The United States General Services Administration ("GSA") is a federal agency charged with the responsibility of overseeing various needs of the federal government, including office lease space requirements of many agencies. On October 4, 2004, the GSA awarded a five-year "no-cost" National Broker Contract ("Contract") to four companies to represent the GSA in procuring such space. These companies include Jones Lange LaSalle Americas, Inc., Julien J. Studley, Inc., The Staubach Company, and the Trammell Crow Company.

On April 1, 2005, those companies were to be given a notice to proceed with the Contract (although nothing was available as of today, on the GSA's website to confirm this has been done). The awarding of the Contract is significant not only for the fact that it substantially changes the method by which the GSA previously procured lease space, but it also indicates that the federal government is centrally focused, as is a typical business, on customer service and recognizing efficiencies.

Prior to the Contract, the GSA directly paid the broker a fee for assisting in the procurement of lease space. However, under the Contract, the broker may only look to the owner/landlord of a property for payment, similar to typical market operation. Moreover, under the terms of the bids submitted by the four companies, they agreed to credit a portion of their commissions negotiated with the owner against the shell rent owed by the tenant. In essence, the GSA has leveraged its multi-billion dollar per year tenant position to obtain commission discounts from the brokerage industry.

In order to obtain a successful bid for the Contract, the four companies were evaluated in the following categories: experience, management/operations and staffing, past performance with the GSA and small business participation. In fact, the Contract has a minimum small business set-aside goal of 23 percent, although GSA information has some of the four brokers exceeding that amount by a "substantial" margin.

The GSA intends to improve customer service and be the central point of contact for the lease process, instead of the previous practice of allowing the relevant tenant agency to operate directly with the broker. Although the GSA has a training program specifically for the brokers to address compliance with the Contract, a Performance Review Board within the agency intends to police the brokers' operations, by analyzing the rental rates negotiated and other various factors (which may affect whether each broker obtains an extension of the Contract).

Commercial brokers familiar with the four brokers' operations would do well to become accustomed with the Contract process, as the set-aside goal assures that a significant amount of referral business, particularly on smaller leases, may be outsourced to various brokerages. For more information on the National Broker Contract, please visit the GSA's website.

Published: April 28, 2005

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