Lease for nonresidential buildings in DC costs over $3.1 million annually, with a total value exceeding $10 million

Contract Overview

Contract Amount: $10,232,079 ($10.2M)

Contractor: Metropolitan Washington Airports Authority

Awarding Agency: Department of Transportation

Start Date: 2006-08-12

End Date: 2025-09-14

Contract Duration: 6,973 days

Daily Burn Rate: $1.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LEASE NO. DTFAEA-05-L-00078A. RECURRING MONTHLY RENT AS PART OF THE CAPTIAL LEASE PAYMENT SCHEDULE. PERIOD OF PERFORMANCE 10/01/2008 - 09/30/2009. $262,361 PER MONTH FOR A TOTAL OF $3,148,332.00 PER ANNUM.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20001

State: District of Columbia Government Spending

Plain-Language Summary

Department of Transportation obligated $10.2 million to METROPOLITAN WASHINGTON AIRPORTS AUTHORITY for work described as: LEASE NO. DTFAEA-05-L-00078A. RECURRING MONTHLY RENT AS PART OF THE CAPTIAL LEASE PAYMENT SCHEDULE. PERIOD OF PERFORMANCE 10/01/2008 - 09/30/2009. $262,361 PER MONTH FOR A TOTAL OF $3,148,332.00 PER ANNUM. Key points: 1. The contract represents a significant recurring expense for the Federal Aviation Administration. 2. The lease duration is exceptionally long, spanning over 19 years. 3. The fixed-price nature of the contract offers cost certainty but limits flexibility. 4. The lease is for nonresidential buildings, indicating a need for physical space. 5. The contract was awarded through full and open competition, suggesting a robust bidding process.

Value Assessment

Rating: fair

The annual rent of $3,148,332 for nonresidential building space in the District of Columbia appears substantial. Benchmarking this against similar commercial real estate leases in the DC metropolitan area would be necessary for a precise value assessment. Given the long-term nature of the lease, the total value of over $10 million warrants careful scrutiny of the per-square-foot cost and the services included.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This suggests a competitive environment that should theoretically lead to a fair market price. The presence of three bidders further supports the notion of a competitive process, though the specific details of the bidding and evaluation are not provided.

Taxpayer Impact: A competitive bidding process generally benefits taxpayers by driving down costs and ensuring the government receives good value for its money.

Public Impact

The Federal Aviation Administration benefits from this lease by securing necessary office or operational space. The lease supports the functioning of federal agencies operating within the District of Columbia. The lease impacts the local commercial real estate market in the DC area. The contract provides revenue for the lessor, Metropolitan Washington Airports Authority.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The extended duration of the lease (over 19 years) raises concerns about long-term cost-effectiveness and potential for obsolescence of the leased space.
The significant annual recurring cost requires continuous budget allocation and could be vulnerable to future budget cuts.
Lack of specific details on the leased space and its condition makes it difficult to assess value for money.

Positive Signals

The contract was awarded through full and open competition, suggesting a fair and transparent procurement process.
The fixed-price contract provides budget certainty for the agency.
The long performance period indicates a stable, long-term need for the leased facility.

Sector Analysis

This contract falls within the Real Estate and Leasing sector, specifically for nonresidential buildings. The market for commercial real estate in the Washington D.C. metropolitan area is known for its high costs and competitive dynamics. The annual spending of over $3.1 million places this lease in the category of significant government real estate commitments. Comparable spending benchmarks would involve analyzing average lease rates per square foot for similar government facilities in the region.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from this specific lease agreement. The primary beneficiary is the lessor, Metropolitan Washington Airports Authority.

Oversight & Accountability

Oversight for this lease would typically fall under the purview of the Federal Aviation Administration's contracting officers and potentially the Department of Transportation's Inspector General. Transparency is facilitated by the contract being publicly awarded through full and open competition. Accountability measures would involve adherence to the lease terms and performance standards by both the lessor and the FAA.

Related Government Programs

Federal Building Leases
Government Office Space Acquisition
Metropolitan Washington Airports Authority Contracts
Federal Aviation Administration Facilities Management

Risk Flags

Long Lease Term
High Annual Recurring Cost
Potential for Market Obsolescence

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $10.2 million to METROPOLITAN WASHINGTON AIRPORTS AUTHORITY. LEASE NO. DTFAEA-05-L-00078A. RECURRING MONTHLY RENT AS PART OF THE CAPTIAL LEASE PAYMENT SCHEDULE. PERIOD OF PERFORMANCE 10/01/2008 - 09/30/2009. $262,361 PER MONTH FOR A TOTAL OF $3,148,332.00 PER ANNUM.

Who is the contractor on this award?

The obligated recipient is METROPOLITAN WASHINGTON AIRPORTS AUTHORITY.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $10.2 million.

What is the period of performance?

Start: 2006-08-12. End: 2025-09-14.

What is the historical spending pattern for this specific lease agreement?

The provided data indicates the lease period began on 10/01/2008 and is set to end on 09/14/2025, with a recurring monthly rent of $262,361. This translates to an annual cost of $3,148,332. The total value of the contract over its full duration is approximately $53,148,332, assuming the monthly rent remains constant. The data does not provide historical spending prior to the current period of performance or details on any modifications or adjustments to the rent over the lease's lifespan. Further analysis would require access to the full contract history and any amendments.

How does the annual cost of this lease compare to similar nonresidential building leases procured by the federal government?

Benchmarking this lease's annual cost of $3,148,332 requires detailed comparison with similar nonresidential building leases in the Washington D.C. metropolitan area, considering factors like square footage, location, amenities, and lease term. Without specific per-square-foot data or details on comparable government leases, a direct comparison is challenging. However, given the high cost of real estate in D.C., this annual figure is substantial and warrants a thorough review against market rates for comparable commercial properties, especially considering the long-term commitment. The Federal Aviation Administration should ensure this rate aligns with prevailing market conditions for similar-sized and located facilities.

What are the specific risks associated with such a long-term lease agreement (over 19 years)?

The primary risks associated with a lease of this duration (over 19 years) include: 1. **Market Obsolescence:** The leased space may become outdated or unsuitable for the agency's evolving needs over nearly two decades. 2. **Cost Inflexibility:** The fixed-price nature locks in costs, preventing the agency from benefiting from potential future decreases in market rental rates. Conversely, if market rates increase significantly, the government is protected, but the initial rate might have been too high. 3. **Budgetary Strain:** The consistent, high annual expenditure ($3.1M+) represents a significant, long-term budgetary commitment that could be impacted by future fiscal constraints. 4. **Contractor Viability:** While the lessor is a major authority, the long term introduces a slight risk regarding the lessor's continued ability or willingness to maintain the property to required standards over such an extended period. 5. **Opportunity Cost:** Funds committed to this lease could potentially be used for other investments or acquisitions.

What is the track record of the Metropolitan Washington Airports Authority as a lessor to federal agencies?

The Metropolitan Washington Airports Authority (MWAA) is a quasi-public entity responsible for operating major airports in the region, including Reagan National and Dulles International. As a lessor, its track record would be tied to its management of airport facilities and associated commercial properties. While not a typical private sector commercial real estate firm, its role in managing large-scale infrastructure suggests experience in property management and leasing. Federal agencies often lease space within airport facilities for various operational needs. The fact that the FAA has entered into a long-term lease with MWAA suggests a level of confidence in their ability to provide suitable space and services, though specific performance metrics or past issues related to federal leases would require deeper investigation into MWAA's contracting history.

Given the 'Full and Open Competition' award, how many bids were received, and what does this imply for price discovery?

The data indicates that the contract was awarded under 'Full and Open Competition' and specifies 'no' (number of bidders) as 3. This means that at least three distinct entities submitted bids for this lease. The presence of multiple bidders is a positive sign for price discovery, as it introduces competition. A competitive process generally encourages bidders to offer their best pricing to win the contract. With three bids, there is a basis for comparison, allowing the contracting officers to assess whether the winning bid represents a reasonable price relative to the others and the estimated market value. However, without knowing the bid amounts or the agency's cost estimates, it's difficult to definitively state how effective the price discovery was beyond the fact that competition existed.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Lessors of Real Estate › Lessors of Nonresidential Buildings (except Miniwarehouses)

Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 AVIATION CIR, WASHINGTON, DC, 98

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,000,000

Exercised Options: $11,019,162

Current Obligation: $10,232,079

Timeline