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Can you award a contract for a Base Item (x) and with Options to purchase other items (y and z)? For example, you wish to purchase 30 of x and to have options to purchase 15 of y and 13 of z within the next 8 months. x, y, and z are different items (but within the same industry and NAICS code).

If you can do this, what FAR Options Clause would you include?

The concept behind this was to purchase what you need and can pay for now, with the option to purchase the other items later without having to go out and do the competition later. Theoretically, the items have already been competed with the original solicitation and we could just exercise the options as the need and funds become available.

Thoughts?

Thank you, in advance.

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Guest Vern Edwards

FAR does not prohibit the use of options to buy other items. See FAR 17.202. There is no standard FAR clause for that kind of option. The CO must write one.

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Vern

You mentioned that Desperado need to "write his own" to include other items under an option since the FAR does not prohibit such use; I would assume that to establish Desperado's scenario is to establish separate priced line items for the other items in the base then exercise when required. What authority would be cited to exercise these options since there is no specific authority under Part 17? Is "mutual agreement" acceptable? When you said "write your own", do you mean it should be substantially similar to 52.217-6 or -7 whichever is applicable? Just a thought! Thanks

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Writing a clause is the simple part. I would think a clause substantially the same as 52.217-7 would work well. For example:

+++++++++++++++++

OPTION FOR ADDITIONAL ITEMS--SEPARATELY PRICED LINE ITEMS

The Government may require the delivery of the numbered line items, identified in the Schedule as option items, in the quantities and at the prices stated in the Schedule. The Contracting Officer may exercise the option by written notice to the Contractor within [insert in the clause the period of time in which the Contracting Officer has to exercise the option]. Delivery of added items shall be made as specified in the Schedule, unless the parties otherwise agree.

+++++++++++++++++

Or you could tailor it more, based on your needs (might you want to have the right to partially exercise the option, or exercise partially more than once?)

And, gjoru, when you go to exercise the options, the only "authority" you need to cite will be the option clause.

The question I'm more interested in is why you wouldn't procure the option items separately, when you will have funds available. Are these items related in some way? Is there some reason they all must be procured from the same vendor? How will you determine the prices of the option items are fair and reasonable? How do you guard against unbalanced pricing?

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The question I'm more interested in is why you wouldn't procure the option items separately, when you will have funds available. Are these items related in some way? Is there some reason they all must be procured from the same vendor? How will you determine the prices of the option items are fair and reasonable? How do you guard against unbalanced pricing?

I think he already gave that reason - he wants to avoid doing another comeptition and contract award. Plus it makes sense in that you might save money through the volume purchasing.

He guards against unbalanced pricing by evaluating the option.

Despardo said :"The concept behind this was to purchase what you need and can pay for now, with the option to purchase the other items later without having to go out and do the competition later. Theoretically, the items have already been competed with the original solicitation and we could just exercise the options as the need and funds become available."

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Guest Vern Edwards
You mentioned that Desperado need to "write his own" to include other items under an option since the FAR does not prohibit such use; I would assume that to establish Desperado's scenario is to establish separate priced line items for the other items in the base then exercise when required. What authority would be cited to exercise these options since there is no specific authority under Part 17? Is "mutual agreement" acceptable? When you said "write your own", do you mean it should be substantially similar to 52.217-6 or -7 whichever is applicable?

You could certainly base the clause on FAR 52.217-7. I think you could use 52.217-7 if it weren't for the clause prescription at FAR 17.208(e), which says to use the clause when "the option quantity is identified as a separately priced line item having the same nomenclature as a corresponding basic contract line item." You might have to change the sentence about delivery at the same rate.

I agree with Navy that the option clause is the authority to exercise the option.

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Navy....

Thanks for the info... actually I was just using Desperado's scenario, whether my thoughts makes sense and general information when and if I ran into same scenario. Although your added questions should be considered whether to include it as a separately priced line item under the umbrella contract or procure separately would depend on the circumstances. If other items are closely related, I probably would try to negotiate the price of the items upfront (this of course if the other items would be required within the period of performance, maybe Desperados' scenario of within 8 months would not make a significant change in the price), determine fair and reasonable price, then fully fund the contract including option prices with current appropriations.

On another note... market research may disclosed that a GSA Schedule holder could satisfy the requirement to include other items under its schedule contract. Then it' may be a simple procurement.

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I don?t know if this would be an issue and don?t have to time to research it, but I?ll throw this thought out for discussion.

Might Offeror A have grounds for protest if award is made to Offeror B based in part on favorable terms (such as pricing) contained in the option items y and z? Or perhaps as a pre-award protest arguing that the source selection process established by the solicitation is arbitrary.

In this situation, it sounds like the agency has a requirement and funding for item x and yet may end up awarding a contract not based on providing best value for item x, but rather on the potential of a requirement and funding of different items y and z.

Even if it is legal/permissible, I would want to make sure the benefit of not having to do another contract would offset the potential risk of getting a mediocre supplier of item x, who wins the contract because they have great prices on items y and z. I guess the more certain you are that you will need and be funded for items y and z, the less a concern this would be.

Just a thought.

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I don?t know if this would be an issue and don?t have to time to research it, but I?ll throw this thought out for discussion.

Might Offeror A have grounds for protest if award is made to Offeror B based in part on favorable terms (such as pricing) contained in the option items y and z? Or perhaps as a pre-award protest arguing that the source selection process established by the solicitation is arbitrary.

In this situation, it sounds like the agency has a requirement and funding for item x and yet may end up awarding a contract not based on providing best value for item x, but rather on the potential of a requirement and funding of different items y and z.

Even if it is legal/permissible, I would want to make sure the benefit of not having to do another contract would offset the potential risk of getting a mediocre supplier of item x, who wins the contract because they have great prices on items y and z. I guess the more certain you are that you will need and be funded for items y and z, the less a concern this would be.

Just a thought.

I don't think that's a protestable issue (well, I guess a lot of things you can file a protest for but I don't think it would have a good shot at being sustained) as long as you evaluate and award consistent with what is said in the solicitation. Generally, you evaluate options but it is possible to determine it is not in the best interest of the government to do so and award strictly on the X. See FAR 17.206. It's basically a business decision that has to be made so you don't end up with a situation where you got a mediocre X and never buy y or z.

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Might Offeror A have grounds for protest if award is made to Offeror B based in part on favorable terms (such as pricing) contained in the option items y and z? Or perhaps as a pre-award protest arguing that the source selection process established by the solicitation is arbitrary.

In this situation, it sounds like the agency has a requirement and funding for item x and yet may end up awarding a contract not based on providing best value for item x, but rather on the potential of a requirement and funding of different items y and z.

I agree with dgm. If you are including options in your solicitation, FAR 17.208( c) requires you to include the provision at FAR 52.217-5 Evaluation of Options (or one substantially the same).

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