A) (incumbent-specific requirements).

   First, the protester contends that because SFO sect. 1.20(A) specifically
   states that "the Executive Boulevard Properties must assume that all
   existing tenant improvements must be demolished," the incumbent offeror is
   being treated unequally from other offerors. As the agency notes, however,
   the demolition requirement clearly applies to all offerors with existing
   tenant improvements. Both the general and incumbent-specific requirements
   use identical language, stating that offerors must "assume that all
   existing improvements must be demolished in order to provide for the
   Government's new POR." SFO sect. 1.9(15), 1.20(A). Although the
   requirement regarding the incumbent lessors is duplicative, we find no
   basis to conclude that the requirements are unequal or impose different
   obligations on incumbent and non-incumbent offerors.

   Next, the protester argues that it is specifically disadvantaged by the
   requirement to demolish existing improvements. Exec states that it has
   recently made improvements at Executive Plaza which would need to be
   demolished under the terms of the SFO. Thus, the protester argues, the
   demolition requirements are prejudicial to its ability to compete for the
   lease because the existing improvements will be "wasted," and "therefore
   add an additional time and cost burden" on the protester. Protester's
   Comments, June 9, 2008, at 10.

   GSA argues that demolition of existing improvements is required to meet
   the warm lit shell requirements. The agency states that the warm lit shell
   approach "allows the tenant agency to design the interior spaces to its
   own unique needs and to increase its flexibility by not being constrained
   to existing space configurations." Supp. AR, July 9, 2008, at 6. GSA also
   states that the warm lit shell approach allows offerors to offer leased
   space on an equal basis, thereby enabling the agency to make a better
   comparison between offerors who are proposing based on uniform
   requirements. Id.

   In a similar protest, our Office determined that GSA's rationale for
   requiring a warm lit shell was reasonable in light of the agency's
   requirement to have flexibility in configuring its office space
   requirements and the need to have a common basis for comparison of
   offerors' proposed properties. Paramount Group, supra, at 4-5. We think
   the rationale in Paramount Group applies here as well, and therefore
   conclude that the agency's requirement for demolition of existing
   improvements is reasonable. Further, the record does not support the
   protester's argument that its existing improvements will be "wasted," as
   the SFO does not require offerors to demolish all improvements, but
   instead requires offerors to assume for purposes of their offers that
   demolition will be required.[6]

   Applicability of Security Requirements to Exec

   Next, the protester argues that the SFO imposes certain security
   requirements on Exec that do not apply to other offerors. GSA argues that
   SFO amendment No. 2 removed any potentially unique or prejudicial
   requirements that applied solely to Exec, and that all offerors must meet
   the same security requirements. We agree with the agency.

   The initial SFO stated that Executive Plaza would require modernization as
   follows:

     The Executive Boulevard Properties must undergo a complete modernization
     to meet the requirements of the SFO. This must include a new building
     fac,ade, new windows, and new mechanical and electrical systems. All
     security requirements outlined in Section 9.0 of this SFO must also be
     met.

   SFO sect. 1.20(G).

   This requirement was revised in SFO amendment No. 2 as follows:

     Requirements of Modernization: the Executive Boulevard Properties must
     meet all of the requirements of the SFO, including all security
     requirements outlined in Section 9.0 of this SFO.

   SFO amend. 2 at 1.

   The agency argues that the revised provision merely states that Executive
   Plaza must meet the requirements of SFO sect. 9.0, which apply equally to
   all other offerors. The agency states that Exec must meet the security
   requirements of SFO sect. 9, but is free to propose any manner of doing
   so, and is not necessarily required to follow the modernization
   requirements set forth in the initial SFO. Exec disagrees with this
   interpretation, arguing that the agency should have deleted the provision
   in its entirety. The protester argues that by specifically singling out
   Exec, the SFO "confirms that there are a different set of requirements for
   [Exec] than there are for all other offerors." Protester's Supp. Comments,
   June 30, 2008, at 16.

   We think that the protester's interpretation of the revised SFO provision
   is unreasonable. While we agree that amended SFO sect. 1.20(G) is
   duplicative in stating that Exec must meet the requirements of SFO sect.
   9.0, there is no basis to conclude that the protester is being treated any
   differently from other offerors. Specifically, there is no basis to
   conclude that SFO sect. 1.20(G) relieves other offerors from the
   requirements of SFO sect. 9.0, nor is there any basis to conclude that
   additional requirements apply to Exec. On this basis, we find no merit to
   the protester's argument.

   Swing Space Requirement

   Next, Exec argues that the swing space requirements are unduly restrictive
   of competition because they apply only to incumbent lessors, and create
   significant costs and burdens. The protester also argues that the
   requirement for swing space is unreasonable because, it argues, Exec may
   not be an incumbent lessor when the lease commences. The agency contends
   that the swing space requirements are reasonable in light of the unique
   status of the incumbent offeror, and that the agency expects to continue
   occupying Executive Plaza until the new lease begins. As discussed below,
   we find no merit to the protester's arguments.

   The SFO requires the incumbent lessors to propose swing space, i.e.,
   alternative office space, for NCI during the renovation of Executive
   Plaza--which the SFO assumes will be required to meet the solicitation
   requirements. SFO sect. 1.20(B). As relevant here, the swing space must be
   provided at Exec's expense, while the government will continue to pay rent
   on Executive Plaza during the relocation to the swing space. Id. para.
   (D). In a move unique to incumbent lessors, the government will pay for
   one move during the relocation of the office space--either to or from the
   swing space; other moves, including reorganization of office space within
   Executive Plaza during the renovation of those buildings, will be at
   Exec's expense. Id. para. (E).

   GSA acknowledges that the solicitation, by design, imposes a swing space
   requirement solely on incumbent offerors. The agency argues that this
   requirement is reasonable because the solicitation requires offerors to
   propose the office space as a warm lit shell, and because Executive Plaza
   will require renovation and demolition of existing tenant improvements. CO
   Statement at 5. As a consequence of the demolition and renovation, NCI
   employees must be moved during these events--to physically remove them
   from the space as it is being renovated, and also to minimize disruption
   to employees during the work. In essence, the agency argues that there is
   no way to conduct the necessary renovation work with the employees
   occupying the workplace. GSA further argues that the requirement for Exec
   to pay for the swing space and certain moving costs is reasonable because
   it allows the government to equalize the costs of incumbent and
   non-incumbent offerors. The agency states that if an incumbent lessor were
   not required to pay for swing space, the government would be subsidizing
   the lessor's costs by paying for both the current space and the swing
   space.

   We think that a swing space requirement is an example of a legitimate
   disadvantage faced by an incumbent lessor due to its circumstances, and is
   not a disadvantage caused by unfair action by the agency. See Paramount
   Group, supra. In this regard, requirements for swing space are the logical
   consequences an incumbent lessor, such as Exec, must face when its
   building must be renovated to meet new lease requirements. While we
   recognize that potential non-incumbent lessors may receive a competitive
   advantage by not having to address the need for swing space in their
   offers, we think an agency is not required to remove the advantage unless
   it results from preferential treatment or other improper actions by the
   government. See, e.g., id. at 5; Norvar Health Servs.--Protest and Recon.,
   B-286253.2 et al., Dec. 8, 2000, 2000 CPD para. 204 at 4-5.

   Next, Exec argues that the requirement for swing space is unreasonable
   because it is not clear that NCI will occupy the building after September
   2009, when the current leases for Executive Plaza are due to expire. In
   this regard, the SFO anticipates occupancy under the new lease between
   August 2011 and February 2012, after the expiration of the current lease.
   Thus, the protester argues, if NCI is not occupying Executive Plaza after
   2009, Exec will not need to propose swing space. The protester also argues
   that GSA has not clearly demonstrated that it will in fact use its
   authority to extend the leases.

   This argument raises two issues: (1) whether the agency has a reasonable
   basis for extending the Executive Plaza leases, and (2) whether the agency
   has the authority to extend the leases and will actually do so. First, GSA
   states that it intends to extend the Executive Plaza leases, as it would
   not be in the government's interest to move the NCI tenants from Executive
   Plaza and the other buildings into a new building, and then move the
   tenants again after the award of the new lease. Supp. AR, June 19, 2008,
   at 11. The agency states that the costs and efforts of such a new
   procurement, along with the tenant improvement and moving expenses cannot
   be justified for such a short period of time. Supp. AR, attach. 1, J&A for
   Lease Extension, at 3. On this record, we think that the agency's
   rationale for continuing its occupancy of Executive Plaza for this period
   is reasonable.

   Second, GSA states that it has the legal authority to extend its leases at
   Executive Plaza, either through negotiations with Exec, or condemnation
   proceedings. In this regard, the GSA supplement to the Federal Acquisition
   Regulation (GSAR) permits GSA to use other than competitive procedures to
   extend the terms of a lease on a short-term basis for various reasons,
   including the establishment of a common expiration date for multiple
   leases. See GSAR sect. 570.405(c). GSA also argues that, in the event it
   is unable to successfully negotiate lease extensions with Exec, the agency
   has the legal authority to obtain a leasehold interest in Executive Plaza
   through condemnation proceedings. See 40 U.S.C. sect. 581(c)(1) (stating
   that the Administrator of GSA may "acquire, by purchase, condemnation, or
   otherwise, real estate and interests in real estate."); 40 U.S.C. sect.
   3113 ("An officer of the Federal Government authorized to acquire real
   estate for the erection of a public building or for other public uses may
   acquire the real estate for the Government by condemnation, under judicial
   process, when the officer believes that it is necessary or advantageous to
   the Government to do so."). Exec does not dispute that GSA has the
   authority to negotiate an extension of the existing lease, award a new
   short-term lease, or to condemn the property. Instead, the protester
   argues that the agency has not taken the steps necessary in this process;
   for example, the protester notes that GSA has not yet sought to engage in
   negotiations regarding the extension of the leases.

   Our review of the record shows that GSA's requirement for swing space is
   based on its assumption that the Executive Plaza leases will be extended
   beyond September 2009. We think the record here also shows that GSA has
   the authority to extend the occupancy of NCI at Executive Plaza, either
   through negotiation or unilateral condemnation actions. Furthermore, the
   record shows that GSA has begun the process of extending the occupancy of
   Executive Plaza by executing a J&A for other than full and open
   competition. To the extent that the agency has not entered into
   negotiations with Exec or taken all of the necessary actions needed to
   extend NCI's occupancy at Executive Plaza, we accept GSA's representations
   that it will do so between now and the September 2009 expiration of the
   current leases. Thus, the record supports the agency's expectation that it
   will occupy Executive Plaza through the new lease occupancy date, and that
   the swing space will therefore be required if Executive is awarded the
   lease. In sum, we find no basis to conclude that the swing space
   requirement is unreasonable.[7]

   Single Ownership Requirement

   Finally, the protester argues that the requirement that the offered office
   space be owned by a single entity is unreasonable.[8] The agency contends
   that the requirement is a reasonable restriction that addresses concerns
   regarding the current lease arrangements for NCI office space, which
   involve [deleted] separate leases, and concerns regarding the future
   administration of the lease.

   As discussed above, the SFO states that"[t]he campus and/or buildings
   offered must be one ownership and one single management group." SFO sect.
   1.4. [Deleted]. The protester contends that because the office space will
   be under a single manager, the fact that there are two separate leases
   with the different owners will not affect the offerors' ability to meet
   the solicitation requirements or affect the government's interests.

   GSA argues that the requirement for single ownership is reasonable based
   on two concerns. First, the agency notes that the current lease situation
   for NCI involves [deleted] leases which results in "different rent rates,
   in multiple buildings, owned by multiple landlords and operated by
   multiple management companies." AR at 7. The agency states that it seeks
   to avoid similar problems with the anticipated lease here by ensuring that
   there will be a single owner and a single lease.

   Second, the agency argues that the negotiation and administration of
   multiple leases with multiple owners would be needlessly complicated
   because of the fact that the government would need to reach separate
   agreements with each lessor.[9] The agency also contends that the lease
   schedule may be put at risk by disputes between multiple owners, and that
   there is an increased risk of a delayed schedule because there will be
   multiple entities responsible for obtaining financing and permitting.
   Finally, the agency notes that the government's rights and remedies in the
   event of nonperformance or breach become more difficult to enforce when
   there are multiple lessors. For example, having multiple lessors could
   require additional litigation by the government to determine how to
   allocate responsibilities for delays or non-performance.

   We think that the agency's concerns regarding multiple owners for the
   proposed lease are reasonable. The agency explains that the numerous
   problems posed by multiple leases stem from entering into leases with
   multiple parties, each of whom would have separate legal rights and
   obligations. For this reason, we think that the agency's concern that
   single management will not address the problems posed by multiple owners
   is reasonable. In sum, we think that GSA's requirement for single
   ownership is reasonable.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] Each of these evaluation factors contains several subfactors which are
   not relevant to this protest.

   [2] Exec also contends that GSA's amendment to the SFO, announced in the
   agency's June 19, 2008 supplemental report on the protest, constituted
   corrective action which entitled the protester to a reimbursement of the
   costs of pursuing its initial protest. GSA does not agree that Exec is
   entitled to protest costs, arguing that the record does not show that the
   initial protest grounds were clearly meritorious. In this regard, our
   Office will recommend that a protester be reimbursed its protest costs
   only where, under the facts and circumstances of a given case, the agency
   unduly delayed taking corrective action in the face of a clearly
   meritorious protest, thereby causing a protester to expend unnecessary
   time and resources to make further use of the protest process in order to
   obtain relief. Advanced Envtl. Solutions, Inc.-Costs, B-296136.2, June 20,
   2005, 2005 CPD para. 121 at 2-3. We have docketed this request as a
   separate matter, and will address it separately.

   [3] "Warm lit shell" is a common industry term, referring to basic
   building structure elements. While the non-incumbent-specific SFO
   provisions refer to a "building shell," and the incumbent-specific
   provisions refer to a "warm lit shell," SFO sections 1.9, 1.20, GSA states
   that for purposes of the SFO, the terms "building shell" and "warm lit
   shell" are interchangeable. Supp. AR at 5. We think the record supports
   this view, as SFO sect. 1.20 states that the incumbent offeror must
   provide a "`warm lit shell' consistent with the definition of such in
   Section 1.9 of this SFO." SFO sect. 1.20(C).

   [4] As discussed above, NCI currently occupies four different buildings:
   the two buildings comprising Executive Plaza, owned by the protester, and
   the two owned by other offerors, 6116 Executive Plaza and 2115 East
   Jefferson Street. The SFO refers to the incumbent lessors collectively as
   the "Executive Boulevard Properties." The protester argues that the
   incumbent-specific provisions of the solicitation are unduly restrictive
   of competition; thus our discussion addresses these provisions as they
   apply to Exec.

   [5] The protester raises numerous collateral arguments in its protest that
   we do not address here. For example, the protester argues that the
   solicitation unreasonably requires incumbent offerors to submit a written
   modernization plan to demonstrate how the incumbent lessor "proposes to
   modernize the Executive Boulevard Properties in accordance with all of the
   requirements of this SFO, including the requirements set forth in this
   Section 1.20, with minimum disruption and interference with the ongoing
   operations of the NIH." SFO sect. 1.20(F). As discussed below, we conclude
   that the SFO requirements are reasonable regarding demolition of existing
   tenant improvements and renovation and swing space. In light of these
   requirements, we do not think that it is unreasonable for the incumbent to
   provide a written overview of its plans to achieve the required
   work--which other offerors will not need to perform. We have reviewed all
   of the protest grounds raised by the protester and find that none has
   merit.

   [6] We also find no merit to the protester's argument that the
   solicitation treats Exec differently from other offerors with regard to
   the ability to receive a "credit" for existing tenant improvements that
   the government may choose to accept, rather than require the lessor to
   demolish, during negotiations concerning the tenant improvement allowance.
   See SFO sections 1.9(A), 1.20(A), 1.11(A)(4). SFO amendment No. 2 imposes
   identical requirements on all offerors to assume, for purposes of pricing
   and structuring their offers, that demolition will be required. The SFO
   provisions for incumbent and non-incumbent offerors also use identical
   language to explain the process by which the lessor and the government may
   agree, after award, that certain existing improvements would be counted as
   a "credit" against the tenant improvement allowance. In this regard, the
   term "notwithstanding" clearly distinguishes the assumptions offerors must
   make in their proposals under SFO sections 1.9(A) and 1.20(A), from
   negotiations that will take place after award regarding the government's
   use of the tenant improvement allowance.

   [7] Additionally, the agency argues that a GSAR provision, which was
   incorporated into the SFO, permits offerors to submit alternative
   proposals to the swing space requirement. See 48 C.F.R. sect.
   552.270-1(c)(7). The protester argues that the ability to propose an
   alternative to the swing space requirement is not a valid justification
   for its restrictive effects, as submission of an alternative approach
   places an offeror at risk of being rejected as unacceptable. Exec also
   argues that this provision does not clearly allow it to propose
   alternatives to the swing space requirement. Because, as discussed above,
   we conclude the swing space requirement is reasonable, we need not address
   whether the ability to propose alternative solutions to the swing space
   requirement renders that requirement reasonable. Nonetheless, we agree
   with the agency that the solicitation permits incumbent offerors to
   propose alternatives to the swing space requirement. We note, however,
   that a recent decision by the Court of Federal Claims expressed the
   following view regarding the alternative proposal clause: "While GSAR
   552.270-1(c)(7) allows offerors to submit proposals that depart materially
   from solicitation requirements, the government has no obligation to
   consider them, or explain why it did not do so." Tim Mills Props., Inc. v.
   United States, Fed. Cl. No. 08-375C, July 15, 2008, at 14-15.

   [8] The protester initially argued that the requirement for single
   management was unduly restrictive of competition, but now concedes that
   the agency's requirement is reasonable. Protest at 11; Protester's
   Comments, June 9, 2008, at 5.

   [9] Exec notes that GSA's concerns are expressed with regard to multiple
   leases, rather than the SFO's requirement for a single owner. The
   protester does not explain, however, the relevance of this distinction to
   its protest. In this regard, the record shows that the protester's
   approach does not or will not involve either single ownership or a single
   lease.