HHS awarded $13.6M for nonresidential building leasing, with a significant portion for Maryland properties

Contract Overview

Contract Amount: $13,618,512 ($13.6M)

Contractor: Second Rock Spring Park Limited Partnership

Awarding Agency: Department of Health and Human Services

Start Date: 2007-07-12

End Date: 2012-07-21

Contract Duration: 1,836 days

Daily Burn Rate: $7.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LRP089976 JUNRENT 6707 DEMOC. INV207JUN07 $210,559.00

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $13.6 million to SECOND ROCK SPRING PARK LIMITED PARTNERSHIP for work described as: LRP089976 JUNRENT 6707 DEMOC. INV207JUN07 $210,559.00 Key points: 1. The contract value of $13.6 million over its duration suggests a substantial commitment to real estate services. 2. Analysis of the contract's value in relation to its duration is key to understanding its cost-effectiveness. 3. The presence of multiple bidders indicates a potentially competitive market for these leasing services. 4. The firm-fixed-price structure generally offers cost certainty for the government. 5. The contract's performance period spans over five years, indicating a long-term need for these facilities. 6. The geographic focus on Maryland is a notable aspect of this real estate acquisition.

Value Assessment

Rating: fair

The total award of $13.6 million over approximately five years averages to roughly $2.7 million per year. Benchmarking this against similar nonresidential building leases by federal agencies is crucial. Without specific per-square-foot data or comparable lease agreements in the same geographic area, a precise value-for-money assessment is challenging. However, the duration suggests a stable, long-term need that may have allowed for negotiation of favorable terms.

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 bids. With 3 bidders, the competition level appears moderate. This suggests that while there was interest, the market might not be saturated with potential offerors for this specific type of service or geographic location. Moderate competition can lead to reasonable pricing, but a higher number of bidders often drives prices down further.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages a wider range of offers, potentially leading to lower prices and better service quality through market forces.

Public Impact

The primary beneficiaries are likely federal agencies within the Department of Health and Human Services requiring office or facility space. The services delivered include the leasing of nonresidential buildings, providing essential operational infrastructure. The geographic impact is concentrated in Maryland, supporting federal operations within that state. Workforce implications are indirect, primarily supporting the administrative and operational functions of the housed agencies rather than direct job creation through the lease itself.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for escalating lease costs over the contract's multi-year term.
Dependence on a single contractor for critical facility space could pose a risk if performance issues arise.
Limited flexibility to adapt to changing space requirements due to the long-term nature of the lease.

Positive Signals

The use of full and open competition suggests a robust process for selecting the most advantageous offer.
A firm-fixed-price contract provides budget certainty for the government.
The contract's duration indicates a stable and predictable operational environment for the agency.

Sector Analysis

This contract falls within the commercial real estate sector, specifically focusing on the leasing of nonresidential buildings. The NAICS code 531120, Lessors of Nonresidential Buildings (except Miniwarehouses), confirms this. Federal agencies are significant consumers of leased real estate, and contracts like this are essential for providing office space and operational facilities. Comparable spending benchmarks would involve analyzing the average cost per square foot for similar federal leases in the Maryland region and the overall federal expenditure on leased properties.

Small Business Impact

The 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 set-aside provision. The primary contractor, SECOND ROCK SPRING PARK LIMITED PARTNERSHIP, is likely a larger entity, and its role does not inherently involve small business subcontracting unless specified elsewhere in the contract terms.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program officials within the Department of Health and Human Services. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver the leased space as specified. Transparency is generally facilitated through contract award databases like FPDS. 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
GSA Leased Building Portfolio
Public Buildings Service Contracts

Risk Flags

Long-term commitment may reduce future flexibility.
Moderate competition could limit price optimization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $13.6 million to SECOND ROCK SPRING PARK LIMITED PARTNERSHIP. LRP089976 JUNRENT 6707 DEMOC. INV207JUN07 $210,559.00

Who is the contractor on this award?

The obligated recipient is SECOND ROCK SPRING PARK LIMITED PARTNERSHIP.

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 $13.6 million.

What is the period of performance?

Start: 2007-07-12. End: 2012-07-21.

What is the historical spending pattern for nonresidential building leases by the Department of Health and Human Services, particularly in Maryland?

Analyzing historical spending for HHS nonresidential leases in Maryland requires accessing detailed procurement data over several fiscal years. While this specific contract award totals $13.6 million, understanding the broader pattern involves looking at the number of similar leases, their average duration, and total expenditure. Agencies like HHS often lease space due to the flexibility it offers compared to owning property, especially in high-demand urban or suburban areas like Maryland. Historical data might reveal trends in average cost per square foot, the prevalence of full and open competition versus other methods, and the typical duration of such leases. Without access to a comprehensive historical database filtered for HHS, Maryland, and the specific NAICS code, a precise historical spending pattern cannot be detailed here. However, it's reasonable to assume consistent annual spending on leased facilities to support agency operations.

How does the awarded amount compare to market rates for similar nonresidential building leases in Maryland?

To compare the awarded amount of $13.6 million to market rates for similar nonresidential building leases in Maryland, one would need to analyze the contract's details, such as the square footage leased, the specific location within Maryland, and the lease term (approximately 5 years). Market rates are often expressed as a cost per square foot per year. Without these granular details, a direct comparison is difficult. However, the fact that the contract was awarded under full and open competition with three bidders suggests that the pricing was likely competitive. If the average annual cost (approximately $2.7 million) falls within or below typical commercial lease rates for comparable Class A or B office space in the relevant Maryland submarkets, it would indicate fair market value. Conversely, if it significantly exceeds these rates, it might suggest a less favorable deal for the government.

What are the potential risks associated with a long-term (5+ year) lease agreement for nonresidential buildings?

Long-term lease agreements for nonresidential buildings, like this 5+ year contract, present several potential risks. Firstly, there's the risk of market obsolescence; the leased space might become unsuitable for the agency's evolving needs over time, leading to inefficiencies or the need for costly modifications. Secondly, if market rental rates decrease significantly during the lease term, the government could be locked into paying above-market prices, representing a financial risk. Thirdly, the long duration ties up significant funds, potentially reducing budgetary flexibility for other priorities. Finally, reliance on a single property for an extended period can create operational risks if the building experiences unforeseen issues (e.g., structural problems, HVAC failures) that are not promptly or adequately addressed by the lessor, impacting agency continuity.

What is the track record of SECOND ROCK SPRING PARK LIMITED PARTNERSHIP in securing and performing on federal government contracts?

Information regarding the specific track record of SECOND ROCK SPRING PARK LIMITED PARTNERSHIP on federal government contracts, beyond this award, is not directly available from the provided data snippet. To assess their track record, one would typically consult federal procurement databases (like FPDS or SAM.gov) to review their past awards, contract values, performance ratings (if available), and any history of contract modifications, disputes, or terminations. A thorough review would involve looking at the number and types of contracts they have held, their performance history on those contracts, and their financial stability. Without this external data, it's impossible to definitively state their track record beyond their role as the lessor in this particular HHS contract.

How does the number of bidders (3) impact the government's ability to secure the best value in this lease agreement?

A moderate number of bidders, such as the three involved in this lease agreement, generally provides a reasonable level of competition. With three bidders, the government has options and can leverage competitive pressure to negotiate favorable terms and pricing. However, a higher number of bidders (e.g., five or more) often intensifies this pressure, potentially leading to even lower prices or more innovative solutions as companies vie more aggressively for the contract. Conversely, fewer than three bidders might indicate limited market interest or potential barriers to entry, which could reduce the government's leverage. In this case, three bidders suggest a moderately competitive environment, likely yielding good value, but perhaps not the absolute best value achievable in a more robustly contested market.

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: 7200 WISCONSIN AVE, STE 1100, BETHESDA, MD, 08

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

Financial Breakdown

Contract Ceiling: $13,618,512

Exercised Options: $13,618,512

Current Obligation: $13,618,512

Contract Characteristics

Multi-Year Contract: Yes

Timeline