A Tenant Improvement Solicitation for Offers (TI SFO) imparts the philosophy contained in GSA’s New Pricing Policy and associated Occupancy Agreement and the wisdom of GSA’s “Can’t Beat GSA Leasing” initiative to competitively acquire leasehold interests in real estate for their customers.
GSA awards a competitive procurement based on the lowest Present Value of “shell”, “real estate taxes”, “operating cost base”, and “tenant improvement allowance,” as defined by GSA’s Pricing Policy. At the time of award, only the fixed components of the rental rate (shell, real estate taxes and operating costs) are identified in the lease contract. Immediately after award, the lessor works with GSA and its customer to prepare design documents reflecting the space requirements of the customer.
From these design documents, the lessor prepares construction documents and bids the project based upon the specific and identifiable tenant improvements contemplated by the Government. At this time, the lessor submits a cost proposal to the Contracting Officer based upon these improvements.
Only a “reasonable cost” of these improvements will then be amortized into the rental rate at a predetermined amortization term and cost of capital identified in the lessor’s Best and Final Offer once substantial completion is determined. If the cost proposal remains unreasonable, the Government can seek remedies that currently exist within the General Clauses.
In essence, this method is nothing more than a “change order.” Provisions that exist in the General Clauses have always permitted the Government to change the Scope of Work in the Lease after award. These clauses now provide a method to reduce procurement time and pricing uncertainty while better meeting the needs of GSA’s customers.
For more information, contact Mr. Steve D. Dietz at (612) 725-1715 or via e-mail at steve.dietz@gsa.gov
