Because of the high number of leases in the National Capital Region, the GSA developed a system known as the Advanced Acquisition Program (AAP) back in the early or mid-1990’s. Once per year, the GSA would issue a generic Solicitation for Offer (SFO) requesting proposals from area landlords for office or warehouse space ranging from 2,000 SF to 100,000 SF. Landlords and brokers spent many late nights scrambling to assemble offers, usually resulting in a teetering stack of 3-ring binders, followed by the carpal-tunnel inducing task of initialing/signing several hundred pages (that would only need to be initialed/signed again at Best and Final and again at lease award), followed by the mad rush down to the Bid Room at the GSA Regional Office in order to meet a firm deadline.
After the procurement process, GSA found itself with dozens of standing offers for vacant space and, back then anyway, plenty of customer agencies looking to fill that space. GSA benefited from being able to expedite lease acquisitions because most of the offer paperwork was complete and they could move straight into drafting a lease after selecting a building. On the other hand, GSA suffered as the months rolled by. As the least expensive space was gobbled up by various agencies, GSA was left to choose among more expensive properties and coasted into some above-market transactions as the shrinking pool of eligible offers grew stale.
In order to reduce the administrative burden of dealing with cubicles full of offer binders, reduce errors, allow for better data analysis and shorten the interval between AAP cycles, the GSA rolled out the Automated Advanced Acquisition Program (AAAP) in 2005 and has used the web-based platform ever since. During the first week of every month, the GSA allows landlords to submit or modify offers, which are then “locked in” for the remainder of the month. Landlords can modify offers in response to market conditions, other AAAP lease awards and changes in budgets or vacancy on a monthly basis, instead of having to wait up to a year or more. GSA has effectively eliminated the staleness factor described above and is able to obtain better lease rates. Landlords enjoy the new system, as it allows for adjustments to offers over time instead of wholesale offer replacements each year, and of course it’s 100% paperless.
In the National Capital Region, the AAP and AAAP have been the primary tool for GSA to obtain leases below the prospectus threshold for years. It’s normally used to acquire standard administrative office space (the warehouse program was ultimately scrapped). Lately, AAAP activity appears to have fallen off a cliff, which mirrors the pace of federal leasing on a national basis. We had the honor of successfully closing the very first deal awarded through the web-based AAAP in 2006 and have carefully tracked all AAAP transactions since the program went into effect. The table below illustrates the performance of the AAAP program over the years. As you can see, 2012 is way off pace.
It’s also interesting to note that deal flow through AAAP is slightly weighted toward the first half of calendar years, but not statistically weighted toward the first OR second half of fiscal years, which suggests a general increase in activity between April and June, a time period that only saw 2 leases signed in 2012.