Search the Community
Showing results for tags 'exercise'.
Found 2 results
In R&D the work can be quite unpredictable and fairly undefined. Vendor's are not able to price the SOW's I attach to RFP's as they are very vague. In order to accommodate this, I usually attach an anticipated level-of-effort to the CPFF Term RFP so all vendors come in on the same playing field. The issue arises when we say, for example, "Agency anticipates 20,000 hours for the base year and each option for a total of 100,000 hours." Once the contract award has been made the work itself fluctuates: the level-of-effort can be accelerated or decelerated depending the way the R&D is being conducted (IAW a level-of-effort clause stating so). This causes issues because the work required in the base year may actually become 22,000 hours, and the next year the work required could become 17,000 hours, etc. Here's my scenario: The R&D contract would have one CLIN: CLIN 0001 for 20,000 labor hours (attached to a labor mix) with an estimated CPFF amount of $5M and a period of performance of 1/1/17 - 12/31/17. The contract would contain 4 options (that are not CLIN's). Each option would contain 20,000 hours, $5M estimated CPFF and will extend the base by 12 months (no set period of performance). The option clause would state "can exercise option anytime prior to expiration of the term." Once I exercise Opt 1, CLIN 0001 would be revised to: CLIN 0001: 40,000 hours, $10M estimated CPFF and a period of performance of 1/1/2017 - 12/31/2018. Same thing with Options 2-4. Each Option would (FAR 17.204(f)(2)) increase specific line items (CLIN 0001). In the end, the contract would be CLIN 0001: 100,000 hrs, $25M 1/1/17-12/31/2022. The reason for this is due to the fluctuating work requirements, uncertainty and unpredictability of the burn rate. If in Month 9 of the base contract year all hours are expended, I could then exercise the next option which will dump into CLIN 0001 and allow us more hours, $ and time. This is not to be confused with exercising an option early as the clause states they can be exercised at any time and the options themselves wouldn't have a start and end date, just an amount of time. Would this acceptable? For this scenario only 2 yr R&D funds and working capital funds would be used.
I was assigned to administer an IDIQ contract with Options. FAR 17.202((2) says that an indefinite quantity contract can have options. We wish to exercise the IDIQ option. Since the IDIQ contract is unfunded as a whole (there are no funds required) does it follow that therefore we don’t need any funds to exercise the option? If there are no funds required on the base contract does this mean that there is no financial commitment on the IDIQ to verify funds for the option and that the Option is unpriced or $0? To exercise an unfunded Option appears to go against FAR 17.207©(1) and 15.403-2(a), which states that the exercise of an option must be at the price established at contract award or initial negotiation. Please clarify, is this correct?