GSA's New Pricing Policy For Space And Space-Related Services
Effective October 14, 1996, the General Services Administration (GSA) implemented significant changes in the way it leases space and also in the way it bills it's customer agencies for space and space-related services.
All future space actions will be memorialized in an Occupancy Agreement (OA). The OA is a document that will serve to record the mutual understanding between GSA and the customer agency as to financial terms, space buildout, contractual conditions, terms, obligations, and timing of the occupancy. It represents the GSA/Customer agreement for a specific housing need.
For new assignments, the OA begins as a draft and is updated as information develops, with formal signing taking place just prior to the award of the lease. In essence, it starts as an estimate of the cost of the services, and ends as a projection of the actual cost. Some items at the time of the OA signing may remain estimates, and may have to be adjusted at a later date. The OA is a tool for estimating the cost of space to be delivered, for recording the space and services needed, and for tracking the refinement of estimates until the final cost becomes the amount that will be billed to the customer.
The principle subjects to be addressed in the OA are listed below and should reflect the conditions and terms of the lease.
base rental and term
tenant allowances (general and customization) and amortization period
lump sum payment(s)
tax and operating expense escalation and frequency
space classification(s) - general use, parking, warehouse, unique
extra or reduced services
joint use space
forced move entitlements and/or existence (or lack) of right to renew occupancy
cancellation (designation of "non-cancelable," if applicable. "Non-cancelable space" was formerly known as "agency unique space") any special circumstances associated with the occupancy, such as environmental responsibilities, unusual use restrictions, or agreements with local authorities termination rights and liabilities of both parties.
The OA will be signed by GSA and the authorized Executive Office for United States Attorneys (EOUSA)/Facilities Management and Support Services (FMSS) representative.
Space pricing will be recorded in the OA. Leased space will be priced as a "market pass through" of the contract rent plus benchmarked GSA fees, for a specific term at a level (or stepped ) rent for the term. The GSA fees and service costs will be expressed as a percentage of the total contract value, or as a cost per square foot. GSA's benchmarked fees for lease acquisitions will cover a full range of services, from requirements development through occupancy.
The current sixteen space classifications will be reduced to four:
General Use: general office space and all other (Courthouses, laboratories, computer centers, etc.) with the exception of those defined below. United States Attorney's office (USAO) space assignments will fall under the General Use classification.
Warehouse: whole building only (General guideline: If 70 percent of the building is warehouse the entire building is classified as such).
Parking: by parking space, instead of by square feet.
Unique: Space that is truly "one-of-a-type" space that does not have a market comparable, such as border stations.
The new billing method utilizes a tenant construction allowance mechanism to replace the existing space classification system. The new method creates two tenant allowances, one for general standard buildout and one for customization. Like all agencies, the USAO will receive a specific tenant allowance based on a historical analysis of USAO space alteration costs, and should be sufficient to cover typical USAO Field Office alterations. The tenant general allowance is a dollar amount per square foot set to cover the cost of typical ratios of normal office space finish components, such as doors, partitions, carpeting, ceiling tile, electrical and telecommunication outlets. It is set nationally, adjusted annually, and indexed to local construction costs. The tenant customization allowance is also a dollar amount per square foot set nationally and adjusted annually, and also indexed to local construction costs. The purpose of this allowance is to cover special items, preparation, or finishes which would result in special space classifications under the previous system. GSA will amortize the allowance over the term of the OA.
This Rent reform is currently being conducted as a pilot, and as such, GSA may need to make refinements before final implementation. The general allowance and the customization allowance are treated as a single budget for agencies moving into space. Although they are developed separately, agencies will have complete freedom to use the sum of the two allowances in the manner that best meets their mission needs. If a customer is anticipating buildout which would exceed the combined general and customization tenant allowances, the customer may choose to reduce the scope of work or pay lump sum for the amount over the combined allowances (above allowance is similar to the old "above standard").
These allowances apply only to the General Use classification (see above). There will be only one buildout allowance for warehouse space, set considerably lower than the allowance for general purpose space. Parking spaces will be categorized as either "structured" (inside) or "surface" (outside). Rates will be quoted on a per-parking-space basis, rather than per-square-foot, in order to mirror current industry practice.
[updated February 1999] [cited in USAM 3-14.100]