Federal Government Leasing Details Require Attention

Real Estate Influence
December 17, 2012 — 838 views  
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The General Services Administration acts as the major go between that handles the majority of the federal government’s contracting with private companies. In the case of leasing property, the GSA is the primary negotiator and represents the largest portfolio of leasing demand in the country. On average, the U.S. uses and needs up to 194 million square feet of leased space, whether for office or industrial needs. It should be no surprise then that there is quite a market to capture this demand and related revenue.

Complexities vs. Private Side Contracting

However, leasing to the federal government is not a straight-forward matter as it is between two private companies. Because the GSA has to contend with multiple federal laws, regulations and administrative guidelines of how money is spent, the entire process can be very cumbersome and bureaucratic. This includes issues such as qualified bidder verification, fair bid process rules, paying attention to government preferences for groups targeted to receive more of government procurement funds, and auditing rules. There’s far more, but these are the major categories. Worse, the GSA, like many federal agencies, will put the burden for producing much of the paperwork on the private company in the potential lease contract. As a result, the entire process can be very complicated.

Due Diligence

How well a company obtains and manages a federal government property lease depends significantly on how well the company meets all of the government procurement rules. Aside from specific terms in a given lease for a specific property, the bid award and contract will have pages and pages of general government regulations that have to be met as well. There is no way around or out of having to meet these requirements; they are set in stone in federal law.

Due diligence on the part of the company involves making sure to read through and understand all the general requirements as well the terms specific to the given lease bid and contract. Fortunately, most of the general guidelines and rules are already in print and easily obtainable. They used to be referred to as Office of Management and Budgeting Circulars but are now formalized in the Federal Acquisition Regulation (FAR) codes and the Cost Accounting Standards (CAS). Determining whether a company can meet and document compliance with all these requirements is important before making any commitments. Failure to do so in a contract can lead to both civil and criminal penalties.

Real Estate Influence