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FY 2009 Budget Justification

Parklawn Lease Expiration - 2010

  FY 2007 Actual FY 2008
FY 2009
FY 2009 +/-
FY 2008
BA --- --- $36,062,141 +$36,062,141

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

FY 2009 Authorization Indefinite
Allocation Method Other

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.

Estimate of Required Usable Square Footage
Current Parklawn Tenants 697,126 Usable Square Feet (usf)
Other HHS Tenants included in Prospectus:  

6010 Executive Blvd

12,845 usf

Rockwall I

16,187 usf

Silver Spring Centre

68,305 usf
Total Current USF Space Requirement 794,463 usf
Total Prospectus USF Space Requirement 779,501 usf

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.

Prospectus Details
Rental Rate $32.00 per rentable square foot (rsf)
Total Annual Cost $30 million
Delineated Area Suburban Maryland
Lease Term 15 years
Total Lease Size 935,401 rsf

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.

Project Benchmark Projected Timeline
Macro Program of Requirements (POR) August 2005
GSA National Office Approval October 2005
OMB Approval January 2006
Senate Environment and Public Works Committee Approved September 2006
Micro POR/SFO Development December 2007
House Transportation and Infrastructure Committee Approval July 2007
HHS Funding in President’s Budget January 2008
Lease Procurement Start February 2008
Lease Award/Reimbursable Work Authorization for Fit-up Costs January 2009
IT/Workstations Installation Complete October 2010
Design & Construction Complete January 2011
All Moves Complete May 2011
Existing Lease Expiration July 2010
Extended Lease Expiration July 2011

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.