Rolling Termination Rights Now Extend to AAAP Program

AAAPAs of last month, the Automated Advanced Acquisition Program (AAAP) still allowed GSA and interested landlords to enter into leases of 5 years, 10 years or 5 years with a fixed-price five-year renewal option. However, this month saw the most significant revision to the AAAP program in many years – no longer will landlords have the ability to secure this 5+5 lease structure through AAAP. Instead, GSA amended the Request for Lease Proposals (RLP) to now solicit proposals for a 10-year lease with GSA having rolling termination rights after the 5th lease year. The basic 5-year firm (which is hardly ever used) and 10-year firm alternatives remain unchanged, but this AAAP revision is noteworthy because it introduces cancelable lease term into the AAAP for the first time.

The 10 year/5 firm structure has been GSA’s default approach to its non-AAAP lease procurements for many years. Despite congressional pressure on GSA to secure longer lease terms and resistance from private industry, this latest evolution of the AAAP demonstrates GSA’s desire to have the AAAP program “fall in line” with its longstanding national leasing policies and it’s aligned with GSA’s apparent attempt to remove the human element from the business of real estate leasing by automating as much of it as possible. GSA’s continued reliance on cancelable leases is one of the reasons GSA’s average remaining lease term, across its national portfolio, continues to decrease.

Because this 10/5 structure is already familiar territory for virtually all of GSA’s contracting officers, and because AAAP transactions are less susceptible to protests, it is quite likely this latest change will result in an uptick in AAAP leasing activity and further establish the AAAP as GSA’s preferred lease acquisition method for the major metropolitan markets in the United States.

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