Development of a new NASA headquarters in the District has been put on hold while a congressional agency reviews the government's decision to award the lease to Boston Properties, the real estate company headed by magazine publisher Mortimer B. Zuckerman.
One of the losing competitors, the Peter N.G. Schwartz Cos., asked the government to overturn the award by the General Services Administration in a formal protest filed with the General Accounting Office, the investigative arm of Congress.
The contract -- which could be worth more than $391 million, according to Schwartz -- is the biggest federal lease awarded in the District of Columbia this year.
Raymond A. Ritchey, senior vice president of Boston Properties, said, "The protest is without merit and we're extremely confident of prevailing."
Schwartz alleged that the government had exceeded its price cap for the project of $16.8 million per year by agreeing to pay Boston Properties annual rent of $19.1 million for 20 years. Schwartz said his proposal, for a building on Judiciary Square that is almost completed, would have cost $15.8 million annually.
The lease offered by Boston Properties includes a 10-year renewal option for the government. Ritchey said his company's proposal is $5.5 million less expensive than Schwartz's over 30 years because Boston Properties offered the government a lower renewal rate.
Schwartz said the government should have based its analysis strictly on the costs for the first 20 years; Ritchey said the government's own ground rules for the competition made it clear that it would consider the cost of the renewal period.
Schwartz's allegation that the Boston Properties lease cost more than the congressional authorization for the project was "incorrect," Ritchey said, but he declined to elaborate.
Ritchey said there was "absolutely no comparison" between the track record of Boston Properties, a national development firm with several other government projects, and that of Schwartz, a less prolific developer. The developer's experience was one of the factors the GSA said it would consider.
The government intends to move about 2,100 National Aeronautics and Space Administration workers now at several locations into the new headquarters. The Boston Properties site is bounded by the Southwest Freeway and Third, Fourth and E streets SW.
Officials at GSA declined to discuss the NASA lease. GSA has until July 30 to respond to the protest.
Michael Christensen, NASA's deputy assistant administrator for headquarters administration, said the cost of the new headquarters was a secondary consideration for the space agency. "We were most interested in getting into a high-quality building," he said.
Schwartz said his proposal would cost $341 million over 20 years and that the Boston Properties lease would cost $391 million for the same period.
Schwartz also alleged that the government gave Boston Properties "an unfair competitive advantage" by giving the company exclusive information about its desires for the headquarters building. Boston Properties's "entire proposal is irreparably tainted by those improper communications," Schwartz said in his protest.
Ritchey and Christensen said the allegation was unfounded.
The protest could delay NASA's move by several months, Christensen said. If it takes that long to resolve, it could add "rather substantial costs" to the consolidation, he said.
The lease was awarded June 1, and construction was to have begun in July.