Status of the Headquarters Parking Contract Garage Contract

U.S. Department of Transportation Facilities Status of the Headquarters Parking Contract Garage Contract

ISSUE: The Department’s Headquarters Building Parking Garage is owned by JBG/Federal Center, L.L.C. (Lessor) but operated by DOT staff through a contract agreement with the Lessor. A new contract should have been awarded at the start of fiscal year 2016 but the Lessor will only agree to extensions to the existing contract while the payment of taxes for that space is under dispute between General Services Administration (GSA), DOT’s Government representative, and the Lessor. If the Lessor increases the contract beyond the ability of DOT to recover costs, DOT may need to transition the operation of the garage to the Lessor.

BACKGROUND: DOT believes the Lessor has overcharged DOT for real estate taxes that were attributed to the HQ parking garage.  DOT through GSA has requested the Lessor to submit a statement of correction and proper accounting for all tax years which will enable DOT to calculate the overcharges for all tax years.  JBG disputes the overcharges and has avoided addressing the substance of DOT’s legal argument.

DOT and the Lessor had a contract for the management of the parking garage that expired September 30, 2015, extended four times with the last being through December 31, 2016, through a contract modification.  DOT and the Lessor have been in negotiations since August 2015 to award a new HQ Parking Garage contract.  The negotiations hit an impasse when the Lessor linked DOT’s claim for the overpayment of the garage taxes to the new garage contract.

DOT has met with GSA on multiple occasions and both are in agreement that the garage taxes are clearly defined in the Lease Agreement and are the responsibility of the Lessor.

GSA has issued its final decision on the Lessor’s claim and the decision ruled that the Lessor is responsible for the taxes of the garage. The Lessor may appeal the final decision to the Civilian Board of Contract Appeals (CBCA) within 90 days from the date they received the decision. Instead of appealing to the CBCA, the Lessor may bring an action directly in the United States Court of Federal Claims within 12 months of the date they received the decision.

Next Steps:

In the event that DOT and the Lessor cannot reach agreement for a new contract and the Lessor refuses to negotiate additional extensions to the current contract, the management of the garage will transfer to the Lessor. This transfer will require a transition plan and formal notifications to the:  Union  Operating Administrations  Employees