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GAO-01-578R 1 (2001-06-05)

handle is hein.gao/gaocrptangc0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 June 5, 2001 Senator James M. Inhofe Senator John McCain United State Senate Subject: Acquisition of Leased Space for the U.S. Patent and Trademark Office This letter responds to your requests for a review of the data, assumptions, and conclusions reached by the General Services Administration (GSA) and the Patent and Trademark Office (PTO) relating to the acquisition of about 2 million square feet of leased space for the consolidation of PTO activities. This build-to-suit lease, valued at approximately $1.2 billion over its 20-year term, was signed in June 2000. According to GSA officials, the lease can be terminated without penalty to the government only if the lessor fails to perform. As agreed with you, the objective of our work was to respond to allegations and questions from two public interest groups about the PTO lease acquisition. One public interest group made the following allegations concerning the procurement process for the lease: (1) GSA improperly awarded the lease to an offeror who had not complied with the solicitation's stated requirements, (2) GSA failed to compete the construction of the interior finishes phase of the project as required by the Competition in Contracting Act of 1984 (CICA), and (3) GSA used an illegal cost-plus-a-percentage-of-cost contract.' The second public interest group asked (1) whether the requirements in GSA's Solicitation for Offers (SFO) for the PTO lease transformed the lease from an operating lease to a capital lease under Office of Management and Budget (OMB) Circular A-11; (2) whether the new facility will be able to house all PTO employees and contractors throughout the lease term because the staff may grow,2 including whether this growth invalidates the potential cost savings from consolidation; (3) whether some of the standard requirements of the lease, such as a day care center and a fitness center, are essential to providing adequate office space for PTO; (4) whether the cost estimates for the tenant improvement allowance and furniture costs are excessive; and (5) whether constructing the PTO facility would have been less costly than leasing it. The methodology we used to respond to these allegations and questions is discussed in enclosure II. 'We consolidated all their allegations into three allegations. 2PTO's workload is projected to grow 116 percent between 2000 and 2005. GAO-01-578R Leased Space for the U.S. Patent and Trademark Office

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