HHS's NIH Spends $20.9M on Nonresidential Building Lease in Maryland
Contract Overview
Contract Amount: $20,922,688 ($20.9M)
Contractor: 10401 Fernwood, LLC
Awarding Agency: Department of Health and Human Services
Start Date: 2007-07-03
End Date: 2012-09-30
Contract Duration: 1,916 days
Daily Burn Rate: $10.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: LRP100092 INV.092-0607 JUNE07 RENT 10401 FERNWOOD ROAD LINCOLN PROPERTY COMPANY EIN:104369846401
Place of Performance
Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $20.9 million to 10401 FERNWOOD, LLC for work described as: LRP100092 INV.092-0607 JUNE07 RENT 10401 FERNWOOD ROAD LINCOLN PROPERTY COMPANY EIN:104369846401 Key points: 1. The contract value is $20.9 million over approximately 5 years. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The lease is for nonresidential buildings, indicating a need for office or lab space. 4. The primary risk appears to be the long-term commitment of taxpayer funds for real estate.
Value Assessment
Rating: fair
The contract price of $20.9 million over 5 years averages $4.18 million annually. Without specific benchmarks for comparable nonresidential building leases in the Maryland area, a precise valuation is difficult. However, the duration and fixed price suggest a negotiated rate.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically allows for the widest possible range of bidders and promotes price discovery. This method suggests that multiple entities likely competed for the lease, potentially driving down costs.
Taxpayer Impact: Taxpayers are impacted by the direct cost of the lease, which is a significant expenditure for office space over several years.
Public Impact
Federal agencies require significant real estate to house operations, impacting local economies through leases. Long-term leases commit federal funds, necessitating careful budgeting and oversight. The location in Maryland places this federal expenditure within a region with a high concentration of government facilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long-term lease commitment
- Potential for underutilization if agency needs change
Positive Signals
- Full and open competition utilized
- Fixed price contract
Sector Analysis
The lease falls under the 'Lessors of Nonresidential Buildings' category, a common expenditure for federal agencies requiring physical office or operational space. Benchmarks for such leases vary significantly by geographic location and building specifications.
Small Business Impact
The data does not indicate whether small businesses were involved in this specific lease agreement, either as bidders or subcontractors. Further analysis would be needed to determine small business participation.
Oversight & Accountability
The contract was awarded under full and open competition, implying a structured procurement process. Oversight would focus on ensuring the terms of the lease are met and that the space remains suitable for NIH's needs.
Related Government Programs
- Lessors of Nonresidential Buildings (except Miniwarehouses)
- Department of Health and Human Services Contracting
- National Institutes of Health Programs
Risk Flags
- Long-term financial commitment
- Potential for space underutilization
- Lack of specific cost-per-square-foot data for comparison
- Lease duration may not align with evolving agency needs
Tags
lessors-of-nonresidential-buildings-exce, department-of-health-and-human-services, md, dca, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $20.9 million to 10401 FERNWOOD, LLC. LRP100092 INV.092-0607 JUNE07 RENT 10401 FERNWOOD ROAD LINCOLN PROPERTY COMPANY EIN:104369846401
Who is the contractor on this award?
The obligated recipient is 10401 FERNWOOD, LLC.
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 $20.9 million.
What is the period of performance?
Start: 2007-07-03. End: 2012-09-30.
What is the average cost per square foot for this lease compared to similar commercial properties in the Bethesda, Maryland area?
Determining the average cost per square foot requires knowing the total square footage leased. Without this information, a direct comparison to market rates is impossible. However, the annual cost of approximately $4.18 million suggests a substantial space requirement, and market research would be necessary to assess if this rate is competitive for the specific location and building class.
What are the specific risks associated with a 5-year lease for nonresidential buildings, particularly for a research institution like NIH?
Risks include potential obsolescence of the facility if technology or research needs rapidly evolve, making the space unsuitable. There's also the risk of the agency's mission changing, leading to underutilization of the leased space. Furthermore, long-term fixed leases can limit flexibility in adapting to new operational requirements or consolidating facilities if needed.
How effectively does a fixed-price lease ensure value for money over its duration, considering potential market fluctuations?
A fixed-price lease provides budget certainty for the government, protecting against upward market fluctuations in rent. However, it can also mean the government misses out on potential savings if market rents decrease significantly over the lease term. The effectiveness in ensuring value depends on the initial negotiation and the accuracy of market predictions at the time of contract award.
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: 10401 FERNWOOD RD, BETHESDA, MD, 08
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $20,922,688
Exercised Options: $20,922,688
Current Obligation: $20,922,688
Contract Characteristics
Multi-Year Contract: Yes
Timeline
Start Date: 2007-07-03
Current End Date: 2012-09-30
Potential End Date: 2015-09-30 00:00:00
Last Modified: 2013-12-19
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