Use of Escalation Clauses for Operating Costs on All GSA Leases

The General Services Administration (GSA) is responsible for locating suitable space to meet agency needs, negotiating and awarding leases, and ensuring that lease terms are met. In November 1973, because of increased inflation, GSA directed its regions to use escalation clauses for building operating costs in long-term leases of 5 years or more. The purpose of the clauses was not to reimburse lessors for actual building operating costs but to provide lessors, through the process of averaging cost increases, some protection against excessive increases in major costs such as real estate taxes, utilities, maintenance, and janitorial services.