POP ends, then next is exercised?

[Supes]

We have a requirement for Custodial Services that we're recompeting. This requirement is on the fiscal year cycle. We've had some issues at end of year on the current contract with obtaining funding previously. We've also had some issues with getting the modifications out on time even if we've had funding. To remedy this we're looking to innovate! We noticed that FAR 17.204(d) seems to imply that we could tailor FAR 52.217-9 to be exercised after the current period of performance ends. Could we tailor it to allow the existing POP to end and then we could exercise it up to say 60 days after that POP ends? Would we then be required to reduce the value of that new option exercise by 60 days or could we just push out the end of the newly exercised POP?

[Don Mansfield]

3 hours ago, Supes said:

Could we tailor it to allow the existing POP to end and then we could exercise it up to say 60 days after that POP ends?

I don't see a problem with that.

3 hours ago, Supes said:

Would we then be required to reduce the value of that new option exercise by 60 days or could we just push out the end of the newly exercised POP?

If this is a severable service funded with annual appropriations, why not tie the period of performance of the option to the date the option is exercised (i.e., 12 months beginning the date of option exercise) instead of a predetermined 12-month period (1 Oct 22 - 30 Sep 23)?

 

[Vern Edwards]

4 hours ago, Supes said:

We noticed that FAR 17.204(d) seems to imply that we could tailor FAR 52.217-9 to be exercised after the current period of performance ends. Could we tailor it to allow the existing POP to end and then we could exercise it up to say 60 days after that POP ends? Would we then be required to reduce the value of that new option exercise by 60 days or could we just push out the end of the newly exercised POP?

So, for example, you want to write a contract that will run from 1 October 2022 to 30 September 2023 and you want an option to extend performance from 1 October 2023 to 30 September 2024 that can be exercised as late as 30 November 2024 with actual performance beginning 1 December 2024. Is that right?

[Supes]

40 minutes ago, Vern Edwards said:

So, for example, you want to write a contract that will run from 1 October 2022 to 30 September 2023 and you want an option to extend performance from 1 October 2023 to 30 September 2024 that can be exercised as late as 30 November 2024 with actual performance beginning 1 December 2024. Is that right?

Well right now it's written more 10/1/22-9/30/23 then we could exercise the 10/1/23-9/30/24 option as late as 11/30/23. I saw Don's comment though and that makes more sense but couldn't that potentially put us past 5 years? 

[bosgood]

5 hours ago, Supes said:

it's written more 10/1/22-9/30/23 then we could exercise the 10/1/23-9/30/24 option as late as 11/30/23

And the contractor would be expected to continue work after 30 September without knowing if you're going to exercise the option? 

[Vern Edwards]

11 hours ago, Supes said:

Well right now it's written more 10/1/22-9/30/23 then we could exercise the 10/1/23-9/30/24 option as late as 11/30/23. I saw Don's comment though and that makes more sense but couldn't that potentially put us past 5 years? 

You must exercise an option in strict accord with its terms. If you write an option for 12 months you cannot "exercise" it for 10 months. That is contract law. See also FAR 17.205(f). So the option itself would have to give the government the right to exercise it for variable lengths. Or you would have to adopt Don's approach.

Don's approach would not violate the 5-year limitation, because the limitation is on the sum of the option periods of performance. So you would be okay as long as the option periods of performance do not exceed 60 months—5 X 12.

But what will you do for service between 10/1 and 11/30? See bosgood's question, above.

16 hours ago, Supes said:

We've had some issues at end of year on the current contract with obtaining funding previously. We've also had some issues with getting the modifications out on time even if we've had funding. To remedy this we're looking to innovate!

Maybe the "innovation" you need is to get your office's act in order.

[Matthew Fleharty]

16 hours ago, Supes said:

We have a requirement for Custodial Services that we're recompeting. This requirement is on the fiscal year cycle. We've had some issues at end of year on the current contract with obtaining funding previously. We've also had some issues with getting the modifications out on time even if we've had funding. To remedy this we're looking to innovate! We noticed that FAR 17.204(d) seems to imply that we could tailor FAR 52.217-9 to be exercised after the current period of performance ends. Could we tailor it to allow the existing POP to end and then we could exercise it up to say 60 days after that POP ends? Would we then be required to reduce the value of that new option exercise by 60 days or could we just push out the end of the newly exercised POP?

No "innovation" necessary - just get off the fiscal year cycle. Shorten the initial PoP to end on 31 May and start each subsequent 12 month option period on 1 June.

 

This is just another example of an "idea" labeled as an "innovation" is anything but...have you thought through your proposed COA, for example:

- gaps in service and how they might impact your mission partners

- whether or not a company would even accept such an arrangement (or the premium you might have to pay for it)

- are you even solving the problem? Would 60 days even be enough time? From my experience, these types of funding issues are usually driven by continuing resolutions (CRs) and many CRs are lasting longer than 60 days... (see https://www.everycrsreport.com/reports/RL32614.html)

 

One final note: as you re-compete this effort, please do not ask for an essay writing contest on offerors' "technical approaches" and "management plans" - see the following must reads:

https://wifcon.com/articles/BP17-8_wbox.pdf

https://www.wifcon.com/articles/The Nash & Cibinic Report-May 2022-Contracting Process Inertia.pdf

[C Culham]

16 hours ago, Supes said:

We have a requirement for Custodial Services that we're recompeting.

I added the emphasis.

16 hours ago, Supes said:

we're looking to innovate!

I am piling on but I do wonder why you need to innovate?   Has your previous contractor in the past stopped working?  Or, are you just trying to solve an internal matter on proper contract administration and action?   I really suspect the latter.   If true then solving in the manner you have suggested, as noted while I was typing this, isn't going to help.

Obtaining Funding?   

• Because of continuing resolutions, non-responsive program folks doing their thing, or ?????   Work on solving that with innovation and communication.   Suggestions, again while I was typing, have been offered.   Your innovation needs to be with program and budget people not a drummed up contract process regarding options.

Modification Timing -

• So trouble with getting the modification out, right?  But what about the preliminary notice of 52.217-9 does that go out timely?  If not do you realize the government has surrendered its unilateral right to exercise the option and the option should be exercised bilaterally.   A bilateral modification properly negotiated and worded solves your late problem.
• Timely notice but untimely modification being sent?   Well consider  CO authority and the ability to send a communication to the contractor - "We sent you the preliminary notice, we have the money, I am exercising the option, you are authorized to continue to work, a formal modification will be sent to you soon."

[bosgood]

18 minutes ago, Matthew Fleharty said:

Shorten the initial PoP to end on 31 May and start each subsequent 12 month option period on 1 June.

This would be my thought.  10 USC s3133 (for DoD & HS/CG) and 41 USC s3902 (most other executive agencies) permit the funding of severable services contracts (such as custodial) across fiscal years provided the POP is no more than 12 months.  There should then be no concern about exercising options when funding is uncertain or nonexistent.

[formerfed]

As other have said, stop with using the term “innovate.”  What you’re facing doesn’t involve “innovation” as the fix.

Other agencies have faced similar situations.  You know how they resolved it?  They prepared a comprehensive business case documenting the problems and a strategy to solve it.  The contracting office met with their budget, finance, comptroller, or CFO staff and laid out the issue.  They showed how much money is needed and when to timely exercise options or award new contracts.  Your agency has the money; you just haven’t demonstrated the need for timely funding to the proper people.   The urgency is contractors will stop work, contracts lapse, or new contracts can’t begin.  It’s likely your CFO type people aren’t aware of this.

You need to clearly explain and document the issue instead of playing games with your contracts.