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June 2006
Real Estate Market Update
TIs. Turnkey. Negotiated buildout. Chances are you’ve heard these terms from landlords before. Both are designed to put a tenant’s mind at ease that they will be able to customize their space for their business; however, with the steady stream of new commercial and residential construction and rising fuel costs, Turnkey and Tenant Improvement (TI) allowance dollars are buying less than ever before. The challenge for most landlords is that market rental rates have not kept pace with these rising build-out costs, so landlords can’t justify increasing allowances to the required levels. Landlords have instead found ways to cover themselves against potential negative blows to their pro forma. Downgrading “building standard” materials and adding not to exceed clauses to declarations of a Turnkey (a landlord’s commitment to perform the work required by a tenant) build-out allowance are just a couple of the ways landlords are passing off more design and construction costs onto tenants. These rising out-of-pocket expenses are particularly troublesome for government contracts, because while rent can usually be passed through to the government customer, upfront construction and relocation costs usually cannot be passed on.
Money will be tight at the Department of Justice in the coming year. A flat discretionary budget and a proposed 2 percent increase in IT spending will likely translate into efficiencies, spending freezes and some cuts on underperforming programs after pay raises and inflation are factored in. Procurement spending is down 12 percent from FY 2004 to FY 2005 overall but spending by the Federal Prison System is up 29 percent during the same period in the last year.
FPI spending accounts for the fact that nearly one-third of all DOJ procurement spending occurs in the Operations and Maintenance market. Increased spending on security initiatives, particularly in conjunction with DHS and Treasury, is fueling the healthy 17 percent of procurement dollars devoted to it. Over one-half of all DOJ procurement spending occurs on IDIQs and GSA Schedules, demonstrating a willingness by the agency to use non-DOJ contract vehicles.
Financial management, the implementation of e-government initiatives and competitive sourcing remain problem areas for agency managers. Over 1,100 contracts worth a total of $359 million are slated for completion between July and June of next year, including $43 million in Professional Services opportunities, $32 million in Computer Services and $31 million in computer hardware.
To view a PowerPoint slide summary of Department of Justice spending, visit www.eagleeyeinc.com and click the Department of Justice link under “This Month’s Agency Synopsis” header to the right of the home page.
Allowable costs for a contractor's travel and transportation allowances are usually governed by the Federal Acquisition Regulation (“FAR”) travel cost principle at FAR 31.205-46. This provision states that costs for lodging incurred by a contractor traveling on official company business under a Government contract are allowable if they do not exceed, on a daily basis, the “maximum per diem rates” in effect at the time of travel in one of three different Government travel regulations – the GSA’s Federal Travel Regulation (“FTR”), the DoD’s Joint Travel Regulations (“JTR”), and the State Department’s Standardized Regulations (“SR”). “Maximum per diem rates” are defined in the Defense Contract Audit Agency’s (“DCAA”) Contract Audit Manual (“CAM”) as “a combination of lodging plus meals and incidental expenses.”
Upcoming NVTC B2G Committee Meetings and Events:
Mark Your Calendars! Register Today.
Keep your calendar open to attend our June 27, 2006, event. Confirmed Speaker: Aneesh Chopra, Secretary of Technology, Commonwealth of Virginia, at the Hilton McLean.
The NVTC B2G Committee and newsletter would not be possible without the support of our sponsors. We would like to showcase the contribution of one of our key sponsors, immixGroup.
Founded in 1997, immixGroup is a rapidly growing government business consulting firm that helps commercial technology companies more effectively do business in the public sector. Through its unique mix of services designed to support companies of all sizes and in various stages of doing business with the government, immixGroup has earned a strong reputation delivering results for its clients. For more information, please visit www.immixgroup.com.
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For more information, contact Robin Randall, Director of Member Relations, at rrandall@nvtc.org.
We welcome relevant B2G articles from NVTC Members that help educate and inform our community. If you would like to submit an article for consideration, please contact Barbara Miller by email: bmiller@sheahedges.com; or by telephone: (703) 287-7818.
We ask only that you follow these simple guidelines:
- Please keep the article directly relative to B2G and/or NVTC – not company self-promoting.
- Submitted articles must appear on your Web site - a web link is printed at the end of each article in the newsletter.
- Please spell check and proof read – especially if using scientific terminology or personal names, etc.
- Submissions accepted only from current members of NVTC.
Platnium Sponsors: LeapFrog Solutions, Inc. | PricewaterhouseCoopers
Gold Sponsor: AH&T Insurance | Aronson Capital Partners, L.L.C. | Synchris
Silver Sponsors: Dickstein Shapiro | immixGroup | Panacea Consulting, Inc. | Venable LLP | Vistronix, Inc.
