General Services Administration: Secret Service Uniformed Division Lease
(Letter Report, 09/07/1999, GAO/GGD-99-153).

Pursuant to a congressional request, GAO provided information on new
leased space acquired for the Secret Service's Uniformed Division (SSUD)
at 1111 18th Street, N.W., Washington, D.C., by the Public Buildings
Service (PBS).

GAO noted that: (1) a lack of adequate internal controls over the
leasing process at the General Services Administration's (GSA) National
Capital Region (NCR) resulted in PBS' awarding a lease for SSUD on
August 5, 1998, above the prospectus dollar threshold without first
preparing and submitting a prospectus for the lease to GSA's Senate and
House authorizing committees; (2) there was confusion about the costs
that were to be considered in determining whether a prospectus was
needed; (3) specific written guidance on how to calculate the cost did
not exist; (4) although the space requirements increased about 40
percent--from about 50,000 square feet to about 70,000 square
feet--during the acquisition process, procedures did not call for the
revalidation of the decision that a prospectus was not needed when the
space requirements or market rental rates used to make the decision
changed during the acquisition process; (5) after a congressional
staffer asked questions about the lease on August 31, 1998, NCR
officials reviewed the award of the lease and determined that a
prospectus should have been prepared and submitted to GSA's Senate and
House authorizing committees as provided for in section 7(a) of the
Public Buildings Act of 1959, as amended, 40 U.S.C. 606(a), and PBS'
policy and procedures; (6) subsequently, NCR has instituted a new policy
requiring its Portfolio Management Division to verify all leases before
they are awarded; and (7) still, GSA has not developed specific guidance
on how to calculate the cost to be used to determine whether a
prospectus should be prepared, nor has GSA determined that it needs to
revalidate prospectus decisions when space requirements or market rental
rates change.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-99-153
     TITLE:  General Services Administration: Secret Service Uniformed
	     Division Lease
      DATE:  09/07/1999
   SUBJECT:  Cost effectiveness analysis
	     Real estate leases
	     Internal controls
	     Federal procurement policy
	     Secret service
	     Rental rates
	     Federal office buildings
IDENTIFIER:  Federal Buildings Fund

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    United States General Accounting Office GAO               Report
    to Congressional Requester House of Representatives September 1999
    GENERAL SERVICES ADMINISTRATION Secret Service Uniformed Division
    Lease GAO/GGD-99-153 United States General Accounting Office
    General Government Division Washington, D.C.  20548 B-283063
    September 7, 1999 The Honorable Bob Franks, Chairman Subcommittee
    on Economic Development, Public Buildings, Hazardous Materials and
    Pipeline Transportation Committee on Transportation and
    Infrastructure House of Representatives Dear Mr. Chairman: This
    report responds to your request concerning new leased space
    acquired for the Secret Service's Uniformed Division (SSUD) at
    1111 18th Street, N.W., Washington, D.C., by the Public Buildings
    Service (PBS) of the General Services Administration (GSA).
    Specifically, you asked us to assess the circumstances that
    resulted in this lease being awarded without PBS' first submitting
    a prospectus for the project to GSA's Senate and House authorizing
    committees, as provided for by law and PBS' policy and procedures.
    Appendix I provides a chronology of events in the acquisition of
    the SSUD lease. A lack of adequate internal controls over the
    leasing process at GSA's Results in Brief
    National Capital Region (NCR) resulted in PBS' awarding a lease
    for SSUD on August 5, 1998, above the prospectus dollar threshold
    without first preparing and submitting a prospectus for the lease
    to GSA's Senate and House authorizing committees. First, there was
    confusion about the costs that were to be considered in
    determining whether a prospectus was needed. Specific written
    guidance on how to calculate the cost did not exist. Second,
    although the space requirements increased about 40 percent from
    about 50,000 square feet to about 70,000 square feet during the
    acquisition process, procedures did not call for the revalidation
    of the decision that a prospectus was not needed when the space
    requirements and/or market rental rates used to make the decision
    changed during the acquisition process. After a congressional
    staffer asked questions about the lease on August 31, 1998, NCR
    officials reviewed the award of the lease and determined that a
    prospectus should have been prepared and submitted to GSA's Senate
    and House authorizing committees as provided for in section 7(a)
    of the Public Buildings Act of 1959, as amended, 40 U.S.C. 606(a),
    and PBS' policy and procedures. Subsequently, NCR has instituted a
    new policy requiring its Page 1                       GAO/GGD-99-
    153 Secret Service Uniformed Division Lease B-283063 Portfolio
    Management Division to verify all leases before they are awarded.
    Still, GSA has not developed specific guidance on how to calculate
    the cost to be used to determine whether a prospectus should be
    prepared, nor has GSA determined that it needs to revalidate
    prospectus decisions when space requirements or market rental
    rates change. We believe that these internal control weaknesses
    need to be corrected and are recommending that actions be taken to
    address these issues. On August 5, 1998, PBS entered into a lease
    with Jack I. Bender & Sons, Background    General Partnership to
    provide lease space and parking for SSUD at an annual net rent of
    $2,129,461. This figure exceeded the prospectus threshold of $1.93
    million for fiscal year 2000, the year in which occupancy is to
    commence. A prospectus was not submitted to GSA's Senate and House
    authorizing committees at the time the lease was signed. As the
    federal government's primary real estate agent, GSA, through PBS,
    provides space for agencies in federally owned buildings or by
    leasing space in privately owned buildings. NCR is responsible for
    providing space for agencies in the Washington, D.C., metropolitan
    area. Pursuant to section 210(h)(1) of the Federal Property and
    Administrative Services Act of 1949, as amended, 40 U.S.C. 490(h),
    the Administrator of GSA is authorized to enter into lease
    agreements for periods of up to 20 years on such terms as the
    Administrator deems to be in the interest of the United States and
    necessary for the accommodation of federal agencies. Section 7(a)
    of the Public Buildings Act of 1959, as amended, 40 U.S.C. 606(a),
    among other things provides for a detailed project description,
    called a prospectus, containing a project cost estimate and
    justification to be submitted to GSA's Senate and House
    authorizing committees. A prospectus is (1) called for if the
    average annual rental of a lease is expected to exceed the
    prospectus threshold, as specified in the statute, and (2)
    adjusted by GSA annually, as authorized by the statute, to reflect
    changes in costs during the preceding year.1 Annually, the PBS
    National Office issues a Capital Investment and Leasing Program
    call asking all GSA regional offices to submit their prospectus-
    level projects. Each year the National Office provides the regions
    with the prospectus-level threshold and general guidance on
    preparing prospectuses. The National Office reviews the
    prospectuses submitted by the regions and the prospectuses that it
    approves are then consolidated 1The actual prospectus thresholds
    for fiscal years 1998, 1999, and 2000 were $1.81 million, $1.89
    million, and $1.93 million, respectively. Page 2
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063
    into GSA's Capital Improvement and Leasing Program and submitted
    to the Office of Management and Budget (OMB) for approval. Once
    OMB approves the program, it is sent to GSA's authorizing
    committees. PBS stated that its policy since 1972 has been not to
    enter into any lease agreement if the annual rental exceeds the
    prospectus threshold unless the authorizing committees have
    approved a prospectus. At your request, we assessed the
    circumstances surrounding the award of Scope and      the SSUD
    lease. As agreed, we did not evaluate NCR's overall process for
    Methodology    identifying prospectus-level leases or for
    preparing prospectuses. To determine the circumstances surrounding
    the award of the lease for SSUD, we spoke with the cognizant NCR
    officials in the Regional Counsel's Office, Portfolio Management
    Division, and Property Acquisition and Realty Services Division;
    reviewed GSA's leasing policies and procedures; and discussed
    policy issues and guidance provided to regional offices with
    officials in PBS. We also spoke with two former NCR staffers-the
    original contracting officer for the SSUD lease and an attorney
    from the Regional Counsel's Office-since both played significant
    roles in this acquisition. We reviewed the contract file for the
    lease to determine the acquisition process used and the critical
    decision points. Only limited documentation was available to
    support some of what we considered to be the critical decisions,
    such as the initial decision that this action was not a
    prospectus- level acquisition. Thus, some of the information being
    provided in this report is based on what current and former GSA
    officials remembered about events that occurred up to 3 years ago.
    We also obtained information on actions taken by NCR to help
    prevent prospectus-level leases from being awarded without a
    prospectus being prepared. Further, we obtained and reviewed GSA's
    policies and guidance related to the preparation of lease
    prospectuses, and we verified that the rental-of- space account in
    the Federal Buildings Fund (FBF) had sufficient appropriated funds
    to cover the obligation for the SSUD lease. We discussed the
    specifics of the SSUD lease with an official in PBS' Office of
    Portfolio Management. We also contacted regional officials in 9 of
    GSA's 10 other regions to determine whether they had guidance in
    place specifying how to calculate the lease costs to be used to
    determine if a prospectus is needed for an acquisition, and
    whether the decision that a lease is not prospectus-level is
    revalidated when space requirements or market rental rates change.
    We were unable to contact the appropriate official in the
    remaining GSA region in time for inclusion in this report. Page 3
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063 We
    did our work between March and July, 1999, in accordance with
    generally accepted government auditing standards. On July 26,
    1999, we requested comments on a draft of this report from the
    Administrator of GSA. GSA's written comments are discussed near
    the end of this letter. In NCR, it is initially the Portfolio
    Management Division's responsibility to The Lease Was
    review expiring leases to identify new leases that might be above
    the Awarded Without        prospectus threshold and to prepare the
    prospectuses for those leases. In the case of the SSUD lease,
    there was no indication that Portfolio Adequate Evaluation
    Management identified the lease as potentially needing a
    prospectus. of the Need for a Prospectus             According to
    the contracting officer, who has since left GSA, even though
    Portfolio Management had not identified this lease as needing a
    prospectus, when she began working on the SSUD lease in April
    1996, she confirmed her expectation that the lease would be below
    the prospectus threshold. Her estimate of the lease costs was made
    by multiplying the expected market rental rate ($29 to $30 per
    square foot) by the estimated space requirement (50,000 square
    feet). This calculation resulted in an estimated total rent of
    $1.45 million to $1.5 million, which was below the fiscal year
    1998 prospectus threshold initially being used for this lease of
    $1.81 million. Therefore, she went forward with the acquisition
    process as a nonprospectus-level lease. In the contract file, we
    found documents showing that early in the acquisition process
    there was information available indicating that the SSUD lease
    could be closer to the fiscal year 1998 prospectus threshold. A
    letter, dated June 27, 1996, to NCR from a Secret Service official
    estimated that SSUD would need 55,000 to 60,000 square feet of
    space. Using the contracting officer's estimated market rental
    rate ($29 to $30 per square foot), the dollar range of $1.6
    million to $1.8 million for that much space would have been much
    closer to the fiscal year 1998 prospectus threshold. Although the
    actual space requirement had not yet been determined, it appears
    to us that PBS should have recognized that if the space
    requirement or rental rate were higher than expected, the lease
    could possibly exceed the fiscal year 1998 prospectus threshold.
    When the Solicitation for Offers (SFO) was issued in November
    1997, it stated that SSUD required 69,500 to 72,250 rentable
    square feet of office and related space and 78 parking spaces. The
    SFO stated that this was not a prospectus-level lease. Therefore,
    to be considered, any offer must be below the prospectus
    threshold. There was nothing in the contract file to indicate that
    a check had been done after SSUD's space requirements were
    finalized to verify that NCR could still expect lease offers for
    this project to Page 4                       GAO/GGD-99-153 Secret
    Service Uniformed Division Lease B-283063 be below the prospectus
    threshold. Because of the increase in space needs over SSUD's June
    1996 estimate, it would seem prudent to have done another
    prospectus-level calculation before issuing the SFO. Had this
    calculation been done using the actual minimum space requirement
    in the SFO (69,500 square feet) times the low end of the estimated
    market rental rate ($29) that the contracting officer had
    initially used, the estimated annual rent would have been about
    $2.02 million. This amount exceeded both the fiscal year 1998
    prospectus threshold of $1.81 million that was initially used for
    this lease and the fiscal year 2000 threshold of $1.93 million
    that was later used. We believe that if an update of the
    prospectus calculation had been done at this point, the need to
    reevaluate the prospectus decision would have been apparent to
    NCR. Early in 1998, there were three offerors competing for the
    SSUD lease. About the time that NCR received the best and final
    offers, the original contracting officer left GSA. When the new
    contracting officer took over responsibility for the SSUD lease,
    he raised the question about the need for a prospectus on the
    basis of the offers received. In May 1998, the contracting officer
    reopened negotiations on the lease to clarify the calculation for
    determining compliance with the prospectus threshold. Before this
    time, there was no indication in the contract files that the
    offerors had been informed about how to calculate whether their
    offers would comply with the SFO requirement that the offer be
    below the prospectus threshold. In an attempt to clarify how to
    calculate the prospectus threshold, the contracting officer sent
    the offerors two letters in May 1998. His first letter, on May 8,
    1998, specified that parking, operating expenses, and the cost of
    amortizing the tenant allowance for above standard requirements
    should be subtracted from the total full-service rental rate to
    determine if the offer would be below the prospectus threshold. A
    week later, on May 15, 1998, the contracting officer sent the
    offerors a second letter, amending the May 8 letter. This letter
    stated that only operating expenses and any concessions offered to
    the government should be subtracted from the total full-service
    rental rate when determining compliance with the prospectus
    threshold. Officials at the National Office and in NCR's Portfolio
    Management Division, stated the same calculation mentioned in the
    May 15 letter as the correct way to determine if an offer met the
    prospectus threshold. After receiving these letters from the
    contracting officer, attorneys for two of the offerors expressed
    concerns about the changes in the calculation being used to
    determine prospectus compliance at such a late stage in the Page 5
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063
    process. Before the new contracting officer reopened the
    negotiations, correspondence between the offerors and NCR
    indicated that the offerors had been informed or led to believe
    that their offers met the basic requirements for the acquisition,
    including compliance with the requirement that their offers be
    below the prospectus threshold amount. Ultimately, none of the
    offers met that requirement on the basis of the calculation
    provided in the May 15 letter. The NCR officials involved with
    this lease said that there were discussions about how to respond
    to the letters from the offerors' attorneys and how to proceed
    with the acquisition. The officials said that their decision to
    try to complete this acquisition without a prospectus was based on
    the (1) time already invested in this acquisition, (2) concerns
    raised by the offerors' attorneys, and (3) need to award the lease
    in time for the new space to be ready when SSUD's current lease
    expires in February 2000. We found little written documentation in
    the contract files of the discussions that were held and the
    decisions made regarding the SSUD lease. The contracting officer
    said that he consulted primarily with an attorney in the Regional
    Counsel's Office on this matter. By telephone and E-mail, the
    attorney sought input from both the National Office and regional
    Portfolio Management officials. However, a consensus opinion on
    how to proceed with this lease was never developed. It appears
    that the contracting officer acted on advice from the attorney
    when he issued an amendment to the SFO in July 1998 informing the
    offerors that (1) the calculation for determining prospectus
    compliance was the aggregate cost of the contract, minus operating
    expenses, minus any tenant improvement allowance, and divided by
    the 20-year term of the lease and (2) the fiscal year 2000
    prospectus threshold of $1.93 million would be used for this
    lease. According to the attorney, who has since left GSA, his
    advice was based on his understanding and interpretation of the
    guidance he received from various sources. Specifically, he said
    he advised the contracting officer that the cost of SSUD's above
    standard tenant requirements could be excluded from the prospectus
    calculation on the basis of discussions with his supervisor and
    his interpretation of a 1990 Comptroller General decision.2
    However, the Comptroller General decision stated that the cost of
    "specials" (i.e., items above standard tenant requirements) could
    be excluded from the prospectus calculation because GSA elected to
    pay for 2Peter N .G. Schwartz Companies Judiciary Square Limited
    Partnership, B-239007.3, Oct. 31, 1990, 90-2 CGPD 353. Page 6
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063
    the specials on a lump-sum basis from the tenant agency's
    appropriation. The general rule relating to above standard
    requirements is that if the costs are paid on a lump-sum basis,
    they are not included in the annual net rent payment. But, if the
    costs are amortized in the lease, they are included in the annual
    net rent payment. In the case of SSUD, it was clear early in the
    acquisition process that the cost of the above standard tenant
    requirements would be amortized over the term of the lease because
    the Secret Service did not have the funds available to pay for
    these costs by lump-sum payment. The attorney advised the
    contracting officer to use the fiscal year 2000 threshold because
    it will be the year when the lease payments begin.  The
    contracting officer confirmed that this was consistent with the
    oral guidance provided by Portfolio Management in the National
    Office. The contracting officer ultimately set July 10, 1998, as
    the date for final revisions to the offers for the SSUD lease, and
    two final offers were received. The third offeror withdrew because
    it said that it could not meet the economic requirements specified
    in the amended SFO. Only one of the offers actually fell below the
    prospectus threshold as defined in the July 1998 amendment to the
    SFO. According to the contracting officer, once it was determined
    that only one offer met the requirements, he had the attorney in
    the Regional Counsel's Office, in accordance with NCR's practice,
    review and concur in the lease award before it was awarded. The
    Budget Office also reviewed the lease as an operating lease and
    certified that funds were available for the award. The contracting
    officer signed the SSUD lease for GSA on August 5, 1998. NCR
    reviewed this acquisition after the lease was awarded and
    questions A Prospectus Should    were raised by a congressional
    staffer about whether it should have had a Have Been Prepared
    prospectus. According to an NCR official, it is GSA's policy to
    prepare lease prospectuses for all leases that exceed the
    prospectus threshold. for the SSUD Lease     NCR concluded that
    the SSUD lease did exceed the prospectus threshold, and that a
    prospectus should have been prepared in this case. NCR then
    prepared a prospectus and submitted it to GSA's authorizing
    committees on September 25, 1998. During NCR's review of this
    lease, it also determined that while the lease was treated as an
    operating lease when it was awarded, it was in fact a capital
    lease.3 As a result, about $22 million in budget authority had to
    be counted against GSA's fiscal year 1998 rental-of- space account
    for the lease. We verified that at the time the SSUD lease
    3According to OMB Circular A-11, a capital lease is "one that
    transfers substantially all the benefits and risks inherent in the
    ownerhip of the property" to the lessee. Page 7
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063
    was signed, there were sufficient unobligated funds in the FBF
    rental-of- space account to cover the obligation. NCR officials
    said that in their opinions, awarding the SSUD lease without a
    prospectus resulted from NCR employees' "creatively" interpreting
    the prospectus threshold. According to a senior NCR official, this
    action was in response to the specific circumstances of this lease
    and does not indicate that there is a systemic problem within NCR.
    Although we did not evaluate NCR's overall process to determine if
    there were  systemic problems, we found no specific written PBS
    guidance on what costs are to be included in the calculation to
    determine whether a lease will need a prospectus. Also, NCR's
    internal controls were not sufficient to ensure that the SSUD
    lease was correctly identified as prospectus-level, and that a
    prospectus was prepared and submitted to GSA's authorizing
    committees before the lease's award. To strengthen the internal
    controls, on October 26, 1998, NCR began requiring the Portfolio
    Management Division to verify all leases before they are awarded.
    The staff was told that "this verification must be made in
    sufficient time prior to award so that a different course of
    action (other than making an award) is available." However, there
    still is no written guidance on how to calculate the costs that
    should be used to determine if a lease is prospectus-level or not.
    Also, there is still no requirement to revalidate the prospectus
    decision when space requirements and/or market rental rates change
    during the course of the acquisition. We spoke with officials in 9
    of GSA's 10 other regional offices4 to ask Similar Internal
    whether they had guidance in place specifying how to calculate if
    a Control Weaknesses             prospectus is needed for a lease,
    and if they revalidate the decision that a lease is not
    prospectus-level when space requirements or market rental Reported
    in Other GSA rates change. None of the officials with whom we
    spoke said they Regions                        currently had
    specific written guidance to follow when determining if a lease
    prospectus was needed beyond the general guidance provided by the
    National Office. However, some of the officials said that the old
    leasing handbook, which is no longer used as guidance, specified
    that when determining whether a lease was prospectus-level,
    operating expenses should be subtracted from the total rent.
    Several officials said that it would be helpful to have specific
    written guidance on what costs to include and exclude when
    determining if a lease is expected to exceed the prospectus
    threshold. 4We did not speak with the appropriate official in the
    other regional office in time for inclusion in this report. Page 8
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063
    When we asked, these nine regional officials said they also did
    not specifically require that the decision that a lease was not
    prospectus-level be documented or revalidated when space
    requirements or market rental rates change.  However, many of the
    officials said that this recheck is inherent in the process. The
    officials said that when the final offers are received, if those
    offers are above the prospectus threshold, the region cannot and
    does not go forward with the award. The lack of adequate internal
    controls over the leasing process at NCR Conclusions
    resulted in PBS' signing a prospectus-level lease for the SSUD
    space on August 5, 1998, without first preparing and submitting a
    prospectus for the lease to GSA's authorizing committees. While
    NCR has instituted a new policy requiring its Portfolio Management
    Division to verify all leases before they are awarded, written
    guidance on how to calculate the average annual rental to be used
    to determine whether a prospectus is needed still does not exist.
    Also, NCR still does not require that the decision that a lease is
    not prospectus-level be documented when that initial decision is
    made, or that the decision be revalidated and documented when one
    or both of the factors on which such a decision is based agency
    space requirements and market rental rates change. Officials in
    nine other GSA regions with whom we spoke said that written
    guidance on how to calculate the average annual rental and a
    requirement to document and revalidate decisions that a lease is
    not prospectus-level is also missing in these regions. We
    recommend that the Administrator of GSA direct the PBS
    Recommendations    Commissioner to issue explicit written guidance
    defining the specific cost elements that may be excluded from the
    total full-service rental rate when calculating whether a
    prospectus should be prepared for a proposed lease. This guidance
    should also cover the fiscal year threshold that should be used
    for making this determination for a capital lease and for an
    operating lease. We also recommend that the Administrator of GSA
    direct the PBS Commissioner to establish a requirement specifying
    that the decision that a lease is below prospectus-level be
    documented and revalidated whenever there is a change in one or
    both of the factors on which such a decision is based agency space
    requirements and market rental rates could affect the outcome of
    the decision on whether a prospectus would be required. On August
    20, 1999, we received written comments on a draft of this report
    Agency Comments    from PBS' Commissioner.  He said that the
    report accurately reflects the Page 9
    GAO/GGD-99-153 Secret Service Uniformed Division Lease B-283063
    factual circumstances surrounding the award of this lease.  While
    the Commissioner believes that the awarding of the SSUD lease
    without a prospectus was an anomaly, he said that he agrees with
    our recommendations that current written guidance is needed and
    has directed his staff to prepare such guidance.  The
    Commissioner's letter is reproduced in appendix II.  In addition,
    an NCR official provided some technical comments, which we
    incorporated as appropriate. We are sending copies of this report
    to Representative Robert E. Wise, Ranking Democratic Member of
    your Subcommittee; Senator John Chafee, Chairman, and Senator Max
    S. Baucus, Ranking Minority Member, Senate Committee on
    Environment and Public Works; the Honorable David J. Barram,
    Administrator, GSA; Mr. Nelson B. Alcalde, Regional Administrator,
    NCR, GSA; and to others upon request. If you have any questions
    about this report, please call me or Ron King on (202) 512-8387.
    Key contributors to this assignment were Maria Edelstein, Shirley
    Bates, and Susan Michal-Smith. Sincerely yours, Bernard L. Ungar
    Director, Government Business Operations Issues Page 10
    GAO/GGD-99-153 Secret Service Uniformed Division Lease Page 11
    GAO/GGD-99-153 Secret Service Uniformed Division Lease Contents 1
    Letter 14 Appendix I Chronology of Events on Secret Service
    Uniformed Division Lease 16 Appendix II Comments From the General
    Services Administration Table I.1: Chronology of Events on Secret
    Service                                14 Tables
    Uniformed Division Lease Abbreviations FBF           Federal
    Buildings Fund GSA           General Services Administration NCR
    National Capital Region OMB           Office of Management and
    Budget PBS           Public Buildings Service SFO
    Solicitation for Offers SSUD          Secret Service Uniformed
    Division Page 12                       GAO/GGD-99-153 Secret
    Service Uniformed Division Lease Page 13    GAO/GGD-99-153 Secret
    Service Uniformed Division Lease Appendix I Chronology of Events
    on Secret Service Uniformed Division Lease Table I.1 contains a
    chronology of major events that transpired in relation to the
    award of the lease for the United States Secret Service Uniform
    Division (SSUD). Table I.1: Chronology of Events on Secret Service
    Uniformed Division Lease Date
    Event April 1996                                The General
    Services Administration's (GSA) National Capital Region (NCR) and
    SSUD began discussing relocation from 1310 L Street. June 1996
    Secret Service provided NCR information on location requirements,
    generic security standards, and estimated space needs (55,000 and
    60,000 square feet) so NCR could begin advertising the need for
    space to assess the properties that might be available for lease.
    November 1997                             NCR issued Solicitation
    for Offers (SFO) seeking leased space for SSUD.  Solicitation was
    for a 20-year lease of between 69,500 and 72,250 rentable square
    feet with 63,408 to 64,500 occupiable square feet of space.   The
    SFO stated that this was not a prospectus level procurement and
    thus the economics of any lease offer must be below the prospectus
    threshold.  (Note:  the initial SFO did not specify the threshold
    amount or how compliance with the prospectus requirement would be
    calculated.)  Initial offers were due to NCR January 20, 1998.
    January 1998                              Four offers were
    submitted on the basis of NCR's SFO.  Offers were submitted by
    Jack I. Bender & Sons, General Partnership c/o Blake Construction,
    Inc.; 17 H Associates L.P. and 17 H II Limited Partnership c/o
    Carr America; Associated General Contractors c/o Dickstein Shapiro
    Morin & Oshinsky LLP; and 1920 L Street LLC c/o Leggat McCall
    Properties. February 1998                             The offerors
    were given an opportunity to present their offers and were
    notified of the areas in which their offers did not meet the
    requirements and were given the opportunity to correct these
    areas. Representatives from 1920 L Street LLC did not attend a
    scheduled meeting and failed to submit a best and final offer.
    Therefore, at this point there were three remaining offerors.
    March 1998                                Original contracting
    officer left GSA to work for the Secret Service and a new
    contracting officer took over the SSUD lease.  The new contracting
    officer said that when he became involved with the SSUD lease he
    saw the need for a prospectus. May 8, 1998
    Current contracting officer tried to clarify calculation for
    determining if offers meet the prospectus threshold.  Letter to
    offerors defined the calculation as the total full-service rental
    rate, minus parking, minus operating expenses, and minus the cost
    of amortizing the tenant improvement allowance.  The letter also
    specified that using the above calculation, the offers must not
    exceed the fiscal year 1998 prospectus threshold of $1.81 million.
    May 15, 1998                              Contracting officer sent
    another letter to the offerors amending the May 8, 1998, letter.
    In this letter, the calculation for determining if offers meet the
    prospectus threshold was defined as the total full-service rental
    rate, minus operating expenses, and minus any concessions offered
    to the government.  This letter also amended the prospectus
    threshold to fiscal year 2000, which is $1.93 million. Page 14
    GAO/GGD-99-153 Secret Service Uniformed Division Lease Appendix I
    Chronology of Events on Secret Service Uniformed Division Lease
    Date                  Event May 20, 1998          Associated
    General Contractors of America withdrew from the competition for
    the SSUD lease because it said that it could not meet the economic
    requirements. Attorneys for the two remaining offerors, Jack I.
    Bender & Sons, General Partnership and 17 H Associates L.P. and 17
    H II Limited Partnership, both wrote letters to GSA expressing
    concerns about the changes to the calculation for determining
    compliance with the prospectus threshold. May - June, 1998
    Internal NCR discussions about how to calculate compliance with
    the prospectus threshold and which fiscal year to use for the
    threshold were held. June 22, 1998         Amendment number 6 to
    the SFO issued stating that the prospectus threshold being used
    for the SSUD lease is fiscal year 2000 ($1.93M) and the
    calculation for determining prospectus compliance is the aggregate
    cost of the contract (including parking), minus operating expenses
    and any tenant improvement allowance, and then divided by the 20-
    year term of the lease. July 1, 1998          Final amendment
    (number 7) to the SFO was issued setting July 10, 1998, as the
    date for final revisions to offers. July 20, 1998         Analysis
    done on offers, including initial offer submitted by Associated
    General Contractors of America, found that only the offer from
    Jack I. Bender & Sons, General Partnership met the prospectus
    threshold requirement as defined in amendment number 7 to the SFO.
    August 5, 1998        GSA signed a 20-year lease with Jack I.
    Bender & Sons, General Partnership for 72,250 rentable (64,500
    usable) square feet of space at 1111 18th Street, Washington, D.C.
    August 31, 1998       A Senior Professional Staff Member for the
    Subcommittee on Economic Development, Public Buildings, Hazardous
    Materials and Pipeline Transportation called NCR to ask about the
    SSUD lease that was reported in the newspaper.  He asked why the
    Subcommittee had not seen a prospectus for the lease since the
    reported size and cost of the lease appeared to be prospectus-
    level. September 25, 1998    A prospectus for the SSUD lease at
    1111 18th Street was prepared and transmitted to GSA's authorizing
    committees. Source:  GAO review of SSUD lease file. Page 15
    GAO/GGD-99-153 Secret Service Uniformed Division Lease Appendix II
    Comments From the General Services Administration Page 16
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