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DOCUMENT 32SURE
08087 - rC32663761
r Increased Costs Resulting from GSA's Failure To Exercise Lease
Options]. LCD-79-301; B-118623. November 17, 1978. 4 pp.
Report to Joel W. Solomon, Administrator, General, Services
Administration; by Richard W. Gutmann, Director, Logistics and
Communications Div.
Issue Area: Increase in the Amount of Govt. Leased Space Despite
Congressf Emphasis on Federal Construction. (710).
Contact: Logistics and Communications iv.
Budget Function: General Government: General Property and
Records management (804).
Congressional Relevancez House Committee on Public Works and
Transportation; Senate Committee cn Environment and Public
Rorks.
On December 3, 1971, the General Services
Administration (GSA) lased 2,850 square feet of space in the
Allegheny Center building in Pittsburgh, Pennsylvania. In April
1972, the lease was amended for a term of 5 years, through
September 5, 1977, at an annual rent of S7.15 a square foot. The
Government was required to notify the lessor at leaut 30 days
before the end of the lease term if it wished to renew tte
option. When the lease expired, the lesser refused to renew the
laase at the option price of $7.65 a square foot because GSA did
not notify the lessor 30 days before expiration of the lease.
Because GSA failed to exercise its option in time, the
Government will incur additional rent of about $400,000 ever a
5-year period plus extra costs to be incurred in relocating the
tenant agency to another building. In September 1976, GSA leased
2,600 squa . feet of space in another building in Pittsburgh at
an annual rent of $4.00 a square foot. This lease also contained
an option whereby the Government could renew for anottIt 5 years
at the sane rent, provided notice was given to the lessoz ac
least 90 days before the lease term expirsd. GSA failed to give
the required 90 days notice, necessitating negotiation of a new
3-year lease at an annual rent of $5.15 a square foot. It will
c, st the Government an estimeted $22,000 in additional rent and
service costs because of failure to exercise the renewal option
in time. The Central Office (.4 GSA, in its periodic leasing
reviews, shoold evaluate the ndequacy of controls established by
the regions for administering lease options. (ERS)](ViewImageLocal?handle=hein.gao/gaobaayiy0001&div=1&collection=&method=preview&ext=.png&size=3)