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I have a services contract that has three seperate task orders, one for each of the signatory organizations. Two of the option year task orders have been exercised for option year 4, the next task order is due to be exercised in Dec, I have met the garunteed minimum. Is there any risk to the government if we do not exercise the 4th option year in the third task order?

I have looked through GAO and other areas but cannot find anything that realy fits my needs, any assistance would be appreciated.

Steve

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I wasn't aware there could ever be a risk to the government for not exercising an option unless the services are still required or the option in question is somehow tied to the pricing of the options that were exercised (which seems rather complicated). Of course, a complicated government contract would not come as a complete surprise.

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I wasn't aware there could ever be a risk to the government for not exercising an option unless the services are still required or the option in question is somehow tied to the pricing of the options that were exercised (which seems rather complicated). Of course, a complicated government contract would not come as a complete surprise.

Well we still need the services, but we are going to do the work in-house by government folks, will that be a problem?

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FAR 17.207 -- Exercise of Options. © The contracting officer may exercise options only after determining that -- (2) The requirement covered by the option fulfills an existing Government need;

Without all the details, it sounds to me that there is no longer an existing need.

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Well we still need the services, but we are going to do the work in-house by government folks, will that be a problem?

Well, funny you should ask. I've been wondering about this very situation in another context. This is sort of a reverse A-76 issue (I believe A-76 actually only applies to contracting out work previously done by government employees). I know there are legislative proposals in the works to limit an agency's ability to do this. However, I'm not sure whether there is anything in place right now. I have a vague recollection that there may be some provision, perhaps in an appropriation or authorization act, that says something about DOD not competing with small businesses. (If there is such a provision, I'd love to have someone give me the reference.) Other than that, I'm not sure you would have a problem with not exercising the

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FAR 17.207 -- Exercise of Options. ? The contracting officer may exercise options only after determining that -- (2) The requirement covered by the option fulfills an existing Government need;

Without all the details, it sounds to me that there is no longer an existing need.

I think the FAR is stating a necessary condition for exercise of an option, but not exactly a sufficient condition. In other words, if there still is an existing need, the contracting officer may exercise an option, but I don't see that he or she is required to exercise the option at that point.

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I think the FAR is stating a necessary condition for exercise of an option, but not exactly a sufficient condition. In other words, if there still is an existing need, the contracting officer may exercise an option, but I don't see that he or she is required to exercise the option at that point.

Well I may have explained it poorly the contract option has been exercised. Then task orders are ordered against the contract, we are just talking about not ordering a piece of the contract anymore. I think we will be alright because we have met the garunteed min, and the contract is still in place we are just not ordering as much as we did in the past. Similair to a de-scoping of work...by letting the existing task order with that particulare work expire...

Thank you...

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Well I may have explained it poorly the contract option has been exercised. Then task orders are ordered against the contract, we are just talking about not ordering a piece of the contract anymore. I think we will be alright because we have met the garunteed min, and the contract is still in place we are just not ordering as much as we did in the past. Similair to a de-scoping of work...by letting the existing task order with that particulare work expire...

Thank you...

With that scenario, I can't see what the contractor would have as a basis for a claim. If anyone has a theory on how the contractor could claim breach, I would be interested in hearing it.

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