by Timothy L. Gorzycki, Associate

If you are a landlord or tenant-to-be in the Washington, D.C. metropolitan area, or in most any other metropolitan area, the issue of SCIF space is likely to be one of the issues you will have to address when leasing office space.  For those who have not before but soon will be encountering it, SCIF space is "sensitive compartmented information facility" space.  SCIF space is specially designed and constructed to provide extraordinary security safeguards for storing, processing and discussing sensitive information.

SCIF space has always been required for certain governmental agencies, mostly defense and intelligence agencies, and private contractors working for those agencies.  In the post 9-11 environment, however, and the ramp-up of the Department of Homeland Security with the associated increase in governmental contracting, there is an increasing demand for high security space.  Consequently, more and more landlords and their prospective tenants must address the construction of SCIF space as part of the tenant improvements and occupancy.  The need for and presence of SCIF space in leased premises pose several issues for both the landlord and the tenant, such as the added costs of construction, maintenance, removal and restoration of SCIF space and what specific lease provisions should the parties consider including in their lease for premises containing SCIF space.

SCIF Space Standards and Construction

SCIF space is normally located within a larger leased space and is used for such activities as storing top-secret documents in fireproof safes, holding top-secret discussions and housing secure telephone and communications systems.  The standards for SCIF space are contained in the "Director of Central Intelligence Directive 6/9 Physical Security Standards for Sensitive Compartmented Information Facilities (SCIF)".  The directive provides that "the physical security protection for a SCIF is intended to prevent as well as detect visual, acoustical, technical and physical access by unauthorized persons".  The directive gives detailed construction requirements for a variety of SCIF space elements.

The design standards for SCIF space, which can include such items as fortified construction, personnel access controls, acoustic security measures, electronic shielding and intrusion detection, can have important ramifications for a landlord.  The requirement for SCIF space can affect the profitability of the lease as well as the future marketability of the space.  Some of the factors a landlord should consider are the time and expense associated with the design, construction and eventual removal of SCIF space improvements, possible marketing impacts due to the existence (or absence) of SCIF space in the premises, and possible provisions to include in the lease to deal with SCIF space related issues.

The fit-out of leased space to meet SCIF space standards can be time consuming and costly.  Eight inch thick reinforced concrete walls, steel lined walls, vault doors, barred or baffled ductwork, acoustical protection measures, personnel access control systems (which can include closed circuit television systems) and intrusion detection systems all greatly complicate the construction of leasehold improvements.

Once a lease expires, the presence of the SCIF space can severely limit the marketability of the space, even to other tenants needing SCIF space.  For prospective tenants who do not need SCIF space, its presence can be problematic; highly fortified, electronically shielded rooms in the tobe- leased space can render the space much less useable.  The added time and costs involved in removing the SCIF space improvements to allow the construction of the new leasehold improvements can be a deal breaker.

SCIF Space Leasing Considerations

In light of the costs of construction and what to do with SCIF space improvements once the current tenant leaves, there are several issues landlords, and tenants, should consider when drafting and negotiating leases for space comprised of, or containing, SCIF space.

•    Janitorial Service

Since SCIF space has highly restrictive access controls, if the landlord is to provide janitorial services for tenant space as part of the lease, then the lease needs to provide for an accommodation of such access controls.  One solution could be for the lease to provide that the tenant is responsible for cleaning the SCIF space.  Alternatively, the lease may call for the landlord to provide cleaning services, but only during normal working hours and the tenant’s security personnel accompany the cleaning personnel at all times.  If either approach is taken or some other variation, consideration should be given to the cost or credit due for the costs of such measures.

•    Landlord Access to the Leased Premises

The landlord’s right and ability to gain access to the leased premises is another important consideration when dealing with premises containing SCIF space.  While it is fairly normal for a lease to provide the landlord with the right of access to the leased space, SCIF space makes landlord access not so simple.  The tenant may require that the landlord only have access upon advance notice, to give the tenant adequate time to store and secure sensitive information.  The tenant may require that the landlord only have access while accompanied by the tenant’s security personnel.  The landlord and tenant should deal in the lease with such measures.

•    Removal and Restoration of SCIF Space

Finally, and perhaps most importantly from a cost and marketing perspective, is the issue of how to treat SCIF space improvements at the expiration of the lease term and whether the premises are to be returned to "pre-SCIF" condition.  The presence of SCIF space improvements can greatly hinder marketing efforts when the present lease expires.  Reinforced concrete walls, windowless inner rooms, electronic shielding and vault doors can be less than highly marketable, never seeming to meet the layout requirements or the particular security needs of the next tenant.  The removal of such improvements can be very costly, and the demolition and renovation work can negatively impact other tenants.  To avoid these possible pitfalls, landlords should address in their leases the removal and restoration of the SCIF space at the end of the lease term.  The landlord and tenant may agree in their lease that the tenant is to remove and restore the SCIF space, at the end of the term, in which case the lease should spell out the timing, methods and construction standards required of the tenant.  Alternatively, if the landlord will not require the tenant to remove and restore, then the landlord should account for such added costs when performing the cost-benefit analysis on a prospective lease for space containing SCIF space.  A landlord should not only consider including the added costs required to remove SCIF space and to restore to non-SCIF space, but also the loss of valuable rental income for the time while the work is being performed.

Conclusion

In this age of heightened security and increased homeland defense spending, the inclusion of SCIF space in leases will certainly become more prevalent.  There is no reason this should negatively impact either the landlord or the tenant, provided both parties adequately consider and address the special circumstances that the inclusion of such space introduces into the leasing equation.  With the proper drafting and forethought, the well crafted lease can deal with the issues and SCIF space can be a benefit and not a burden to the landlord and tenant.


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The information or opinion provided in this article is the author's own and not necessarily that of Watt, Tieder, Hoffar & Fitzgerald, LLP. The author is solely responsible for the information and opinion that he or she has provided. The information contained herein does not replace seeking specific legal counsel to directly address individual client needs.