OA’s – Cancelable & Non-Cancelable

Client Solutions Division77 Forsyth Street, SWSuite 110Atlanta, GA 30303404.331.3584www.gsa.gov

What is a Cancellable/Non-cancelable Designation?

• Designation attributed to all Occupancy Agreements, in both owned and leased space

• Outlines the financial obligations of a tenant agency when they vacate GSA-controlled space

2GSA Public Buildings Service

3GSA Public Buildings Service

Non-Cancelable Space

• Characteristics– Remote or not easily accessible location

– Lease Construction

– Special purpose

– Unusual term

– Lack of any realistic federal need for space, other than requesting tenant agency

– Any other factors that would significantly impair PBS ability to backfill the space

4GSA Public Buildings Service

Non-Cancelable Space

• PBS reduces the fee to 5% for leased assignments designated as non-cancelable

• The decision must be made at the beginning of a leasing action

• The OA must indicate that the space is non-cancelable in the 1st draft of the OA and at the beginning of the OA term.

• If significant changes occur in the project before the beginning of the OA term, PBS may revisit designation.

When is the Decision Made?

• Designation made upon receipt of tenant agency requirements

• Once designation has been made by PBS, it is generally not changed during the OA term, unless there is a material change in the nature or size of the initial space request that would have changed the original designation.

5GSA Public Buildings Service

6GSA Public Buildings Service

Tenant Agency Rights & Options

• Prior to Contract Execution– Tenant Agency withdraws prior to PBS

obligating the government to a contract

– PBS will make no claim against tenant agency

7GSA Public Buildings Service

Tenant Agency Rights & Options

• After Contract Execution, Prior to Rent Start– Cancelable OA’s only, the Tenant Agency is

liable for:• 16 month rental Obligation, plus unamortized

balance of TI or

• If lease, the buyout costs

• If Federal space, the total project costs incurred

OA Terms

• For new occupancies (new space assignments to PBS inventory) as of October 1, 2011 the tenant agency may relinquish space upon four (4) months' notice at any point after the first twelve (12) months of occupancy.

– After the first twelve (12) months of occupancy, the tenant agency's financial obligation can be reduced to four (4) months of Rent, plus the unamortized balance of any tenant improvements financed through PBS, plus any rent concession not yet earned.

8GSA Public Buildings Service