B-310941, Eisenhower Real Estate Holdings, LLC, March 18, 2008

B-310941 Mar 18, 2008 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Eisenhower Real Estate Holdings, LLC protests the decision by the General Services Administration (GSA) to award a sole-source lease to the incumbent lessor of office space for the headquarters location of the Drug Enforcement Administration (DEA). The protester, which asserts that it can provide an acceptable alternative property offering cost savings to the agency, challenges the reasonableness of the cost-benefit analysis cited as the basis for GSA's justification for the use of noncompetitive procedures and its determination that there is only one responsible source that can satisfy the needs of the agency. We deny the protest. View Decision B-310941, Eisenhower Real Estate Holdings, LLC, March 18, 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: Eisenhower Real Estate Holdings, LLC File: B-310941 Date: March 18, 2008 Fernand A. Lavallee, Esq. and J. Philip Ludvigson, Esq., DLA Piper, for the protester. Robert A. Hauser, Esq., General Services Administration, for the agency. Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest of reasonableness of agency's cost-benefit analysis that served as basis for agency determination that government cannot expect to recover through competition substantial relocation or duplication costs involved in award of lease to other than incumbent lessor is denied where record shows cost-benefit analysis was reasonably based, and protester provides no persuasive support for assertion that a lease for its property would provide cost savings exceeding agency's relocation or duplication costs. DECISION Eisenhower Real Estate Holdings, LLC protests the decision by the General Services Administration (GSA) to award a sole-source lease to the incumbent lessor of office space for the headquarters location of the Drug Enforcement Administration (DEA). The protester, which asserts that it can provide an acceptable alternative property offering cost savings to the agency, challenges the reasonableness of the cost-benefit analysis cited as the basis for GSA's justification for the use of noncompetitive procedures and its determination that there is only one responsible source that can satisfy the needs of the agency.[1] We deny the protest. GSA's existing lease for office space for DEA's headquarters location (in two buildings constructed 20 years ago for DEA's use) is expiring. The current protest involves the agency's plan to award a 10-year lease to the incumbent lessor for continued use of the property based on a cost-benefit analysis that demonstrated that substantial relocation expenses would not be recovered through competition for the award of the lease.[2] On June 29, 2006, the agency issued a presolicitation notice seeking expressions of interest from potential lessors for a 10-year lease of approximately 593,100 rentable square feet (RSF) of office and related space in northern Virginia. The notice, which provided general requirements for a secured site meeting government safety standards and setback distances with proximity to a Metrorail station, was reissued on April 2, 2007; both notices specifically advised potential offerors that the agency would evaluate expressions of interest in terms of availability of alternative properties and the relocation costs involved in moving DEA to determine whether the agency would remain at the existing property or relocate. Expressions of interest were to describe the potential lessor's property and identify the amount of space available, date the property will be available, expected rental rate per RSF (capped by the lease prospectus at $35 per RSF), cost and amount of available on-site parking, tenant improvement allowance, and available services and amenities. Six responses were received after the first notice, and two firms, the protester and the incumbent, revised their responses after the second notice.[3] Both the protester's and incumbent's properties were considered acceptable in terms of meeting the minimum requirements set out in the notices, and both were found to meet the applicable $35 per RSF rental rate maximum.[4] The agency, through its broker for the lease acquisition, then performed a comparative review of the properties in a cost-benefit analysis evaluating the estimated costs of remaining at the present location versus relocating.