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Subpart 570.4 - Special Aspects of Contracting for Continued Space Requirements
570.401 Renewal options.
(a) Exercise of options. Before exercising an option to renew, follow the procedures in 517.207 Exercise of options.. The contract must first provide the right to renew the lease. If a renewal option was not evaluated as part of the lease at award, then the addition of a renewal option during the lease term must satisfy the requirements of GSAM 506 regarding full and open competition.
(b) Market information review. Before exercising an option to renew a lease, review current market information to determine that the rental rate in the option is fair and reasonable.
570.402 Succeeding leases.
570.402-1 General.
(a) If a succeeding lease for the continued occupancy of space in a building does not exceed the simplified lease acquisition threshold, the contracting officer may use the simplified procedures in 570.2. Explain the absence of competition in the contract file.
(b) If a succeeding lease will exceed the simplified lease acquisition threshold, the contracting officer may enter into the lease under either of the following conditions:
(1) The contracting officer does not identify any potential acceptable locations.
(2) The contracting officer identifies potential acceptable locations, but a cost-benefit analysis indicates that award to an offeror other than the present lessor will result in substantial relocation costs or duplication of costs to the Government, and the Government cannot expect to recover such costs through competition.
570.402-2 Publicizing/Advertising.
The contracting officer must publish a notice if required by 570.106. The notice should:
(a) Indicate that the Government's lease is expiring.
(b) Describe the requirements in terms of type and quantity of space.
(c) Indicate that the Government is interested in considering alternative space if economically advantageous, and that otherwise the Government intends to pursue a sole source acquisition.
(d) Advise prospective offerors that the Government will consider the cost of moving, alterations, etc., when deciding whether it should relocate.
(e) Provide a contact person for those interested in providing space to the Government.
570.402-3 Market survey.
Conduct a market survey following 570.301.
570.402-4 No potential acceptable locations.
If the contracting officer does not identify any potential acceptable locations through the advertisement or the market survey, prepare a written justification to negotiate directly with the present lessor. Fully document the efforts to locate alternative sources. Prepare the justification and obtain approval following FAR 6.3 and 506.3.
570.402-5 Potential acceptable locations.
If the contracting officer identifies potential acceptable locations through the advertisement or market survey, conduct a cost-benefit analysis following the procedures 570.402-6. Based on the results of the cost-benefit analysis, take appropriate action as follows:
(a) If the cost-benefit analysis indicates that the Government will recover relocation costs and duplication of costs through competition, develop an SFO and negotiate with all interested parties following 570.3.
(b) If the cost-benefit analysis indicates that the Government cannot expect to recover relocation costs and duplication of costs through competition, prepare a justification for approval in accordance with FAR 6.3 and 506.3. Explain both:
(1) How the contracting officer performed the cost-benefit analysis.
(2) That the cost-benefit analysis indicates that award to any other offeror will likely result in substantial costs to the Government that the Government cannot expect to recover through competition.
570.402-6 Cost-benefit analysis.
(a) The cost-benefit analysis must consider all the following:
(1) The prices of other potentially available properties.
(2) Relocation costs, including estimated costs for moving, telecommunications, and alterations, amortized over the firm term of the lease.
(3) Duplication of costs to the Government.
(4) Other appropriate considerations.
(b) Establish the prices for other potentially available properties by requesting each prospective offeror to provide an informational quotation for standard space for comparison purposes.
(1) Adjust the prices quoted for standard space for any special requirements.
(2) You do not need a formal SFO to obtain the informational quotation. However, you must provide a general description of the Government’s needs.
(3) If you obtain oral quotations, document the following information, as a minimum:
(i) Name and address of the firm solicited.
(ii) Name of the firm’s representative providing the quote.
(iii) Price(s) quoted.
(iv) Description of the space and services for which the quote is provided.
(v) Name of the Government employee soliciting the quotation.
(vi) Date of the conversation.
(4) Compare the informational quotations to the present lessor’s price, adjusted to reflect the anticipated price for a succeeding lease.
570.403 Expansion requests.
(a) If the expansion space is in the general scope of the lease, the contracting officer may acquire the space through a modification without further justification under FAR 6.3.
(b) If the expansion space needed is outside the general scope of the lease, the contracting officer must determine whether it is more prudent to provide the expansion space by supplemental agreement to the existing lease or to meet the expansion requirement and existing tenancy to the requirement by competitive means.
(1) Conduct a market survey to determine the availability of suitable alternative locations.
(2) If you identify alternate locations that can satisfy the total requirement, perform a cost-benefit analysis to determine whether it is in the Government’s best interest to relocate. Consider, as appropriate:
(i) The cost of the alternate space compared to the cost of expanding at the existing location.
(ii) The cost of moving.
(iii) The cost of duplicating existing improvements.
(iv) The cost of the unexpired portion of the firm lease term. If a termination is possible, use the actual cost of such an action.
(v) The cost of disruption to the agency’s operation.
(c) If the contracting officer determines not to use competitive procedures and the expansion space is outside the general scope of the lease:
(1) If the estimated value of the acquisition does not exceed the simplified lease acquisition threshold, document the file as required by 570.203-2.
(2) If the estimated value of the acquisition exceeds the simplified lease acquisition threshold, prepare a justification for approval under FAR 6.3 and 506.3.
570.404 Superseding leases.
(a) Consider executing a superseding lease to replace an existing lease when the Government needs numerous or detailed modifications to the space that would cause complications or substantially change the present lease or when market conditions warrant renegotiation of an existing lease.
(b) If the value of the superseding lease exceeds the simplified lease acquisition threshold, the justification and approval requirements in FAR 6.3 and 506.3 apply. If the cost does not exceed the simplified lease acquisition threshold, the contracting officer may use the simplified procedures in 570.2 and explain the absence of competition in the file.
570.405 Lease extensions.
(a) This subsection applies to extension of the term of a lease to provide for continued occupancy on a short term basis.
(b) If the value of a lease extension will exceed the simplified lease acquisition threshold, the justification and approval requirements in FAR 6.3 and 506.3 apply. For extensions that will not exceed the simplified lease acquisition threshold, the contracting officer may use the simplified procedures in 570.2 and explain the absence of competition in the file.
(c) FAR 6.302-1 permits contracting without providing for full and open competition when the property or services needed by the agency are available from only one responsible source and no other type of property or services will satisfy the needs of the agency. This authority may apply to lease extensions in situations such as, but not limited to, the following:
(1) The agency occupying the leased space is scheduled to move into other Federally controlled space, but encounters unexpected delays in preparing the new space for occupancy.
(2) The Government encounters unexpected delays outside of its control in acquiring replacement space.
(3) The Government is consolidating various agencies and the contracting officer needs to extend the terms of some leases to establish a common expiration date.
(4) The agency occupying the space has encountered delays in planning for a potential relocation to other federally controlled space due to documented organizational, financial, or other uncertainties.
