Wayne State University's $8.5M lease for nonresidential buildings shows a 2893-day duration

Contract Overview

Contract Amount: $9,896,934 ($9.9M)

Contractor: Wayne State University

Awarding Agency: Department of Health and Human Services

Start Date: 2007-06-29

End Date: 2015-05-31

Contract Duration: 2,893 days

Daily Burn Rate: $3.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LRP0702117 WAYNE STATE JUNE RENT INVS0464287 $84,735.20

Place of Performance

Location: DETROIT, WAYNE County, MICHIGAN, 48201, UNITED STATES OF AMERICA

State: Michigan Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $9.9 million to WAYNE STATE UNIVERSITY for work described as: LRP0702117 WAYNE STATE JUNE RENT INVS0464287 $84,735.20 Key points: 1. The contract's long duration suggests a stable, long-term need for the leased space. 2. The firm fixed-price contract type indicates predictable costs for the government. 3. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 4. The lease was awarded under full and open competition, implying a broad market search. 5. The National Institutes of Health (NIH) is the specific agency within HHS overseeing this lease. 6. The North American Industry Classification System (NAICS) code 531120 points to commercial building leasing.

Value Assessment

Rating: fair

Benchmarking the value of this lease is challenging without specific details on the square footage, location, and amenities provided. However, the total award amount of $8,473,520.20 over approximately 8 years (2893 days) suggests an average annual cost of roughly $1 million. This figure needs to be compared against prevailing market rates for similar commercial office space in the relevant geographic area (Michigan) to determine if it represents good value for money. The fixed-price nature of the contract helps control cost overruns, but the initial price negotiation is critical.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that the government solicited bids from all responsible prospective contractors. The presence of 3 bidders suggests a moderate level of competition for this lease. While multiple bidders are positive, the exact number and the nature of their proposals would be needed to fully assess if the competition effectively drove down prices and ensured the best value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging a wider range of offers, potentially leading to more competitive pricing and better terms for the government.

Public Impact

The primary beneficiary is Wayne State University, which receives rental income from the leased property. The leased space likely supports federal operations, potentially for research, administrative, or other functions managed by the NIH. The geographic impact is localized to Michigan, where the leased property is situated. The contract supports the real estate sector by providing a long-term tenant for commercial property.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency on specific space utilization and associated operational costs.
Potential for price escalation in future renewals if market rates increase significantly.
Limited insight into the specific needs driving such a long-term lease.

Positive Signals

Long-term lease provides stability for federal operations.
Firm fixed-price contract offers cost predictability.
Full and open competition suggests a deliberate effort to find suitable offerings.

Sector Analysis

This contract falls within the Real Estate and Rental and Leasing sector, specifically the sub-sector of Lessors of Nonresidential Buildings. The federal government is a significant consumer of commercial real estate, leasing space across the country to support its vast operations. Benchmarking this lease against other federal leases for similar types of buildings and durations in the Midwest region would provide further context on its market competitiveness.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary focus was on securing the best overall offer from the broader market. There is no explicit information on subcontracting requirements, which means opportunities for small businesses to participate in fulfilling the lease obligations may be limited unless Wayne State University voluntarily engages them.

Oversight & Accountability

Oversight for this lease would typically fall under the contracting officer at the Department of Health and Human Services (HHS) and the relevant program officials at the National Institutes of Health (NIH). Accountability is maintained through contract clauses, performance monitoring, and payment verification. Transparency is generally limited to the contract award details available in public databases; specific operational details and performance metrics are usually internal.

Related Government Programs

Federal Real Estate Leases
Department of Health and Human Services Contracts
National Institutes of Health Procurement
Commercial Property Leasing
Nonresidential Building Lessors

Risk Flags

Long contract duration may indicate potential for vendor lock-in or reduced flexibility.
Lack of small business participation details requires further scrutiny.
Value for money assessment is limited without detailed property specifications and market comparisons.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $9.9 million to WAYNE STATE UNIVERSITY. LRP0702117 WAYNE STATE JUNE RENT INVS0464287 $84,735.20

Who is the contractor on this award?

The obligated recipient is WAYNE STATE UNIVERSITY.

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 $9.9 million.

What is the period of performance?

Start: 2007-06-29. End: 2015-05-31.

What specific NIH/HHS functions are housed in the leased property, and how does this space contribute to their mission?

The provided data does not specify the exact functions or programs supported by this lease. However, given that the contracting agency is the National Institutes of Health (NIH), a part of the Department of Health and Human Services (HHS), the leased space likely supports critical research, administrative, or operational activities related to public health and medical research. Understanding the specific mission-critical nature of these functions would help assess the strategic importance of this lease and the value derived from it. Without this context, it's difficult to definitively link the lease expenditure to specific mission outcomes.

How does the per-square-foot cost of this lease compare to similar commercial properties in Michigan during the contract period (2007-2015)?

The provided data does not include the square footage of the leased property, making a direct per-square-foot cost comparison impossible. The total award amount was $8,473,520.20 over approximately 2893 days. To perform a meaningful comparison, one would need to know the total square footage leased. If, for example, the leased space was 50,000 square feet, the average annual cost would be approximately $177,000, or $3.54 per square foot per year. This would then need to be benchmarked against average commercial lease rates for similar property types (e.g., office, laboratory) in the specific Michigan locality during the 2007-2015 period, considering factors like building class, amenities, and lease terms.

What was the rationale for selecting a firm fixed-price contract type for this long-term lease?

A firm fixed-price (FFP) contract type is typically chosen when the risks and uncertainties surrounding performance are relatively low and the scope of work is well-defined. For a real estate lease, the 'work' is the provision of usable space. The FFP structure provides the government with cost certainty, as the price is fixed regardless of the lessor's actual costs incurred in maintaining the property. This is advantageous for long-term leases where predictable budgeting is crucial. The rationale for choosing FFP here likely stems from the desire to lock in costs for the duration of the lease, transferring the risk of cost overruns related to property maintenance and operational expenses to the lessor, Wayne State University.

Given the 3 bidders in the full and open competition, what was the range of proposed prices or terms, and how was the winning offer determined to be the best value?

The provided data indicates that there were 3 bidders for this contract, which was awarded under full and open competition. However, the specific details regarding the range of proposed prices, technical solutions, or the evaluation criteria used to determine the 'best value' are not included. Typically, 'best value' procurements allow for consideration of factors beyond just price, such as the quality of the space, landlord services, lease duration flexibility, or responsiveness to specific government needs. Without access to the source selection decision document or bid abstracts, it is impossible to ascertain how the winning offer from Wayne State University was deemed superior to the other two proposals.

What are the historical spending patterns for commercial real estate leases by the NIH or HHS in Michigan?

The provided data focuses solely on this single lease award to Wayne State University. To analyze historical spending patterns for commercial real estate leases by the NIH or HHS in Michigan, one would need to access and aggregate data for all similar contracts awarded within that geographic region and by those agencies over a relevant period. This would involve querying federal procurement databases (like FPDS or USASpending) for contracts with NAICS code 531120 (or related real estate codes) awarded by HHS/NIH in Michigan. Analyzing such data would reveal trends in spending levels, average lease values, contract durations, and the prevalence of different contract types and competition levels.

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: 5707 WOODWARD RM 6402, DETROIT, MI, 48202

Business Categories: Category Business, Educational Institution, Government, Higher Education, Nonprofit Organization, Not Designated a Small Business, U.S. Regional/State Government

Financial Breakdown

Contract Ceiling: $9,896,934

Exercised Options: $9,896,934

Current Obligation: $9,896,934

Contract Characteristics

Multi-Year Contract: Yes

Timeline