DHHS awarded $11.2M for nonresidential building leasing in Phoenix, AZ over 9 years

Contract Overview

Contract Amount: $11,235,422 ($11.2M)

Contractor: Phoenix, City of

Awarding Agency: Department of Health and Human Services

Start Date: 2007-06-07

End Date: 2016-06-30

Contract Duration: 3,311 days

Daily Burn Rate: $3.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MAY RENT LRP0604125 INV. 4878 445 NORTH 5TH ST. PHOENIX, AZ

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85004

State: Arizona Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $11.2 million to PHOENIX, CITY OF for work described as: MAY RENT LRP0604125 INV. 4878 445 NORTH 5TH ST. PHOENIX, AZ Key points: 1. The contract's duration of over 9 years suggests a long-term need for the leased space. 2. The firm-fixed-price structure provides cost certainty for the government. 3. The contract was awarded under full and open competition, indicating a broad market search. 4. The North American Industry Classification System (NAICS) code 531120 points to commercial real estate leasing. 5. The lease was awarded to a municipal entity, the City of Phoenix, which may have unique considerations. 6. The contract's value of $11.2 million over its term averages approximately $1.24 million annually.

Value Assessment

Rating: fair

Benchmarking the value of this lease requires detailed analysis of comparable commercial real estate rates in Phoenix, AZ during the contract period (2007-2016). Without specific square footage and amenity details, a precise per-square-foot cost comparison is not possible. However, the annual average of approximately $1.24 million for a government lease of this duration suggests a potentially fair market price, assuming the leased space met specific federal requirements. Further investigation into the property's location, size, and condition would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition,' indicating that all responsible sources were permitted to submit offers. The presence of 3 bidders suggests a moderate level of competition for this specific lease requirement. While multiple bidders are positive, the exact number (3) doesn't necessarily guarantee the most competitive pricing without knowing the bid amounts and the specific nature of the requirement.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple vendors to bid, which can drive down prices and ensure the government secures services at a reasonable cost.

Public Impact

The primary beneficiary is the Department of Health and Human Services (DHHS), which secured necessary office space. The services delivered include the provision of nonresidential building space for federal operations. The geographic impact is localized to Phoenix, Arizona, where the leased property is located. Workforce implications are indirect, relating to the employees who would utilize the leased facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 9 years) could lead to potential overpayment if market rates decrease significantly over time.
Lack of specific details on the leased property makes it difficult to assess if the price reflects true market value or if there are hidden costs.
The contract was awarded to a city government entity, which may have different cost structures or negotiation leverage compared to private sector lessors.

Positive Signals

Awarded under full and open competition, suggesting a fair process for selecting the lessor.
Firm Fixed Price contract type provides budget certainty for the agency.
The contract was awarded to a municipal entity, potentially indicating a stable, long-term partner for the government.

Sector Analysis

This contract falls within the Real Estate and Leasing sector, specifically the sub-sector of nonresidential building leasing. The market for federal real estate leasing is substantial, with agencies constantly seeking suitable facilities across the country. Comparable spending benchmarks would involve analyzing average lease rates for similar government facilities in major metropolitan areas like Phoenix, considering factors such as building class, location, and lease term. The National Institutes of Health (NIH), a part of DHHS, often requires specialized facilities, which can influence leasing costs.

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 or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary lessor is the City of Phoenix, a government entity, not a small business.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the contracting officer at the National Institutes of Health (NIH) or the broader Department of Health and Human Services (DHHS). Accountability measures would be tied to the terms and conditions of the lease agreement, including adherence to occupancy requirements, maintenance standards, and payment schedules. Transparency is generally facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Federal Real Property Management
Government Office Space Leasing
Health and Human Services Facilities Management
NIH Research Facilities

Risk Flags

Long contract duration may not adapt well to changing market conditions.
Lack of specific property details hinders thorough value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $11.2 million to PHOENIX, CITY OF. MAY RENT LRP0604125 INV. 4878 445 NORTH 5TH ST. PHOENIX, AZ

Who is the contractor on this award?

The obligated recipient is PHOENIX, CITY OF.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $11.2 million.

What is the period of performance?

Start: 2007-06-07. End: 2016-06-30.

What was the specific square footage and type of nonresidential building leased by DHHS in Phoenix?

The provided data does not specify the exact square footage or the precise type of nonresidential building leased. The NAICS code 531120, 'Lessors of Nonresidential Buildings (except Miniwarehouses),' indicates it was commercial property, but details like office space, laboratory, or other specialized facilities are absent. This information is crucial for a granular value-for-money assessment, as lease costs are heavily influenced by size and specific functional requirements. Without this, comparisons to market rates are generalized.

How did the awarded lease rate compare to prevailing market rates for similar properties in Phoenix, AZ, during the contract period (2007-2016)?

A direct comparison to prevailing market rates is challenging without knowing the specific characteristics of the leased property (e.g., square footage, building class, amenities, location within Phoenix). However, the total award of $11.2 million over approximately 9.3 years averages to about $1.2 million annually. To assess value, one would need to research average commercial lease rates per square foot in Phoenix for the relevant years and multiply by the leased area. Given the contract was competed, it suggests the price was deemed acceptable by the bidders, but a detailed market analysis would be required for a definitive conclusion on whether it represented excellent value.

What were the specific performance requirements outlined in the lease agreement?

The provided data does not detail the specific performance requirements of the lease agreement beyond the provision of nonresidential building space. Standard requirements for federal leases typically include maintaining the property to certain standards, providing utilities (unless otherwise specified), ensuring security, and adhering to occupancy levels. The firm-fixed-price nature of the contract suggests that the lessor was obligated to provide the space and potentially associated services for the agreed-upon price. Any deviations or failures to meet these implicit or explicit requirements would likely trigger contractual remedies.

What was the track record of the City of Phoenix as a lessor to the federal government prior to this award?

The provided data does not contain information on the City of Phoenix's prior track record as a lessor to the federal government. However, as a municipal entity, it is likely to have experience in managing city-owned properties. Assessing their specific performance on federal contracts would require reviewing past performance evaluations, any documented disputes, or contract modifications. The fact that this contract was awarded under full and open competition suggests that the City of Phoenix was considered a responsible source capable of meeting the government's needs at the time of award.

Were there any significant contract modifications or disputes during the 9-year duration of this lease?

The provided summary data does not include details on contract modifications or disputes. Such information is typically found in more detailed contract award files or modification histories. A lease agreement spanning over nine years often involves some level of modification, potentially related to changes in space requirements, escalation clauses, or building system upgrades. The absence of readily available modification data could indicate a straightforward execution or that such details are not captured in this summary view.

How does the average annual cost of this lease compare to other similar federal facility leases managed by DHHS or NIH?

The average annual cost of this lease is approximately $1.2 million. To compare this effectively with other DHHS or NIH leases, we would need data on the size (square footage), location, and specific services included in those other leases. Federal real estate costs vary significantly by geographic market and building specifications. Without these comparable metrics, stating whether $1.2 million annually is high or low relative to other agency leases is speculative. A comprehensive analysis would involve benchmarking per-square-foot costs across similar geographic regions and building types.

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: 200 W WASHINGTON ST 11TH FL, PHOENIX, AZ, 85003

Business Categories: Category Business, Government, U.S. Local Government, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $11,235,422

Exercised Options: $11,235,422

Current Obligation: $11,235,422

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline