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contractor100

failing to exercise an option - what can be the source of this myth

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Several different program people (from the same agency) have told me that, if an option is not exercised, their agency may not reprocure the items in the option for 12 months.  That is certainly not in the FAR, not do I see it in the supplement - and seems like an insane policy for an agency to adopt.  They must have misinterpreted some policy or rule to come up with this.  Anyone else ever hear this?

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Tell them to show you the policy or rule stating as much - I doubt they will be able to, but if they do produce something substantive, please share because I've never heard of an agency with such a policy (it isn't in the FAR).

As far as working towards educating your program people, go back and review the requirements for exercising of an option at FAR 17.207( c ) - there are 7 different criteria need to be met and, therefore, there are 7 different and separate reasons for not exercising an option.  I imagine the misinterpretation is stemming from FAR 17.207( c )(2); however that is only one of the possible seven reasons (and I'd also argue just because a need doesn't exist at one point in time does not mean it cannot exist for 12 months).  Have them consider a situation where that the option was not exercised due to the lack of funds availability (requirement 17.207( c )(1))...the requirement could be an existing need for an agency, but it is a need that goes unfulfilled due to inadequate resources.  I don't know why an agency would have or adopt a policy that requires a 12 month waiting period in such circumstances, but I'm sure more experienced/seasoned individuals would say they've seen stranger things than that...

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I heard of  it.

Some contracting offices placing similar policiess on organizations requiring contracting support.

Basically, it goes something like --  we will not be able to reprocure services within 12 months if the contractor is performing satisfactorily and you elect not to exercise the option to extend the term of the contract.

I could see it as a blanket lead time warning, but I have also heard people say it's to avoid a protest from an incumbent. Apparently some fear a contractor protesting on the grounds that a decision to non-exercise could be an arbitrary and capricious abuse of discretion. The thought is, it may be unreasonable not to exercise an option for an existing need without a valid reason.

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1. An option gives the buyer the right to buy under predetermined conditions.

2. The buyer does not have the obligation to exercise the option.

3. The seller has the obligation to perform.

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Thanks all!  So, Jamaal, you are saying that offices doing interagency purchasing for other agencies, like franchise funds or something, sometimes make this a condition of using their services ?  Could you share specific offices?  That might explain what I am hearing.

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Sounds like someone created a local "policy" to deter customers from advocating to not exercising options with contractor's they do not "like" in hopes of getting a different one.  I don't know of any such Federal level prohibition.  The government is under no obligation to exercise an option and is free to acquire the services under a new solicitation/contract.   Whether that makes good business sense or not, depends on the particulars of a contract and the marketplace.

Attached is a short article by Ross Crown, titled "Legal insights: Government Decision Not to Exercise Contract Option."  Short of proving bad faith on the part of the CO, "even satisfactory performance by a contractor does not impair the Government’s right to refuse to exercise an option. Vehicle Maintenance Services v. General Services Administration, GSBCA No. 11663."

Gov decision not to exercise option Dispute.pdf

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21 hours ago, contractor100 said:

Several different program people (from the same agency) have told me that

FYI: This is usually a sign to immediately ask for a citation to written authority, and if you don't get one, to ignore and studiously avoid the people in question.

PepeTheFrog would say this alleged policy sounds like laziness (oh, don't make us do another source selection), myopia (oh, what will this do to our PALT?), and risk aversion (oh, what if there is a protest?) triumphing over common sense...but that never happens in Federal contracting offices. PepeTheFrog knows better.

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