I have a procurement that I am working as the Contract Specialist under DOI that is an IAA for services in which the selling agency (another agency within DOI) provided the draft Statement of Work for us to use in preparing the IAA documents. My agency is the requesting agency. In the draft SOW they provided to me they have included a five year period of performance consisting of a base year and four option years, however they have included the following language regarding the pricing:
"3. PERIOD OF PERFORMANCE -
The overall period of performance is estimated to be five year period of time. This agreement is structured as one base year and four option years requiring mutual and annual agreement of the involved agencies, as well as notification and acceptance of potential price changes.
The cost for the Base Year... is Firm Fixed Price at $XX,XXX. Option periods will be priced closer to the start of the specified option date. "
Since one year money is being used we are only able to fund a single year at a time. It is a firm fixed price contract type for non-severable annual services (they perform surveys for us on an annual basis).
My question is: is this 'pricing to be provided later' a legitimate approach? I've been under the impression that in accordance with 17.202(c)(1) &(2) that options should be pre-priced at the time of the initial award. The other agency is claiming that 17.2 is only in reference to Contracts and not IAA's. I am not finding anything (within FAR nor DOI policy) that shows that IAA's would be excluded from this part of the FAR. Am I missing something? Either way we would have to issue either a mod or a new IAA each year, but my concern is more about whether or not we can include non priced options in an IAA.