Attachment 1

**Operating Policy for Revised Tenant Improvements SFO Paragraphs**

1.  We have revised certain tenant improvements (TI) paragraphs in the
    Solicitation for Offers (SFO) as shown on the following pages. The
    changes specifically address TI schedules and submittals, and
    provide for better coordination among the TI processes. These
    changes are incorporated into the SFO. Changed text is highlighted
    in yellow in this RSL attachment. All revised paragraphs are dated
    March 2007 to reflect the month of revision.

2.  [How to Offer]{.underline}, subparagraph E(1)(d): The sentence with
    the TI allowance amount was deleted and replaced by a reference to
    its new location in the new Tenant Improvements Included In Offer
    paragraph. We also changed the *alterations* references to
    *improvements* since that is used throughout the document.

3.  [Tenant Improvements Included in Offer]{.underline} paragraph: The
    former title of Tenant Improvements is revised to indicate this
    paragraph applies to the offer phase of the procurement. The TI
    allowance is moved from the How to Offer paragraph. Previously it
    was buried and difficult to find. The new title clarifies that the
    TIs are included in the offer. Since the GSA Form 3517 does not
    address quality standards and requirements, the paragraph is changed
    to reference the SFO and attachments.

4.  [Tenant Improvements Rental Adjustment]{.underline}: This paragraph
    is corrected by deleting the provision that allowed the Government
    after occupancy to make lump sum payments to buy down the rent. This
    is in keeping with PBS pricing policy.

5.  [Tenant Improvements Pricing Requirements]{.underline}: The
    reference to the General Clauses in subparagraph A is corrected to
    the appropriate FAR clause. Subparagraph B(1) is corrected to
    combine all information. Subparagraph B(2) is amended to clarify
    that the scope of work is related to the tenant improvements. Some
    paragraphs are reordered to better reflect the chronology of events
    that occur. Subparagraph B(4) introduces the new CSI format that
    must be used with TI procurements. Using this form will help
    standardize how we obtain this information, but it is also modeled
    on the form our planner/estimators will use for independent
    Government estimates.

6.  [Construction Schedule of Tenant Improvements]{.underline}: A
    seventh task phase regarding the TI bid process and the bidding
    phase and notice to proceed is added to the time line. A section on
    Certificates of Occupancy is also added.

7.  [Subsequent Tenant Alterations]{.underline}: The title is changed
    from Subsequent Tenant Improvements to avoid confusion with the
    tenant improvements that initially are performed to deliver the
    leased space as opposed to alterations that occur during the lease
    term.

\[Excerpt from the How to Offer paragraph\]

NOTE: New date for the paragraph title is (Mar 2007)

E. [IMPORTANT CLARIFICATIONS TO OFFER REQUIREMENTS]{.underline}:

1\. Rate structure required from subparagraph B shall include the
following:

\[Subparagraphs a-c text deleted for ease of reference\]

d\. The annual amortized cost of the Tenant Improvements Allowance. Such
amortization shall be expressed as a cost per usable and rentable square
foot per year. Tenant Improvements shall be all alterations for the
Government‑demised area above the building shell buildout. [The Tenant
Improvements Allowance is stated in the Tenant Improvements Included in
Offer paragraph elsewhere in this solicitation]{.mark}. Such alterations
shall be described and identified in the drawings used to construct the
Government‑demised area. The Tenant Improvements Allowance, which is to
be provided by the Lessor to the Government for Tenant Improvements,
shall be made available at lease execution.

TENANT IMPROVEMENTS

mandatory paragraph if using "ti" approach

MAY BE ALTERED BUT SHOULD CONTAIN SUBSTANTIALLY THE SAME INFORMATION

**1.12 TENANT IMPROVEMENTS [INCLUDED IN OFFER (MAR 2007)]{.mark}**

> A. **[The Tenant Improvements allowance is per ANSI/BOMA Office Area
> square foot.]{.mark}** The Tenant Improvements Allowance shall be used
> for the [buildout]{.mark} of the Government‑demised area in accordance
> with the Government‑approved design intent drawings. All Tenant
> Improvements required by the Government for occupancy shall be
> performed by the successful Offeror as part of the rental
> consideration, and all improvements shall meet the quality standards
> and requirements of [this solicitation and its attachments.]{.mark}
>
> B. The Tenant Improvements Allowance shall include all the Offeror's
> administrative costs, general contractor fees, subcontractor's profit
> and overhead costs, Offeror\'s profit and overhead, design costs, and
> other associated project fees necessary to prepare construction
> documents to complete the tenant improvements. It is the successful
> Offeror's responsibility to prepare all documentation (working
> drawings, etc.) required to receive construction permits. **NO COSTS
> ASSOCIATED WITH THE BUILDING SHELL SHALL BE INCLUDED IN THE TENANT
> IMPROVEMENT PRICING**.

mandatory paragraph if using "ti" approach

MAY BE ALTERED BUT SHOULD CONTAIN SUBSTANTIALLY THE SAME INFORMATION.

## 1.13 TENANT IMPROVEMENTs RENTAL ADJUSTMENT (MAR 2007*)*

All Tenant Improvements shall be identified after award of the contract
in accordance with the provisions established in the \"Design Intent
Drawings\" subparagraph in the \"Construction Schedule of Tenant
Improvements\" paragraph in the MISCELLANEOUS section of this SFO.

1.  The Government, at its sole discretion, shall make all decisions as
    to the usage of the Tenant Improvements Allowance. The Government
    may use all or part of the Tenant Improvements Allowance. The
    Government may return to the Lessor any unused portion of the Tenant
    Improvements Allowance in exchange for a decrease in rent according
    to the amortization rate over the firm term.

2.  [The Government reserves the right to make cash payments for any or
    all work performed by the Lessor. Prior to occupancy, the
    Government, at its sole discretion, may choose to pay lump sum for
    any or all of the Tenant Improvements Allowance. If, prior to
    occupancy, the Government elects to make a lump sum payment for any
    portion of the Tenant Improvements Allowance, the payment of the
    Tenant Improvements Allowance by the Government will result in a
    decrease in the rent.]{.mark}

> []{.mark}

3.  If it is anticipated that the Government will spend more than the
    allowance identified above, the Government reserves the right to
    1) reduce the Tenant Improvements requirements, 2) pay lump sum for
    the overage upon completion and acceptance of the improvements, or
    3) increase the rent according to the negotiated amortization rate
    over the firm term of the lease.

4.  Payment will not be made by the Government in instances where the
    Government accepts fixtures and/or other Tenant Improvements already
    in place. However, the Lessor will be reimbursed for costs to repair
    or improve the fixture(s) and/or any other improvements already in
    place.

mandatory paragraph if using "ti" approach

MAY BE ALTERED BUT SHOULD CONTAIN SUBSTANTIALLY THE SAME INFORMATION

C.O. / R.S should consult with their regional a/e or estimator to
determine an acceptable range for Lessor's overhead and profit fees.

## [3.2 TENANT IMPROVEMENTS PRICING REQUIREMENTS (MAR 2007)]{.mark}

[A. Under the provisions of FAR Subpart 15.4, the Lessor must submit
information that is adequate for the Government to evaluate the
reasonableness of the price or determining cost realism in conjunction
with the Tenant Improvements.]{.mark}

[]{.mark}

B. In lieu of submitting detailed cost or pricing data and entering into
negotiations to determine a final cost for the subject work, the
Government (in accordance with FAR 15.403) is willing to accept a price
based upon the results of a competitive proposal process if the
following conditions are met:

[]{.mark}

1\. The Lessor shall submit to the Government a proposal for overhead,
profit, and architectural‑engineering fees, permits, and regulatory fees
for all Tenant Improvements. This will be negotiated and agreed upon
prior to the award for the subject improvements (separate from lease
award).

2\. The [Tenant Improvements]{.mark} scope of work includes the lease,
the SFO, all SFO attachments, the construction drawings/documents, and
written specifications. In cases of discrepancies, the Lessor shall
immediately notify the Contracting Officer for resolution. All
differences will be resolved by the Contracting Officer in accordance
with the terms and conditions of the lease.

3\. No building shell items shall be included in the [pricing for the
Tenant Improvements.]{.mark}

[]{.mark}

4\. Each proposal shall be 1) submitted in the [attached 21 Division
Tenant Improvements Cost Summary (TICS) table by the proposed General
Contractors (or subcontractors)]{.mark} and 2) reviewed by the
Government. [The General Contractors shall submit the supporting bids
from the major subcontractors.]{.mark} The Government reserves the right
to determine if bids meet with the scope of work, that the price is
reasonable, and that the Lessor's proposed contractors are qualified to
perform the work. The Government reserves the right to reject all bids,
at its sole discretion.

[]{.mark}

5\. A minimum of three qualified general contractors shall be invited to
participate in the competitive proposal process. Each participant shall
compete independently in the process. [In the absence of sufficient
competition from the general contractors, a minimum of three qualified
subcontractors from each trade of the attached 21 Division TICS table
shall be invited to participate in the competitive proposal
process.]{.mark}

[]{.mark}

6\. The Government [reserves the right to be represented]{.mark} at all
negotiation sessions between the Lessor and potential contractors.

[]{.mark}

7\. The Lessor shall demonstrate to the Government that best efforts
have been made to obtain the most competitive prices possible, and the
Lessor shall accept responsibility for all prices through direct
contracts with all contractors.

8\. The Lessor shall complete the competition and the cost proposal
process in the time frame specified in the Construction Schedule of
Tenant Improvements paragraph in this section.

[]{.mark}

9\. Once the Government determines that there is adequate competition,
and upon the Government's acceptance of the Lessor's cost proposal based
upon that competition (provided the Lessor selects the competition's
lowest priced bid of a contractor qualified to perform the subject
work), the Contracting Officer shall issue to the Lessor a notice to
proceed for the subject work.

[]{.mark}

> 10\. The Lessor shall complete the work within the time frame
> requirements illustrated in the Construction Schedule of Tenant
> Improvements paragraph in this section.

**[[CONSTRUCTION SCHEDULE OF TENANT IMPROVEMENTS]{.smallcaps}]{.mark}**

[OPTIONAL PARAGRAPH]{.mark}

[MAY BE ALTERED BUT SHOULD CONTAIN SUBSTANTIALLY THE SAME INFORMATION.
depending on the scale of tenant improvements, and if only minor
improvements are required,, the construction schedule may commence from
the date of the notice to proceed with tenant improvements, at the
contracting officer's discretion.]{.mark}

## [3.19 CONSTRUCTION SCHEDULE AND ACCEPTANCE OF TENANT IMPROVEMENTS (MAR 2007)]{.mark}

A. The construction schedule shall commence upon lease award, unless
otherwise expressly agreed by the Lessor and Government as stated in the
lease. The schedule shall be divided into [seven]{.mark} tasks for each
phase. These are: [1) the generation of the design intent drawings;
2) the Government's approval of the design intent drawings; 3) the
Lessor's generation of the Government's construction documents; 4) the
Government's review of the construction documents; 5) the TI cost
submittal, review, approval and Notice to Proceed process; 6) the
Lessor's construction of the subject leased area; and 7) the
Government's acceptance of the Lessor's construction.]{.mark} Each of
these tasks is detailed below. References to working days shall be based
upon a 5‑day work week (Monday through Friday, exclusive of federal
holidays). References to "approval" shall mean such approval granted by
the Contracting Officer. During the construction schedule, the
Government may request regularly scheduled progress meetings and request
that the Lessor keep meeting minutes of discussion topics and
attendance. During design and construction, the Lessor may discover
instances where the Government's directives conflict. In such cases, the
Lessor shall immediately notify the Contracting Officer so that the
Government may issue a determination as to how to proceed beyond the
building shell.

action required: there are two subparagraph b\'s. one must be deleted.
THE FIRST B SHOULD BE USED WHEN THE LESSOR PREPARED DIDs AND THE SECOND
B SHOULD BE USED WHEN THE GOVERNMENT PREPARES DIDs.

B. [DESIGN INTENT DRAWINGS]{.underline}:

1\. The Lessor shall prepare, as part of shell rent, and provide to the
Government, for the Government's approval, design intent drawings
detailing the Tenant Improvements to be made by the Lessor within the
Government‑demised area. The Government shall use best efforts to
coordinate the provision of such information and details as required by
the Lessor's architect to complete such drawings in a timely manner.
Design intent drawings, for the purposes of this lease, are defined as
fully‑dimensioned drawings of the leased space that include enough
information to prepare construction documents and shall consist of:
1) furniture locations, telephone and data outlet types and locations;
2) specifications necessary for calculation of electrical and HVAC
loads; and 3) all finish/color/signage selections. Design intent
drawings shall be due from the Lessor within
\_\_\_\_\_\_\_\_\_\_ working days from award.

2\. *Review*. The Government retains the right to review, approve, and
request modifications (if necessary) to the Lessor's design intent
drawings prior to the Lessor's commencement of construction documents.
The Government's review and approval of the drawings is limited as to
the drawings' conformance to the specific requirements of the SFO and
the agency's needs as they apply to the specific leased space. The
Government shall perform all reviews of design intent drawings within
\_\_\_\_\_\_\_\_\_\_ working days of receipt of such from Lessor. Should
the Government require that modifications be made to the Lessor's design
intent drawings before approval can be granted, the Government shall
state as such in writing to the Lessor, and the Lessor shall have
\_\_\_\_\_\_\_\_\_\_ working days to cure all noted defects before
returning the design intent drawings to the Government for a subsequent
review. Upon approval of the design intent drawings, a notice to proceed
shall be transmitted to the Lessor, and the Lessor shall commence
construction documents for the space. At the sole discretion of the
Government, the Lessor may be required to submit a budget proposal,
based on the Tenant Improvements and associated work as shown on the
design intent drawings. This budget proposal shall be completed within
10 working days of the Government's request. Delay of receipt of such
proposal shall result in a Lessor delay.

> B. [DESIGN INTENT DRAWINGS]{.underline}:

The Government shall prepare and provide to the Lessor the Government's
approved design intent drawings detailing the Tenant Improvements to be
made by the Lessor within the Government‑demised area. Design intent
drawings, for the purposes of this lease, are defined as
fully‑dimensioned drawings of the leased space that include enough
information to prepare construction documents and shall consist of:
1) furniture locations, telephone and data outlet types and locations;
2) specifications necessary for calculation of electrical and HVAC
loads; and 3) all finish/color/signage selections. Design intent
drawings shall be due to the Lessor within \_\_\_\_\_\_\_ working days
from award.

C. [CONSTRUCTION DOCUMENTS]{.underline}:

The Lessor shall prepare, out of the Tenant Improvement Allowance, final
construction documents for the improvements illustrated on the
Government‑approved design intent drawings. The construction documents
shall include all mechanical, electrical, plumbing, fire safety,
lighting, structural, and architectural improvements scheduled for
inclusion into the Government‑demised area. Construction documents shall
also be annotated with all applicable specifications. The resulting
product shall reflect requirements which are substantially the same as
that specified by the Government‑approved design intent drawings and
shall incorporate neither extraneous additions nor deletions of
requirements. The Lessor's construction documents shall be due to the
Government within \_\_\_\_\_\_\_\_\_\_ working days of the Government's
approval of the design intent drawings. Construction documents shall
clearly identify 1) Tenant Improvements already in place and 2) the work
to be done by the Lessor or others.

D. [REVIEW OF CONSTRUCTION DOCUMENTS]{.underline}:

The Government retains the right to review, and request modifications
(if necessary) to, the Lessor's construction documents prior to the
Lessor's commencement of interior construction. The Government's review
of the construction documents is limited to the construction documents'
conformance to the specific requirements of the SFO and to the approved
design intent drawings. The Government shall perform all reviews of
construction documents within \_\_\_\_\_\_\_\_\_\_ working days of
receipt of such from the Lessor. Should the Government require that
modifications be made to the Lessor's construction documents, the
Government shall state such in writing to the Lessor, and the Lessor
shall have \_\_\_\_\_\_\_\_\_\_ working days to cure all noted defects
before returning the construction documents to the Government for a
subsequent review. Upon complete Government review for conformance of
the construction documents to the design intent drawings, the Lessor
shall obtain the necessary permits. Notwithstanding the Government's
review of the construction documents, the Lessor is solely responsible
and liable for the technical accuracy of the construction documents in
meeting all requirements and provisions of the lease and the
Government‑approved design intent drawings. The Lessor shall obtain the
necessary permits and [may]{.mark} commence construction of the
[shell]{.mark} space.

> [[E. TENANT IMPROVEMENTS PRICE PROPOSAL]{.underline}:]{.mark}
>
> [Within \_\_\_\_\_ working days of Government review for conformance
> of the construction drawings, the Lessor must submit the written price
> proposal along with adequate cost and pricing data or the
> documentation of the competitive proposals (as described in the
> "Tenant Improvements Pricing Requirements" paragraph in this section)
> and for any costs or credits to the Government that are beyond the
> scope of the original SFO and its attachments. Any work shown on the
> construction documents that is building shell shall be clearly
> identified and priced as such. After negotiation and acceptance of the
> Tenant Improvements price, **A NOTICE TO PROCEED SHALL BE TRANSMITTED
> TO THE LESSOR**, and the Lessor shall commence construction of the
> Tenant Improvements.]{.mark}
>
> []{.mark}
>
> F. CONSTRUCTION OF TENANT IMPROVEMENTS:
>
> The Lessor shall construct all Tenant Improvements in accordance with
> 1) the Government reviewed construction documents and 2) all terms and
> conditions of the SFO. The Lessor shall complete Tenant Improvements
> within \_\_\_\_\_\_\_\_\_\_ working days of receiving the notice to
> proceed from the Government. The Lessor shall furnish a detailed
> construction schedule (such as Critical Path Method) to the Government
> within 5 days of issuance of the notice to proceed. Such schedule
> shall also indicate the dates available for the Government contractors
> to install telephone/data lines or equipment. The Government reserves
> the right to access any space within the building during the conduct
> of interior construction for the purposes of performing inspections or
> for installing Government‑furnished equipment. The Government shall
> coordinate with the Lessor the activity of Government contractors in
> order to minimize conflicts with, and disruption to, other contractors
> on site. Access shall not be denied to authorized Government officials
> including, but not limited to, Government contractors, subcontractors,
> or consultants acting on behalf of the Government with regard to this
> project.

If local jurisdiction requires systems furniture installation prior to
the final Certificate of Occupance, a temporary cert. of occupancy may
be acceptable, until the final is issued.

G. [ACCEPTANCE OF SPACE AND CERTIFICATE OF OCCUPANCY]{.underline}:

\_\_\_\_\_\_\_\_\_\_ days prior to the completion of interior
construction, the Lessor shall issue written notice to the Government to
inspect the space. The Government shall have
\_\_\_\_\_\_\_\_\_\_ working days to inspect and to either accept or
reject the subject space.

1\. Substantially completed space will be accepted by the Government
subject to the completion of minor punch list items (see the Definitions
paragraph of GSA Form 3517, General Clauses). Space which is not
substantially complete will not be accepted by the Government. Should
the Government reject the Lessor's space as not substantially complete
as defined herein, the Lessor shall immediately undertake remedial
action and when ready shall issue a subsequent notice to inspect to the
Government.

2\. [The Lessor shall provide a valid Certificate of Occupancy, issued
by the local jurisdiction, for the intended use of the Government and
shall maintain and operate the building in conformance with current
local codes and ordinances. If the local jurisdiction does not issue
Certificates of Occupancy, the Lessor shall obtain the services of a
licensed fire protection engineer to verify the offered space meets all
applicable local codes and ordinances to ensure an acceptable level of
safety is provided.]{.mark}

> []{.mark}

Action required: indicate in the variable provided where in the lease
the rent commencement date can be found.

H. [RENT COMMENCEMENT]{.underline}:

The rent commencement date (for each increment) shall be the date that
space acceptance is made by the Government. Any rental paid by the
Government prior to actual occupancy shall be less the cost for services
and utilities. In any event, the Government will not be required to
accept space and commence rent prior to the original date as indicated
in \_\_\_\_\_\_\_\_\_\_.

> []{.mark}
>
> []{.mark}
>
> I. [LEASE COMMENCEMENT]{.underline}:
>
> The Government shall issue GSA Form 276, Supplemental Lease Agreement,
> to establish the lease commencement date after the acceptance of all
> space[, if different from the date previously established in the
> lease.]{.mark} In any case, the lease commencement date shall not be
> prior to the rent commencement date

SUBSEQUENT TENANT [alterations]{.mark} \$100,000 OR LESS

OPTIONAL PARAGRAPH

MAY BE ALTERED BUT SHOULD CONTAIN SUBSTANTIALLY THE SAME INFORMATION

## 3.3 SUBSEQUENT TENANT [ALTERATIONS]{.mark} \$100,000 OR LESS (mAR 2007)

A. The Lessor may be requested to provide alterations during the term of
the lease. Alterations will be ordered by issuance of GSA Form 276,
Supplemental Lease Agreement, GSA Form 300, Order for Supplies or
Services, or a Tenant Agency‑approved form when specifically authorized
to do so by the Contracting Officer. The two clauses from GSA Form 3517,
General Clauses, 552.232‑75, *Prompt Payment* (Deviation FAR 52.232-25),
and 552.232‑70, *Invoice Requirements*, apply to orders for alterations.
All orders are subject to the terms and conditions of this lease.

B. Orders may be placed by the 1) Contracting Officer, 2) GSA Buildings
Manager, or 3) Tenant Agency officials when specifically authorized to
do so by the Contracting Officer. The Contracting Officer will provide
the Lessor with a list of Tenant Agency officials authorized to place
orders and will specify any limitations on the authority delegated to
Tenant Agency officials. The Tenant Agency officials are not authorized
to deal with the Lessor on any other matters.

C. Payments for alterations ordered by the Tenant Agency will be made
directly by the Tenant Agency placing the order.