[Federal Register Volume 61, Number 30 (Tuesday, February 13, 1996)]
[Notices]
[Pages 5552-5554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3130]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Policy Statement on Securing Leased Space
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Statement of policy.
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SUMMARY: The FDIC has adopted a statement of policy which establishes
the procedures that the FDIC will use when it leases space. The
procedures have been designed to generate sufficient competition to
ensure a good economic deal for the FDIC while providing a level
playing field for all competitors. Most of the procedures contained in
the policy have been in use for the past five years.
EFFECTIVE DATE: February 6, 1996.
FOR FURTHER INFORMATION CONTACT: Lynn T. Anderson, Chief, Leasing &
Insurance Unit, Facilities Development Section, (202-942-3259),
Division of Administration, 550 17th Street NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION: The text of the policy statement follows:
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Policy Statement on Securing Leased Space
I. Purpose. To establish:
A. The procedures that the FDIC will follow when leasing space; and
B. Official written guidance for FDIC personnel who have the
responsibility of carrying out those procedures.
II. Applicability. The procedures outlined in this policy statement
will be used for all FDIC lease acquisitions over 10,000 square feet,
except for those executed by the FDIC when acting as the conservator of
a failed financial institution or when operating as a bridge bank.
III. Policy. It is the policy of the FDIC to lease space which
provides a safe, efficient and pleasant work environment for its
employees, meets the programmatic needs of the organization and
provides the FDIC with the best value in terms of cost and other
factors. Further, the method of competition used to select space will
be fair for all offerors that meet the basic criteria.
IV. Procedures. Depending on whether the lease acquisition
represents a new lease, a lease renewal or a lease extension, the
process for securing leased space will be as follows:
A. New Leases.
(1) Define Geographic Boundaries. Once the general location for a
new office has been determined or it is determined that an existing
office should remain in a general metropolitan area, the FDIC will
define the specific geographic boundaries.
The FDIC will conduct a survey to determine the general market
conditions, including current rental rates, vacancy rates and a listing
of buildings with sufficient space to fulfill the FDIC's requirements.
This information enables the FDIC to set the geographic area in which
the space will be competed so that there are a reasonable number of
buildings to ensure sufficient competition.
The geographic boundaries are set based on the information in the
market survey and the following criteria:
(a) Access to other FDIC offices.
(b) Access to other financial and/or regulatory agencies.
(c) Access to public transportation (walking distance).
(d) Access to major highways and airport.
(e) Located in an area with a low crime rate in order to assure the
safety of the FDIC's employees and visitors.
(2) Advertise. Once geographic boundaries have been established,
the FDIC will advertise in the local newspaper and the local commercial
real estate paper to solicit letters of interest for space meeting the
following minimum criteria:
(a) The location must be within the described geographic
boundaries; and
(b) The building must meet the minimum space requirements.
(3) Issue the Request For Proposal (RFP). Upon receipt of all
letters of interest, the FDIC will call each of the interested parties
to verify that they meet the minimum criteria, and if they are a
broker, they will be required to submit evidence that they represent
the owner of the particular building. RFP's which detail the basic
space and facility requirements and include the FDIC's Standard Lease
and the Leasing Representations and Certification forms will then be
mailed to all offerors who meet the minimum criteria.
(4) Review Responses. When the responses to the RFP are received,
an initial review will be made to determine if all basic information is
included, especially the Leasing Representations and Certifications
Form. The information provided on this form is the basis for
determining the fitness and integrity of each of the respondents and
whether or not they can do business with the FDIC. Each offeror must
submit the form correctly and completely prior to the request for Best
and Final Offers (BAFO).
Also, a preliminary financial analysis is made on each proposal.
(5) Tour Buildings. The FDIC tours all buildings that submit a
response to the RFP, accompanied by a licensed independent appraiser
who is familiar with the local real estate market. The appraiser
determines the designation of each building (Class A, B, C, etc.).
During this tour, specific issues with each building are noted so that
they can be addressed in the request for BAFO's.
(6) Issue Request for BAFO's. The FDIC will compile a short list of
potential landlords based on their proposals and the results of the
tours. This list will be developed using the below listed items to
qualify or disqualify landlords:
(a) Did the ownership clear all conflict and fitness and integrity
issues?
(b) Did the space qualify for FDIC use? (Typically, the FDIC
utilizes Class A space. In some cases, however, due to market
conditions, the FDIC may consider Class B space.)
(c) Are the economics of the proposal in the competitive range?
(d) Is there enough contiguous space to meet the requirement?
(e) Will the space be available within the required time frame?
(f) Does the landlord offer the required flexibility for early
termination or downsizing?
It should be noted that when requests for BAFO's are issued, any
offeror who has not provided the required fitness and integrity
information on the Representations and Certifications Form will be
disqualified from further consideration. Unless there is sufficient
information to determine that the building owner has no conflicts, it
will be assumed that one or more conflicts exist.
(7) Review Best and Final Offers. An economic analysis including
all cost factors and using the same criteria/assumptions will be
performed for each proposal. To assure each proposal is judged fairly,
and to take into consideration the time value of money, a net present
value analysis is performed.
The following items are factored into the financial analysis:
(a) Cost per square foot.
(b) Efficiency of the building in rentable vs. actual useable
square feet.
(c) Rent abatement or lease assumption offered (if any).
(d) Cash concessions, incentives, and non-cash concessions, such as
construction, materials, etc.
(e) Estimated cost of architectural fees.
(f) Estimated cost to build-out the space.
(g) Estimated relocation costs for the office move.
(h) Estimated cabling and telecommunication costs.
(i) Estimated increases in operating expenses over the base year
amount.
(j) Estimated cost of parking, when applicable.
The location of the office and the availability of public
transportation will determine whether or not parking will be included
in the financial analysis. If parking is included, participants in the
RFP process will be advised in the initial RFP of the approximate
number of spaces needed.
A financial analysis is prepared for each building for which a BAFO
has been received. In addition, the FDIC performs calculations from
building plans to verify each offeror's stated usable square footage.
(8) Award Lease. Based on the financial analysis of the BAFO's, the
FDIC awards the lease to the offeror whose proposal is the most
favorable to the FDIC, considering cost and other factors, after
obtaining appropriate approvals in accordance with the Corporate
Delegations of Authority.
B. Lease Renewals. Normally, when the need for space will continue
beyond the lease expiration date, the FDIC will begin the process of
seeking competitive offers for the continuing requirement
[[Page 5554]]
prior to lease expiration. However, if the lease contains an option to
renew and the FDIC determines that it is in its best interest to remain
at the same location, the option can be exercised provided the
following information is collected and shows that remaining in the same
location is the best alternative:
(1) Market Survey. Contract with a local real estate professional
to perform a market survey that will report on current vacancy rates,
current asking rates, and the effective rates of recently completed
comparable deals.
(2) Proposal from Landlord. Solicit a proposal from the current
landlord that addresses the criteria and needs of the FDIC.
(3) Fitness and Integrity. Obtain a new Representations and
Certifications form from the landlord to check fitness and integrity.
(4) Cost Comparison. Compare the cost of staying at the current
location under the renewal option to the estimated cost of relocating.
If it appears that the best option is to remain at the current
location after gathering and analyzing this data, the FDIC will attempt
to renegotiate any terms of the current lease that caused problems
during the initial lease term.
If the economic terms of the proposed extension prove that it will
be less expensive to stay in the existing space, and if there are no
remaining problems with the terms of the lease, a lease amendment will
be prepared and executed after appropriate approvals are obtained in
accordance with the Corporate Delegations of Authority.
C. Lease Extensions. A lease extension differs from a lease renewal
because (1) There are no options to exercise and the FDIC needs to
remain in the space beyond the lease expiration date, or (2) the
existing option(s) are unacceptable and the FDIC needs to remain in the
space beyond the lease expiration date.
A lease extension is not meant to be a long-term solution to a
space acquisition problem or to circumvent the competitive space
acquisition process. It is meant to provide the FDIC additional time to
determine its long-term requirements, which will then be included in a
formal competition. Therefore, a lease extension will not be longer
than three years.
(1) Long-Term Lease Extensions. As with a lease renewal, the
following requirements need to be fulfilled if the lease is to be
extended for a period longer than six months:
(a) Market Survey. Contract with a local real estate professional
to perform a market survey that will report on current vacancy rates,
current asking rates, and the effective rates of recently completed
comparable deals.
(b) Proposal from Landlord. Solicit a proposal from the current
landlord that addresses the criteria and needs of the FDIC.
(c) Fitness and Integrity. Obtain a new Representations and
Certifications form from the landlord to check fitness and integrity.
(d) Cost Comparison. Compare the cost of staying at the current
location versus the estimated cost of relocating.
(e) Negotiate. Renegotiate any terms of the lease that may have
caused problems during the initial term.
(f) Obtain Approvals and Execute Lease Amendment. Since a long-term
lease extension could be considered a non-competitive procurement, the
Board of Directors must approve all such extensions before the lease
amendment is executed.
(2) Short-Term Extensions. When the term of the proposed lease
extension will be six months or less, the lease amendment can be
executed after appropriate approvals are obtained in accordance with
the Corporate Delegations of Authority.
By order of the Board of Directors, dated at Washington, DC, this
6th day of February, 1996.
Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-3130 Filed 2-12-96; 8:45 am]
BILLING CODE 6714-01-P
