Jump to content
The Wifcon Forums and Blogs

Sign in to follow this  
Retreadfed

Extension of Base Period of Performance

Recommended Posts

I have just come across a situation that I have never encountered before and need a sanity check on my reaction.  The government issued a T&M contract for severable services effective January 2016 that is funded with DoD O&M funds.  The base period of performance was to run from January 2016 to 30 Sep. 2016.  Option year 1 was to run from October 1, 2016 to Sep. 30, 2017.  The contract does not contain any FAR option clauses, but does contain a home brewed option clause that essentially gives the government the right to exercise the option up to 60 days after the base period of performance has expired.

Instead of exercising the option when the base period was expiring, because all the funds initially obligated on the contract had not been expended by Sep. 30, 2016, the government unilaterally extended the base period for 60 days to Nov. 30, 2016.  The authority cited for the extension mod was CICA.  Although the extension mod appears to have been issued after October 1, the effective date of the mod is January 2016.

While I have several issues with the contract and extension mod, I have two major concerns.  First, is the effect of the extension mod on the possible exercise of the option.  The extension mod did not change the option period.  Thus, if it is exercised, the option will be running concurrently with the base period.  I don't see how that is possible.  Am I missing something here?  Also, I do not see how the option can be exercised in accordance with its terms if it does not begin on October 1.

Second, is the extension of the base period of performance into a new fiscal year.  Although there was no new obligation of funds, there was nothing in the contract that permitted the extension and the option was available to cover the severable services in FY 17.  If the period of the base year had initially run to Nov. 30, there would be no problem.  However, the way the extension was done gives me an uneasy feeling that something is just not right here.  Am I over reacting on this?

Share this post


Link to post
Share on other sites
17 hours ago, Retreadfed said:

I have just come across a situation that I have never encountered before and need a sanity check on my reaction.  The government issued a T&M contract for severable services effective January 2016 that is funded with DoD O&M funds.  The base period of performance was to run from January 2016 to 30 Sep. 2016.  Option year 1 was to run from October 1, 2016 to Sep. 30, 2017.  The contract does not contain any FAR option clauses, but does contain a home brewed option clause that essentially gives the government the right to exercise the option up to 60 days after the base period of performance has expired.

Instead of exercising the option when the base period was expiring, because all the funds initially obligated on the contract had not been expended by Sep. 30, 2016, the government unilaterally extended the base period for 60 days to Nov. 30, 2016.  The authority cited for the extension mod was CICA.  Although the extension mod appears to have been issued after October 1, the effective date of the mod is January 2016.

While I have several issues with the contract and extension mod, I have two major concerns.  First, is the effect of the extension mod on the possible exercise of the option.  The extension mod did not change the option period.  Thus, if it is exercised, the option will be running concurrently with the base period.  I don't see how that is possible.  Am I missing something here?  Also, I do not see how the option can be exercised in accordance with its terms if it does not begin on October 1.

Second, is the extension of the base period of performance into a new fiscal year.  Although there was no new obligation of funds, there was nothing in the contract that permitted the extension and the option was available to cover the severable services in FY 17.  If the period of the base year had initially run to Nov. 30, there would be no problem.  However, the way the extension was done gives me an uneasy feeling that something is just not right here.  Am I over reacting on this?

Retread,

Regarding your first issue, this is pure speculation, but it sounds to me like they overlooked the performance periods for the option items, and may be expecting to exercise them within 60 days after the original base period of performance (i.e. November 29) with a performance period of December 1 - November 30.  Now would be a good time to clarify with the CO what the government's intentions are, because  I think your concerns are valid, and there could be problems if they're not addressed early.. Suppose the government thinks that by changing the base period of performance to run through November 30, the option exercise date is likewise extended to January 29, 2017?

Second, it seems to me that as a contractor, you are safe in relying on the CO's extension, if your concern is the ultimate allowability of costs of performance between October 1 and November 30, notwithstanding the propriety, or lack thereof, of the government's actions, so to that extent, I'm thinking you may be over-reacting.  I haven't had the time to look into the propriety of extending the base period of performance as you describe to take advantage of the 10 USC 2410a authority.

 

Share this post


Link to post
Share on other sites

Navy, thanks.

Vern, hopefully this is a clearer timeline.

Jan. 2016 T&M contract is awarded consisting of a base period of performance and four option periods of 12 months each.  Contract is for severable services.

Base period of performance to run from Jan. 2016 to Sep. 30, 2016.

First option period is stated as running from October 1, 2016 to Sep. 30, 2017.

Agency issues notice of intent to exercise first option in summer 2016 (at least 60 days prior to end of base performance period).

Contract does not contain any FAR option clause but a local clause.  Local clause contains a formula describing time limit on when option may be exercised.  Application of the formula to the facts of the contract results in the option being exercised no later than Nov. 30, 2016.

On Oct. 5, 2016 contractor receives mod extending base period of performance to Nov. 30, 2016 citing CICA exception to full and open competition as authority.  The reason for the extension is that funds obligated for base period of performance remain unexpended and agency wants to expend those funds before adding more funding through exercise of option.  Mod does not change period of performance of first option period (Oct. 1, 2016 to 30 Sep. 2017) or price of base period of performance or price of first option.

Share this post


Link to post
Share on other sites
18 minutes ago, Retreadfed said:

On Oct. 5, 2016 contractor receives mod extending base period of performance to Nov. 30, 2016 citing CICA exception to full and open competition as authority.  The reason for the extension is that funds obligated for base period of performance remain unexpended and agency wants to expend those funds before adding more funding through exercise of option.  Mod does not change period of performance of first option period (Oct. 1, 2016 to 30 Sep. 2017) or price of base period of performance or price of first option.

It seems to me that the key fact from your last post is that they said the extension is based on a CICA exception, not the option clause. (Which CICA exception?)

The justification that funds obligated in FY2016 have not been expended, so they plan to expend them in FY2017 for severable services might raise questions related to the bona fide needs rule, but who knows?

It sounds goofy, but it might be okay.

Share this post


Link to post
Share on other sites
3 hours ago, Retreadfed said:

Local clause contains a formula describing time limit on when option may be exercised.  Application of the formula to the facts of the contract results in the option being exercised no later than Nov. 30, 2016.

Are you sure you are interpreting it correctly? Your interpretation of the local clause would permit exercise of the option two months into the option period. If you get an absurd result, you should try interpreting it a different way.

Share this post


Link to post
Share on other sites

Exercising the option within 60 days [of some event] is similar to the language in 52.217-9. The office may have needed that window to get funding in the new fiscal year ‥. especially considering recent fiscal uncertainties.

What's odd is the period of performance ended Sep 30, but a CICA exception was used to extend it fives days after the contract completion date. It appears you should have an entirely new contract and that is being missed. See Washington National Arena Limited Partnership, B-219136, 65 Comp. Gen. 25 (1985):

"Upon expiration of [the contractor’s] contract, neither the government nor [the contractor] was obligated by any of the contract terms; [the contractor] no longer was bound to provide ... services, and the government no longer was bound to pay [the contractor] commissions for such services. The unexercised option provisions were part of the contract and, thus, necessarily expired when the contractual relationship was terminated. Thus, the attempted retroactive extension of [the contractor’s] contract was not an extension at all—there was no contract to extend—but the noncompetitive creation of a new contractual relationship with [the contractor]." (emphasis added)

It should be clear that the contractual relationship which existed was terminated and the issuance of an "extension mod" after the expiration date to retroactively extend and modify the contract as if it had not expired amounts to a new contract award.

Share this post


Link to post
Share on other sites

Don, the wording of the local clause is clear as to what it says.  The contract does not contain an Availability of Funds clause and as Jamaal surmised, the agency has stated that it is worded the way it is because funds are generally not available to fund the option at the beginning of a fiscal year.

Jamaal, in this case, the agency appears not to have thought about the impact an extension of the base period will have on the option periods.  The agency's main concern is to spend the money obligated on the contract in the base period.  It seems that the agency really believes that if it does not spend all of its appropriations, it will not get what it asks for in the future.  If a new contract was issued in October 2016, FY 16 O&M funds could not be used to fund it.

Share this post


Link to post
Share on other sites

I would agree with others that it appears the Govt failed to address the downstream impact on the option period, rather focused solely on extending the base period.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.
Sign in to follow this  

×