Change Number: Change 156 GSAM Case 2022-G510
Effective Date: 12/02/2022

Subpart 570.5 - Special Aspects of Contracting for Lease Alterations

570.501 General.

      (a)  The procedures in 570.502 apply to alterations acquired directly from a lessor by modification or supplemental lease agreement. This is allowed if the following conditions are met:

           (1)  The alterations fall within the scope of the lease. Consider whether the work can be regarded fairly and reasonably as part of the original lease requirement.

           (2)  The lessor is willing to perform the proposed alterations at a fair and reasonable price.

           (3)  It is in the Government’s interest to acquire the alterations from the lessor.

      (b)  If proposed alterations are outside the scope of the existing lease, decide whether to acquire the alterations through either:

           (1)  A supplemental lease agreement, as justified and approved under 570.502-1.

           (2)  Government performance or a separate contract. The lease must first provide the Government with the right to perform alterations to the leased space.

570.502 Alterations by the lessor.

570.502-1 Justification and approval requirements.

If the proposed alterations are outside the general scope of the lease and the contracting officer plans to acquire them from the lessor without competition, the following justification and approval requirements apply:

      (a) If the alteration project will not exceed the micro-purchase threshold identified in FAR 2.101(b), no justification and approval is required.

      (b) If the alteration project will exceed the micro-purchase threshold identified in FAR 2.101(b), but not the simplified lease acquisition threshold, the contracting officer may use simplified acquisition procedures and explain the absence of competition in the file.

      (c) If the alteration project will exceed the simplified lease acquisition threshold, the justification and approval requirements in FAR 6.3 and 506.3 apply.

570.502-2 Procedures.

      (a)  Scope of work. The contracting officer must prepare a scope of work for each alteration project.

      (b)  Independent Government estimate. The contracting officer must obtain an independent Government estimate for each alteration project, including changes to existing alteration agreements with the lessor.

      (c)  Request for proposal.

           (1)  The contracting officer must provide the scope of work to the lessor, including any plans and specifications, and request a proposal.

           (2)  The contracting officer must request sufficient cost or price information to permit a price analysis.

      (d)  Audits. If the contracting officer requires cost or pricing data and the alteration project will exceed the threshold identified in FAR 15.403-4, request an audit.

      (e)  Proposal evaluation.The contracting officer must—

           (1)  Determine if the proposal meets the Government’s requirements.

           (2)  Analyze price or cost information. At a minimum, compare the proposed cost to the independent estimate and, if applicable, any audit results received.

           (3) Analyze profit following FAR 15.404-4.

           (4)  Document the analysis under this paragraph and the resulting negotiation objectives.

      (f)  Price negotiations. The contracting officer must—

           (1)  Exercise sound judgment. Make reasonable compromises as necessary.

           (2)  Provide the lessor with the greatest incentive for efficient and economical performance.

           (3)  Document negotiations in the contract file, including discussions regarding restoration cost or waiver of restoration cost.

      (g)  Order. For modifications not exceeding the simplified acquisition threshold, lease contracting officers may delegate alteration contracting authority to a warranted contracting officer’s representative in GSA or the tenant agency. Alterations awards must reference the lease number. If the modification does not exceed the simplified acquisition threshold, the contracting officer may use GSA Form 300, Order for Supplies or Services. Reference the lease on the form.

      (h)  Inspection and payment. The contracting officer must not make final payment for alterations until the work is:

           (1)  Inspected by a qualified Government employee or independent Government contractor.

           (2)  Confirmed as completed in a satisfactory manner.

570.503 Alterations by the Government or through a separate contract.

If the Government chooses to exercise its right to make the alterations rather than contracting directly with the lessor, the Government may either:

      (a)  Have Federal employees perform the work.

      (b)  Contract out the work using standard contracting procedures that apply to a construction contract performed on Federal property. If the Government decides to contract for the work, invite the lessor, as well as all other prospective contractors, to submit offers for the project.