II guess the question is: Is there a difference between ?program years? and ?contract years? and the performance period? FAR 17.103 Definitions - ?Multi-year contract? means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. A multi-year contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds, and (if it does so provide) may provide for a cancellation payment to be made to the contractor if appropriations are not made. The key distinguishing difference between multi-year contracts and multiple year contracts is that multi-year contracts, defined in the statutes cited at 17.101, buy more than 1 year?s requirement (of a product or service) without establishing and having to exercise an option for each program year after the first. 17.104 -- General (a) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award. This method may be used in sealed bidding or contracting by negotiation. Also see 17.105-2 for Objectives. Because I work for NASA I go to its supplement and read: NASA FAR Sup. 1817.204 Contracts and 1804.170 Contract effective date. (a) "Contract effective date" means the date agreed upon by the parties for beginning the period of performance under the contract. In no case shall the effective date precede the date on which the contracting officer or designated higher approval authority signs the document. ( Costs incurred before the contract effective date are unallowable unless they qualify as precontract costs (see FAR 31.205-32) and the clause prescribed at 1831.205-70 is used. I see a dis-link between program years, contract effective date, the period of performance. I see the 5 year rule is generally for funding & budgeting and not really the period of performance by the contractor. So, in essence you can have a contract that runs 61 ? 63 months if acquiring services that need to be continuous and the awardee needs phase-in/transition time and bill for those costs. That the 1 ? 3 month phase ?in is not included as part of the contractors period of performance since there is currently a contractor performing those functions and it is budgeted for in the 5 program years. Some are under the assumption that the phase-in time counts as a part of the 5 year contract limit which if you write a contract with the phase-in period that it is included as part of the 5 years and you need to back-out the contract performance time so not go over the 60 months hard and fast rule. (is it) The rationale for Phase-in/Transition as not being applied to the 5 year period of performance is that 1) This is a time frame for the contractor to prepare logistically to start actual contract performance (e.g. contact incumbent personnel to hire, acquire badges and passes for the new employees, inventory and transfer government property, coordinate the transfer of ongoing projects and if in an overseas area acquire passports, country clearances) and not actual full performance of the contracted work, (e.g. Statement of Work, Performance Work Statement, Tasks). 2) Day-to-day operations are still ongoing by the incumbent contractor who is performing the Government requirement and keeping the mission going. 3) The staff hired to coordinate and do this work can be a direct cost to the contract and billable, if that is how the contractor has its accounting records established, yet there is not full service for a month of a contractor who is maybe only performing pre-performance logistical type service. 4) Normally a contractor cannot jump right into a sustained service type contract without the added upfront period prior to ?full contract performance? and there is a cost associated to that which may not be wrapped up into the contract cost/price. 5) The playing field would never be level to displace an incumbent contractor because a competitive contractor would have taken its start up costs as a loss. Some contractors do price out phase-in as ?Zero Dollar?, especially the incumbent; however, the actions of an evaluated Phase-in Plan enable the Government to evaluate competitive Offerors and build confidence that if contracting with other than the incumbent the mission would be met without sacrificing valuable time and resources which is a benefit to the Government yet also a loss if this time is counted as a part of performance to the contract. Administratively s contractor needs a signed contract to start the process of gaining access to an installation and transfer of government furnished property, if in the contract. This type of work is normally accounted for in a CLIN as Firm Fixed Price for Phase-in/transition and it is understood within the contract terms and conditions that actual contract performance begins sometime after this is accomplished. If counting the phase-in/transition as part of the period of performance of 5 years then we would always be short changing the contractor from a full contract performance period of doing the actual statement of work required. We know we cannot pay two contractors for the same work so I guess the Phase-in CLIN is distinguishing the fact that we are not paying twice for the same service yet contractually binding the incoming contractor to initiate transition so there will be a continuity of service which is a benefit to the Government. Also, I have seen past performance and award fee?s given specifically for this period which was evaluated separately from the actual contract statement of work performance. I have seen these phase-in periods from 30 ? 90 days depending on complexity of the service and location (dispersed overseas areas). Some have proposed to do a separate action (e.g. purchase order) to cover this period and not put it in the awarded contract. The flaw with this approach is 1) it is not efficient contracting and 2) I don?t know what the deliverable would be. Some have proposed that if a contract was going to be 61 months that it requires higher HQ approvals because it went over the over the 60 months. Again, that is not efficient contracting. There have been various different schools of thought and of course different opinions and experiences depending on the Agency, Contracting Officer, and legal advice. Thank you for your time and again, appreciate your contributions to the profession.