Parklawn Lease Expiration - 2010

Authorizing Legislation: Section 301 of the Public Health Service Act.

Budget Request
Since HRSA is the single largest tenant in the Parklawn Building, funds are requested centrally in the HRSA budget to most effectively manage the project with the General Services Administration. The current lease of the Parklawn Building expires on July 31, 2010; consequently, a long-term housing solution for the building occupants must be found. The Parklawn Building itself has become functionally obsolete after 40 years of occupancy, and would require a substantial modernization effort by the landlord to meet minimum federal standards. The inefficient design of the building significantly limits space layout on each floor, which also increases the amount of space that must be leased. GSA requires a total of $87 million (including $36 million in the FY 2009 HHS budget) to support a competitive lease procurement and to meet updated space requirements for a modern, efficient workplace.

Lease Replacement -When the existing lease expires on July 31, 2010, HHS has the option of remaining in the Parklawn Building or moving to a new leased location. In either case, the expiring contract is to be replaced with a prospectus-level lease, which also consolidates three other smaller leases for other HHS tenants (6010 Executive Boulevard, Rockwall, and Silver Spring Centre). In addition, a lease extension will be required to provide the time necessary for a competitive procurement to replace the existing lease.

GSA has received Congressional authorization for this lease transaction. The Senate Environment and Public Works Committee approved the request in September of 2006 and the House Transportation and Infrastructure Committee approved the request in June of 2007.

Project Summary - The new lease must incorporate space needs for 2,484 current Parklawn tenants as well as tenants from three other current HHS-leased properties. The total existing requirement for usable square footage is 794,463. However, the maximum usable square feet included in the prospectus is 779,501, due to an expected increase in space efficiency with a new lease.

Usable square footage includes assigned tenant occupied space; it excludes common areas such as restrooms, elevator lobbies, and hallways. Rentable square footage (rsf) includes these common areas and must be included in the rent and total square footage calculation. The estimated total rsf for this lease procurement is 935,401.

Project Schedule -The current project schedule, which assumes funding in FY 2009, estimates that all tenants will be housed in new or updated space by May 2011. The Parklawn lease extension is reflected in the adjusted project schedule.

In the short-term, without the benefit of a competitive procurement, HHS will likely face sizeable vacancy costs, damage claim costs, and higher rent. In the long-term, without the procurement support funding, HHS staff will be housed in substandard space conditions enduring multiple moves and renovation projects. The result to the taxpayer will be a less effective agency and less value at a greater cost.