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Extending a Federal Services Contract

By Vern Edwards on Friday, July 7, 2000 - 01:07 pm:


Answer: poor regulation coordination and writing by the FAR Council, pure and simple.


By scott stermer on Friday, July 7, 2000 - 12:56 pm:


I am just trying to add a little fodder for the conversion, I agree with Vern on SCA totally.
Consider what the FAR says at 17.204(e):

"(e) Unless otherwise approved in accordance with agency procedures, the total of the basic and
option periods shall not exceed 5 years in the case of services, and the total of the basic and
option quantities shall not exceed the requirement for 5 years in the case of supplies. These
limitations do not apply to information technology contracts. However, statutes applicable to
various classes of contracts, for example, the Service Contract Act (see 22.1002-1), may place
additional restrictions on the length of contracts."

Award Term contracting would fall under approved agency procedures.

Why does the FAR take us back to the SCA, DOL does not think it would not restrict the length of the contract in the case of options.


By Tim on Friday, July 7, 2000 - 08:09 am:


Your excellent explanation of DOL's interpretation of the SCA also highlights why award term contracts for services with potential 10-15 year performance periods are acceptable.

By Vern Edwards on Thursday, July 6, 2000 - 07:27 pm:


With regard to the five year limit on contracts subject to the Service Contract Act, as stated in 41 U.S.C. 353(d) and FAR 22.1002-1:

The Dept. of Labor has interpreted that five year limit as follows: When a contract is funded annually and awarded for a base year and options, the base year and each option is considered a new contract. Thus, the SCA five year clock starts anew with the exercise of each option. The five year limit does not apply to the total contract -- i.e., the base year plus the options.

DOL's interpretation is stated clearly in 29 C.F.R. 4.145(a), which I will quote below:

"Sometimes service contracts are entered into for an extended term exceeding one year; however, their continuation in effect is subject to the appropriation by Congress of funds for each new fiscal year. In such event, for purposes of this Act, a contract shall be deemed entered into upon the contract anniversary date which occurs in each new fiscal year during which the terms of the original contract are made effective by an appropriation for that purpose. In other cases a service contract, entered into for a specified term by a Government agency, may contain a provision such as an option clause under which the agency may unilaterally extend the contract for a period of the same length or other stipulated period. Since the exercise of the option results in the rendition of services for a new or different period not included in the term for which the contractor is obligated to furnish services or for which the Government is obligated to pay under the original contract in the absence of such action to extend it, the contract for the additional period is a wholly new contract with respect to application of the Act's provisions and the regulations thereunder (see Sec. 4.143(b))."

29 C.F.R. 4.143(b) says that mods which extend the period of performance are also considered new contracts. It reads in part as follows:

"Also, whenever the term of an existing contract is extended, pursuant to an option clause or otherwise, so that the contractor furnishes services over an extended period of time, rather than being granted extra time to fulfill his original commitment, the contract extension is considered to be a new contract for purposes of the application of the Act's provisions."

You can confirm this if you like by calling DOL or by checking with your labor law attorney.

Thus, in Wayne's scenario, the five year limit mentioned in FAR 22.1002-1 is not a concern.

By Eric Ottinger on Thursday, July 6, 2000 - 05:04 pm:

Here is an ďAsk A ProfessorĒ Q&A addressing the five year limitation.


I presume the you can always do a J&A and a new contract to go beyond five years. Another pragamatic possibility is to get interim support off of one of these GSA schedule contracts.

Personal opinion: As long as you are honestly doing a bridge with the intent to compete, the probability of a protest is effectively zilch.


By Fran L. Cass on Thursday, July 6, 2000 - 04:24 pm:

If it is a services requirement -- you may have problems with the 5 year limit. In such cases our office writes the J&A to support interim coverage through a short term "bridge" contract as opposed to justifying a modification that would push the contract's total performance period over 5 years. (FAR 22.1002-1)

By Vern Edwards on Thursday, July 6, 2000 - 02:17 pm:

You ask:

"How long can the Government continue to extend an existing contract to provide a bridge to a follow-on contract? Isnít there some kind of limit?"

Not as long as the government can justify extending the contract without full and open competition. They can extend the contract in the way you have described as long as an authorized official in the agency is willing to sign a J&A. (I presume that nothing fishy is going on.)

By Wayne Hinton on Thursday, July 6, 2000 - 01:31 pm:

The scenario: A professional services contract expires (all option periods have been exercised) on September 30, 1999. The efforts to re-compete the follow-on contract are running behind, so the Government extends the existing contract to January 31, 2000 to provide a 4-month bridge. Offers for the follow-on contract are received on October 29, 1999. Delays in awarding the follow-on contract persist, so the Government extends the existing contract 3 additional times, each providing an additional 3-month bridge (9 months total). The current contract has now been extended a total of 13 months beyond its original expiration date to October 29, 2000. Offers for the follow-on contract have been in hand for over 8 months (12 months by the time the existing contract expires).

The questions: How long can the Government continue to extend an existing contract to provide a bridge to a follow-on contract? Isnít there some kind of limit?