SK Hart Properties, LLC

B-414338 May 11, 2017 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights SK Hart Properties, LLC (SK Hart), of Anchorage, Alaska, protests the terms of request for lease proposals (RLP) No. 5UT0131, issued by the General Services Administration (GSA), Public Building Service, for leased office space in Salt Lake City, Utah. SK Hart, the incumbent lessor, argues that the RLP's fixed tenant improvement allowance provision will result in a flawed price evaluation and is prejudicial to offerors that can accomplish the tenant improvements for less than the mandated amount. We deny the protest. We deny the protest. View Decision 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:  SK Hart Properties, LLC File:  B-414338 Date:  May 11, 2017 S. Lane Tucker, Esq., Stoel Rives LLP, for the protester. Leigh Ann Bunetta, Esq., General Services Administration, for the agency. Gabriel D. Soll, Esq., and Christina Sklarew, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest challenging price provision in request for lease proposals is denied where the protester has not demonstrated that the provisions violate applicable procurement laws and regulations, and the provision is otherwise unobjectionable. DECISION SK Hart Properties, LLC (SK Hart), of Anchorage, Alaska, protests the terms of request for lease proposals (RLP) No. 5UT0131, issued by the General Services Administration (GSA), Public Building Service, for leased office space in Salt Lake City, Utah.  SK Hart, the incumbent lessor, argues that the RLP’s fixed tenant improvement allowance provision will result in a flawed price evaluation and is prejudicial to offerors that can accomplish the tenant improvements for less than the mandated amount. We deny the protest. BACKGROUND GSA issued the RLP for the lease of between 17,936 – 19,929 ABOA[1] square feet within Salt Lake City, Utah.  RLP at §§ 1.02(A), 1.03.  The RLP contemplates the award of a lease for 15 years (10 years firm) based on the lowest-priced, technically acceptable offer submitted.  RLP at §§ 1.02(F), 4.03.  The solicitation was amended four times; as finally amended, the RLP set February 3, 2017 at 4:30 pm as the closing time for receipt of proposals.  Agency Report (AR), Tab 6, RLP Amend. 4, at 1. At issue in this protest is a price provision in the RLP that establishes a fixed tenant improvement allowance.  The RLP describes tenant improvements as the “finishes and fixtures” that typically convert a rental space to its finished, usable condition.  The tenant improvement allowance is used to build-out the rented space for the lessee agency’s intended purpose.  RLP § 3.07; AR, Tab 6, RLP Amend. 4, at 1.  The RLP advises potential offerors that the tenant improvement requirements would be fully developed after award of the lease, and that the lessor would be compensated for the costs of the improvements, as well as receiving design and project management fees to be set under the lease.  RLP at § 1.07(D).  The RLP encourages offerors to minimize waste by using the rental space’s existing items and construction, but included the following caveat: [A]ny existing improvements must be deemed equivalent to Lease requirements for new construction, and Offerors are cautioned to consider those requirements before assuming efficiencies in its [tenant improvements] costs resulting from use of existing improvements. Id. Potential offerors are instructed to include in their lease proposals a fixed amount of $44.40 per ABOA square foot to accommodate anticipated improvements.  AR, Tab 6, RLP Amend. 4, at 1.  The anticipated terms of the lease, included as an attachment to the RLP, include a clause detailing the options available, should the actual cost of the build-out be more or less than the anticipated amount, and explaining how the agency would account for those costs over the term of the lease.  See RLP, Ex. A, at §1.08. The solicitation advises that award will be made to the lowest-priced technically acceptable offer.  RLP at § 4.03(A).  The RLP establishes a “present value price evaluation” methodology that takes into account various additions and deductions to the offered rental price.  Id. at § 4.05.