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Option Periods Exceeding 12 Months


Maureen

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Have you seen any? I am investigating this for an upcoming requirement in which it is desirable to have a more stable period of performance. I have researched the regulations (FAR, DFARS,AFARS) and can find no mention of maximum length of time for option periods. Has anyone awarded contracts that have included options that were, say, two years in length? How did you support this decision?

BTW - we are also looking into award term contracts. However, I want to also see if two year options (x 2) are possible.

Thanks.

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Guest Vern Edwards

It is largely a matter of appropriations law. Aside from any agency or local policy, the limitation on the length of an option period depends on the nature of the services (severable or entire), funding (annual, multiple year or no-year) and application of the bona fide needs rule. For example, the bona fide needs rule does not permit an option period for an annually-funded contract for severable services that is more than one year in length. However, you could have an option for a nonseverable service with a period of performance of more than one year.

The rule for IDIQ contracts is somewhat more complicated, because funding is usually associated with task orders. Thus, you can have an IDIQ contract with an option to extend the ordering and performance periods for two years or longer, but the bona fide needs limitation applies to each task order.

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Thank you, Mr. Edwards, I knew I could count on you. I probably should have known this, so a little shame here. Will work with our attorney advisor next. Again, thank you.

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Maureen,

Vern is correct in that it is an appropriations law issue. Prinicples of Federal Appropriations Law, 3rd Ed. (AKA - GAO Redbook), Vol. 1, Page 5-41, provides some guidance:

"If an agency is contracting with fiscal year appropriations and does not have multiyear contracting authority, the only authorized course of action, apart from a series of separate fiscal year contracts, is a fiscal year contract with renewal options, with each renewal option (1) contingent on the availability of future appropriations and (2) to be exercised only by affirmative action on the part of the government (as opposed to automatic renewal unless the government refuses)." (citations omitted).

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In some cases, it might make practical sense to have differing option periods. We recently had a contract with a 6 month base, and four one year options. The upside is now we are exercising options (and re-competing) the contract in a time that doesn't mean a September award.

And while I'm open to other's experience, I've seen nothing that gives award terms an advantage over regular options. Stick with options, you can extend or end the contract easier than with award terms.

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