The federal government has awarded a 20-year, $383 million lease for a new NASA headquarters building to a partnership led by developer Mortimer B. Zuckerman, the owner of U.S. News & World Report and the Atlantic magazine.
Zuckerman's winning proposal was 12.2 percent more expensive than one of the three rival bids, according to one of the losing developers. Government officials said Zuckerman's proposal was chosen on economic and technical grounds, but declined to specify the reasons for their choice.
The outcome was a setback for the government in its effort to move federal agencies into government-owned office buildings. The government had asked developers for proposals that would enable it to credit its lease payments toward an eventual purchase of the new NASA office building, but no developer offered a building on those terms.
The Office of Management and Budget and the General Services Administration (GSA), which serves as the government's landlord, have asserted that, over the long run, owning office buildings would be more economical for the government than leasing them.
The new headquarters, to be built on the site bounded by the Southwest Freeway and Third, Fourth and E streets SW, will house about 2,100 NASA employees currently working in three government-owned and four leased office buildings in the District, officials said. The agency's two main buildings, at 400 Maryland Ave. SW and at 600 Independence Ave. SW, will undergo major renovations, after which they will be used by other government agencies, officials said.
The buildings, which are about 30 years old, need sprinkler systems, new heating and air conditioning, and asbestos removal, officials said. They also have rodent problems.
Zuckerman's rivals in the bidding for the NASA project were Western Development Corp., Peter N.G. Schwartz Cos. and Leland H. Phillips. A fifth competitor, the developer of the long-delayed Far East Center in Chinatown, had been eliminated from the competition earlier because of defects in its proposal, government officials said.
While Raymond A. Ritchey, senior vice president of Zuckerman's Boston Properties company, was expressing "extreme pride" in his company's victory, Peter Schwartz was expressing surprise and skepticism. "We're in a state of shock," he said. Schwartz had been hoping that NASA would lease his building at Judiciary Square, which is in an advanced stage of construction and waiting for a tenant.
Schwartz said he had offered the government an annual rental rate of $34.95 per square foot compared with Boston Properties's offer of $39.20. "There has to be a damn good explanation for paying ... more for something when there's an alternate," Schwartz said.
Roy Eckert, the GSA official who chaired the government's selection committee, said he would discuss the reasons for the decision in meetings with the losers next week. Zuckerman's proposal "represented the best technical product" for NASA, and "the price was very competitive," he said.
GSA considered the quality of the developers, the security of the proposed buildings and the efficiency of their design, among other factors, Eckert said.
Western, which has reportedly been experiencing some financial problems related to projects outside Washington, had offered the government space in The Portals, an office complex it is developing near the base of the 14th Street Bridge. Leland Phillips had offered to build a building for NASA on the former site of a wax museum near Zuckerman's project.
The NASA deal follows a string of government awards for Boston Properties. It is developing an office building adjacent to the NASA site for the Office of the Comptroller of the Currency and another for the federal judiciary near Union Station.
Construction of the NASA building is scheduled to begin in July, and the space agency is scheduled to begin moving in early 1992.