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Missed Option but Have a J&A

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I have a question on a topic that has been discussed, but I don't believe it has been discussed with this nuance.

We have  buyer who notified the contractor of our intent to exercise an option, did the required reviews, and sent to the mod to the KO for review and signature. The KO did not get to signing the mod before the option expired (on a Saturday), and when this was realized two days later on Monday, it was legal's opinion that the contract was over at that point and that there was nothing that we could do to save it. At that point we wrote a J&A and it has been coordinated through legal and the Competition Advocate. They are both good with the J&A, and the contractor has agreed to hold its final option year pricing, terms and conditions; however,  there is some disagreement about how to put this new action in place.

We (the contracting office) would like to do a bilateral modification to the previous contract so we don't have to transfer GFP and re-write the entire contract, while our legal office is under the opinion that we need to issue an entirely new contract for this action. The GAO cases that address modifications to extend missed options appear to be silent on the issue of "how" to do it properly. They focus on the fact that these can be considered unjustified sole source actions (which ours will not be because we have a J&A), but they appear to remain silent on the issue of whether we can bilaterally extend a contract after the PoP has ended.

Any thoughts on this?

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Guest Vern Edwards

How old is the old contract?

If FAR or your agency supplement prescribes different clauses or newer versions of the old clauses, or if new policies otherwise apply, then the proper thing to do is update the contract terms accordingly. You can do that by bilateral modification of the old contract or by issuing a new contract.

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Thank you for the response. The contract was awarded in 2013, and the PoP just ended on November 25. We intended to issue the final option to have one more year of support (through November 2018), but when our option exercise window was missed, we started the J&A immediately.  

Even though we have a J&A now, I believe our legal team thinks that we cannot modify the contract since the most recent PoP ended. Their thought is, "How can you modify a contract that no longer exists?" I don't necessarily agree with this, but I also haven't seen anything that would specifically support bilaterally modifying an expired contract to regain support.

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Guest Vern Edwards

I don't agree with it, either. But why argue about it? There is no law or regulation about it that I know of. The difference in your case between issuing a mod and writing a new contract is mainly clerical. A new contract might be a little more paperwork, but not enough more to make it worth arguing about.

P.S. You intended to exercise the final option, not "issue" it.

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This is true. It has sparked a lot of conversation between contracting, policy and legal though. Policy is also of the mindset that we should be able to mod, but the bigger question this leads to is if we cannot mod in this situation, is there ever a situation when it is proper/legal to mod an expired contract? It appears our counsel would say there is not...although it's probably not a situation we run into often.

We are currently going without support until we can get this interim/J&A action awarded; however, there is another project in the works to get long-term follow-on coverage. 

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This would not be a problem if the CO had done his/her job.

Will the CO's performance bonus be reduced?

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Guest Vern Edwards
4 hours ago, fedcontract said:

Is there ever a situation when it is proper/legal to mod an expired contract?

What do you mean by "expired contract"? When does a contract "expire"? I know when the completion or delivery schedule or the period of performance of a contract expires, but many contractual obligations continue in effect for years after those dates. Liability for latent defects might continue for up to six years after delivery. The contractor's right to submit a claim to the CO continues for six years after the event which commenced the accrual of the claim. Obligations under warranties may remain in effect for many years. Obligations to retain records and cooperate with government auditors remain in effect for years after final payment. So when does a contract "expire"?

I know of no statute, regulation, or common law doctrine to the effect that the parties to a government contract cannot extend that contract after the delivery schedule or the period of performance has expired. Go down to your legal office, go to the cubicle of the person who says that you can't modify an "expired contract", and demand that he or she show you the law, regulation, court, or board decision that supports their contention.

If you can modify a contract years after the period of performance has expired in order to settle a claim, you can modify it after the period of performance has expired in order to extend that period. If the person in your legal office insists that you can't, demand that they show you where it says so. 

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4 hours ago, Vern Edwards said:

A new contract might be a little more paperwork, but not enough more to make it worth arguing about.

Vern - Might is the operative word here. Depending on the requirement and what the CO wants, a new award could require all of the following: revised IGCE, revised PWS, an updated Market Research Report, OSBP/SBA approval, public notice, price/cost analysis, responsibility determination, and/or FPDS-NG report. Some of these may seem superfluous in context, but there can be a lot of pressure on COs to have "model" contract files at the expense of efficiency. Not to mention regenerating, adding, deleting, and completing clauses/provisions, and the inherent joy that comes with using contract writing systems running on archaic technology. If I were the CS/CO in this case, I would have a strong impulse to avoid the above if possible.

14 minutes ago, Vern Edwards said:

I know of no statute, regulation, or common law doctrine to the effect that the parties to a government contract cannot modify that contract after the delivery schedule or the period of performance has expired.

Assuming what you are saying is true (news to me), this seems could lead to some absurd situations. For instance, whereas most COs would probably only think to extend a contract that is "recently expired," what about the CO who decides to pick up any decaying husk of a contract (FY16 POP end? FY15? FY14?) and extends that because it would be administratively simpler and somehow justifiable on paper? Why not completely circumvent CICA this way if that's what the CO feels like doing?

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Guest Vern Edwards
1 hour ago, FrankJon said:

Depending on the requirement and what the CO wants, a new award could require all of the following: revised IGCE, revised PWS, an updated Market Research Report, OSBP/SBA approval, public notice, price/cost analysis, responsibility determination, and/or FPDS-NG report. Some of these may seem superfluous in context, but there can be a lot of pressure on COs to have "model" contract files at the expense of efficiency. Not to mention regenerating, adding, deleting, and completing clauses/provisions, and the inherent joy that comes with using contract writing systems running on archaic technology. If I were the CS/CO in this case, I would have a strong impulse to avoid the above if possible.

What are you talking about?

If a CO fails to exercise an option in a timely manner, a contract extension would be, by definition, out of scope. Extending such a contract on a sole source basis would be a new procurement requiring a J&A and all of the procedures and file documentation of any other new procurement, whether it is done by supplemental agreement mod or a new contract document with a new contract number. The OP, fedcontract, understands that. As I told the fedcontract, the difference would be mainly clerical and not worth arguing about. All the same, it's ridiculous for his legal office to object to a supplemental agreement solely on the ground that the period of performance has expired, and I see no reason to put up with ridiculous objections from a legal office. Especially from a legal office. I expect more from them.

1 hour ago, FrankJon said:

Assuming what you are saying is true (news to me), this seems could lead to some absurd situations. For instance, whereas most COs would probably only think to extend a contract that is "recently expired," what about the CO who decides to pick up any decaying husk of a contract (FY16 POP end? FY15? FY14?) and extends that because it would be administratively simpler and somehow justifiable on paper?

Again, doing a bilateral mod instead of a new procurement would not be that much simpler. In fact, after so much time had passed it probably would be easier to write a new contract than a supplemental agreement. In any case, since the mod would require a J&A, do you think the CO would wait three or four years to request approval to extend a service contract on a sole source basis? If he did, do you think he would get it? Do you think the contractor would agree to the same prices as had been stipulated for the three or four year old expired option? Please don't waste my time with half-baked reductio ad absurdum arguments.

1 hour ago, FrankJon said:

Why not completely circumvent CICA this way if that's what the CO feels like doing?

Huh? In light of what I've said, how would extending the contract by supplemental agreement instead of by preparing a new contract document circumvent CICA?

Read the thread again.

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12 hours ago, Vern Edwards said:

Extending such a contract on a sole source basis would be a new procurement requiring a J&A and all of the procedures and file documentation of any other new procurement, whether it is done by supplemental agreement mod or a new contract document with a new contract number.

That may technically be correct, but in the case of a recently-missed option, I simply do not believe that many COs would supplement the file documentation outside of the J&A. Most, I believe, would treat if it the extension were the option for file documentation purposes. I'm basing this belief on a related, but different situation that I've seen often: extension of a contract during performance, where 52.217-8 was not evaluated at the time of award, so a J&A is required. In this case, I've never seen a CO augment the file documentation beyond the J&A and POP modification. Instead, they treat the contract as if 52.217-8 is still the mechanism extending the contract, vice the J&A.

12 hours ago, Vern Edwards said:

Again, doing a bilateral mod instead of a new procurement would not be that much simpler. In fact, after so much time had passed it probably would be easier to write a new contract than a supplemental agreement.

I respectfully disagree. Even if we assume that the CO were to fully supplement the modified file with all-new updated documentation (which I maintain is a stretch), taking into account real-world factors such as system lag, communication gaps, file construction, etc., a bilateral, supplemental modification will ordinarily save significant time over a new award for the same requirement. (My definition of "significant" for this example is 4 hours, or half-a-day.)

13 hours ago, Vern Edwards said:

In any case, since the mod would require a J&A, do you think the CO would wait three or four years to request approval to extend a service contract on a sole source basis? If he did, do you think he would get it? Do you think the contractor would agree to the same prices as had been stipulated for the three or four year old expired option?

Point taken. The scenario is far-fetched, but not implausible. How about a justification for "follow-on" work? How about "unusual and compelling urgency," which is used in all kinds of ways? If it's under $700k, nobody apart from the CO will know, potentially for years, at which point the CO is long-gone. I don't see why the prices need to remain static in this scenario. Renegotiate them. If the acquisition is commercial in nature, that shouldn't be difficult.

 

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14 hours ago, Vern Edwards said:

Read the thread again.

Though my thinking on this topic is admittedly muddled, I don't see upon review how your exchange with OP would have impacted my comment and questions, since only updated clauses were discussed.

14 hours ago, Vern Edwards said:

The OP, fedcontract, understands that.

I also don't see what gave you this impression. 

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Guest Vern Edwards
1 hour ago, FrankJon said:

That may technically be correct, but in the case of a recently-missed option, I simply do not believe that many COs would supplement the file documentation outside of the J&A. Most, I believe, would treat if it the extension were the option for file documentation purposes. I'm basing this belief on a related, but different situation that I've seen often: extension of a contract during performance, where 52.217-8 was not evaluated at the time of award, so a J&A is required. In this case, I've never seen a CO augment the file documentation beyond the J&A and POP modification. Instead, they treat the contract as if 52.217-8 is still the mechanism extending the contract, vice the J&A.

What does what most COs would do, and what you have seen COs do, have to do with the points that I have made?

1 hour ago, FrankJon said:

Even if we assume that the CO were to fully supplement the modified file with all-new updated documentation (which I maintain is a stretch), taking into account real-world factors such as system lag, communication gaps, file construction, etc., a bilateral, supplemental modification will ordinarily save significant time over a new award for the same requirement. (My definition of "significant" for this example is 4 hours, or half-a-day.)

Well, if you think that four hours or half a day is a significant savings of time, then I won't argue.

1 hour ago, FrankJon said:

The scenario is far-fetched, but not implausible.

Huh? :huh: Look up far-fetched and implausible. Really, FrankJon, that's a hoot. :lol:

59 minutes ago, FrankJon said:

I also don't see what gave you this impression [that the OP understands that extending the contract after expiration of the option would be a sole source procurement requiring a J&A]..

This:

22 hours ago, fedcontract said:

The GAO cases that address modifications to extend missed options appear to be silent on the issue of "how" to do it properly. They focus on the fact that these can be considered unjustified sole source actions (which ours will not be because we have a J&A)....

It is well established that out of scope work can be added to a contract through bilateral modification.

FrankJon, I don't understand why you have posted in this thread. I don't know if you are trying to understand one of my points, trying to dispute one of them, or are trying to make a point of your own. But I'll continue with you if you have anything useful to say.

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Guest Vern Edwards

One problem I have is that I write so much stuff I can't remember when I wrote about something. I wrote about the problem of untimely exercise of options and CICA in The Nash & Cibinic Report in 2013. While the article does not address the problem of extension by supplemental agreement vs. new contract, it might be of interest, so I've copied it below. If I were writing it today I would say some things differently. I would say "period of performance has expired" instead of "contract has expired." But I stand by my main conclusions. Where I use the pronouns "we" and "ours" I am speaking from Prof. Nash and myself. I don't agree with all of the things the GAO said in the quote from their decision.

The Nash & Cibinic Report, August 2013

¶ 40. LATE EXERCISE OF OPTIONS: What Are The CICA Implications?

Vernon J. Edwards

What, if anything, do the Competition in Contracting Act and Federal Acquisition Regulation Part 6, “Competition Requirements,” require a Contracting Officer to do when he has inadvertently failed to exercise an option within the deadline for doing so? Let’s review the regulations and consider three scenarios.

 The Regulations

Suppose that an agency competitively awarded a firm-fixed-price service contract with a period of performance of one year and a priced one-year extension option. The option clause in the contract, FAR 52.217-9, “Option To Extend the Term of the Contract (MAR 2000),” states, in pertinent part:

 (a) The Government may extend the term of this contract by written notice to the Contractor at least 30 working days before the contract expiration; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Government to an extension.

 FAR 6.001, “Applicability,” states:

This part applies to all acquisitions except—

 ***

(c) Contract modifications, including the exercise of priced options that were evaluated as part of the initial competition (see [FAR] 17.207(f)), that are within the scope and under the terms of an existing contract;

 FAR 17.207, “Exercise of options,” states, in pertinent part:

(a) When exercising an option, the contracting officer shall provide written notice to the contractor within the time period specified in the contract.

 ***

(c) The contracting officer may exercise options only after determining that—

(1) Funds are available;

(2) The requirement covered by the option fulfills an existing Government need;

(3) The exercise of the option is the most advantageous method of fulfilling the Government’s need, price and other factors (see paragraphs (d) and (e) of this section) considered;

(4) The option was synopsized in accordance with [FAR] Part 5 unless exempted by 5.202(a)(11) or other appropriate exemptions in 5.202; and

(5) The contractor is not listed on the Excluded Parties List System (EPLS) (see FAR 9.405-1).

***

(f) Before exercising an option, the contracting officer shall make a written determination for the contract file that exercise is in accordance with the terms of the option, the requirements of this section, and [FAR] Part 6. To satisfy requirements of Part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract, e.g.—

(1) A specific dollar amount;

(2) An amount to be determined by applying provisions (or a formula) provided in the basic contract, but not including renegotiation of the price for work in a fixed-price type contract;

(3) In the case of a cost-type contract, if—

(i) The option contains a fixed or maximum fee; or

(ii) The fixed or maximum fee amount is determinable by applying a formula contained in the basic contract (but see [FAR] 16.102(c));

(4) A specific price that is subject to an economic price adjustment provision; or

(5) A specific price that is subject to change as the result of changes to prevailing labor rates provided by the Secretary of Labor.

Three Scenarios

Assume that the CO properly made all of the determinations in paragraphs (c) and (f) prior to the issuance of the preliminary notice of intent to exercise the option. Now consider three scenarios: 

         (1) The CO gave timely preliminary notice, but did not give the contractor timely written notice of the exercise of the option. The contract period of performance has not yet expired.

         (2) The CO gave timely preliminary notice, but did not give the contractor timely written notice of the exercise of the option. The contract period of performance expired two weeks ago, but the contractor continued working.

         (3) The CO gave timely preliminary notice, but did not give the contractor timely written notice of the exercise of the option. The contract period of performance expired two weeks ago, and the contractor stopped working at its end.

In every case, the CO’s failure to exercise the option was due to administrative oversight, and the contractor is willing to waive the CO’s failure to meet the deadline. May the CO go ahead and extend the contract by exercising the “option,” or must he conduct a new procurement and either seek full and open competition or justify a sole-source acquisition? Apparently, failure to process option paperwork in a timely fashion is not unheard of, and we recently became aware of two such cases. In each case, agency counsel or contracting staff told the CO that he could not exercise the option.

As far as we have been able to determine, this issue has not come before the Government Accountability Office very often, and apparently never before the U.S. Court of Federal Claims. The GAO has treated late option exercises as sole-source contracts. See Washington National Arena Limited Partnership, Comp. Gen. Dec. B-219136, 65 Comp. Gen. 25, 85-2 CPD ¶ 435, 1985 WL 50837, an early CICA decision. In that case, the agency extended a contract four months after its expiration. The GAO sustained the protest on this issue, stating:

"We agree with [the protester] that this attempt [to extend the contract] was improper. 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 visitor reservation 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].

Under CICA, agencies are required to “obtain full and open competition through the use of competitive procedures” in procuring property or services. 41 U.S.C. § 253 [now 41 U.S.C. § 3301]. Certain exemptions from the competition requirement are listed, but it does not appear from the record, and [the agency] does not argue, that any of these exemptions would apply to justify a noncompetitive award to [the contractor] under the circumstances here. Consequently, we sustain the protest on the ground that [the agency] should have conducted a competitive procurement for these visitor reservation services."

See also Acumenics Research & Technology, Inc.—Contract Extension, Comp. Gen. Dec. B-224702, 87-2 CPD ¶ 128, 1987 WL 102680, and WSI Corp., Comp. Gen. Dec. B-220025, 85-2 CPD ¶ 626, 1985 WL 53711."

In none of our scenarios can the option be exercised in accordance with its terms, as appears to be required by FAR 6.001(c) and FAR 17.207(a) and (f) for exercise to be exempt from CICA, since the CO missed the deadline. The deadline is one of the terms of the option.

In Washington National, the agency appears to have consciously decided not to extend the contract and then changed its mind, whereas in our scenarios the failure to exercise the option was an oversight. Moreover, four months had passed between the expiration of the contract and the modification to extend it, during which time the then former contractor apparently did not perform. Our scenarios can be distinguished in several ways. In our first scenario, in which the contract has not yet expired, the CO could argue (a) that the parties are still in a contractual relationship and (b) that the matter is thus one of contract administration and the contractor can waive the CO’s failure to provide timely written notice. In our second scenario, in which the contract has expired but the contractor has continued to work, the CO could argue that while he did not formally exercise the option on time he had provided the preliminary written notice and that the contractor’s continued performance shows that he had “constructively” exercised it with the contractor’s assent.

Our third scenario is more problematic. The original period of performance expired and the contractor stopped working. However, the CO could argue that he issued a timely preliminary notice, his failure to exercise the option was an administrative oversight, not an intentional decision let the contract come to an end, and the two-week period in which the contractor had stopped work was very brief in comparison with the four months in Washington. That might be enough to distinguish the situation from Washington National. But while the third scenario might not fall squarely within the shadow of Washington National, it certainly falls within its penumbra. We suspect that in the first scenario, in which contract has not yet expired, the CO might get away with late exercise of the option. We are doubtful about the other two scenarios, especially the third.

As Ralph and Steve Feldman discuss in 1 GOVERNMENT CONTRACT CHANGES § 11:34 (2013), the boards and courts have, on occasion, treated the improper exercise of an option as a constructive (within scope) change, even though continued performance could have been ordered under the “Changes” clause. See, e.g., Griffin Services, Inc., ASBCA 52280, 02-2 BCA ¶ 31943, 2002 WL 1788533, and General Dynamics Corp., ASBCA 20882,77-1 BCA ¶ 12504, 1977 WL 2191. In one case, Alliant Techsystems, Inc. v. U.S., 178 F.3d 1260 (Fed. Cir. 1999), the contractor asserted that the exercise of an option was improper and ineffective and submitted a claim seeking a declaration that it was not required to perform. The Government terminated the contract for default when the contractor refused to perform as demanded by the CO. The Federal Circuit held that the exercise of the option had not been in accordance with the clause and was thus ineffective. However, the court also held that under the “Disputes” clause the contractor had been required to “proceed diligently” with the CO’s order to perform pending final resolution of the claim, because the claim arose under that clause and was thus a claim “arising under” the contract.

We have no idea whether such administrative oversights happen often. We suspect that when they do happen the parties simply complete the paperwork after the fact and go on about their business, which seems a reasonable thing to do in light of the disruption and amount of work that would follow from a decision not to do so. Moreover, it seems unlikely that a prospective protester would become aware of what happened. Of course, such oversights should not happen at all. VJE 

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19 hours ago, Vern Edwards said:

What do you mean by "expired contract"? When does a contract "expire"? I know when the completion or delivery schedule or the period of performance of a contract expires, but many contractual obligations continue in effect for years after those dates.

...

If you can modify a contract years after the period of performance has expired in order to settle a claim, you can modify it after the period of performance has expired in order to extend that period.

Vern - Our legal counsel's initial position was that once the current PoP ended our contract had "expired" and the only option was to issue a new contract; however, I think you have a great point that if we can modify for other reasons years later, then nothing should be specifically preventing us from bilaterally modifying to extend right now.

(An update on my situation is at the end of this comment.)

18 hours ago, FrankJon said:

Vern - Might is the operative word here. Depending on the requirement and what the CO wants, a new award could require all of the following: revised IGCE, revised PWS, an updated Market Research Report, OSBP/SBA approval, public notice, price/cost analysis, responsibility determination, and/or FPDS-NG report. Some of these may seem superfluous in context, but there can be a lot of pressure on COs to have "model" contract files at the expense of efficiency. Not to mention regenerating, adding, deleting, and completing clauses/provisions, and the inherent joy that comes with using contract writing systems running on archaic technology. If I were the CS/CO in this case, I would have a strong impulse to avoid the above if possible.

FrankJon - Yes, from a practical standpoint, some of this is what I was hoping to avoid by just modifying the original contract. While many of these, as Vern stated, would need to be done regardless of the approach (market research, FBO notice, updated Acq Plan, 2579 etc.), some of the other purely administrative aspects (such as adding clauses and actually generating a new contract in the system, as you mention) are quite time consuming...especially when the alternative is just writing a modification and turning the already-written contract back "on". To your point, something else that I was hoping to be able to avoid by issuing a modification was the "transfer" of GFP. In my scenario, there is quite a bit of GFP on contract, and it has very specific safety, security and accountability requirements. Even if it is just a transfer to account for the new contract number, it still has to go through the transfer approval process and has the potential to muddy things up.

1 hour ago, Vern Edwards said:

I wrote about the problem of untimely exercise of options and CICA in The Nash & Cibinic Report in 2013. While the article does not address the problem of extension by supplemental agreement vs. new contract, it might be of interest, so I've copied it below. 

Vern - Thanks for sharing this. My situation (unfortunately) exactly resembles the third and "more problematic" scenario, and I appreciate everyone's discussion points and input on it. It would be interesting to delve into whether there is a "correct" way to remedy the situation after a J&A is obtained (or if both ways are equally correct). 

But this brings me to an update - After further discussion between policy and legal yesterday and today, legal has agreed to support a bilateral modification to extend. Despite the "technical correctness" (their words), they have stated that they see little risk in the proposed approach.

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Guest Vern Edwards

That's good news! Congratulations. Glad legal joined the team.

3 hours ago, fedcontract said:

Our legal counsel's initial position was that once the current PoP ended our contract had "expired" and the only option was to issue a new contract; however, I think you have a great point that if we can modify for other reasons years later, then nothing should be specifically preventing us from bilaterally modifying to extend right now.

Your legal counsel's position is the position that 99 out of 100 contracting practitioners would take. The contract "dies" after the period of performance expires and you cannot raise a contract from the dead. I don't mind them taking that position as long as they ground it in a sound argument supported by something other than a vague sense of unease. However, I think it's demonstrably untrue. Contracts do not necessarily die when the period of performance ends.

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On 12/11/2017 at 10:52 AM, fedcontract said:

I have a question on a topic that has been discussed, but I don't believe it has been discussed with this nuance.

We have  buyer who notified the contractor of our intent to exercise an option, did the required reviews, and sent to the mod to the KO for review and signature. The KO did not get to signing the mod before the option expired (on a Saturday), and when this was realized two days later on Monday, it was legal's opinion that the contract was over at that point and that there was nothing that we could do to save it. At that point we wrote a J&A and it has been coordinated through legal and the Competition Advocate. They are both good with the J&A, and the contractor has agreed to hold its final option year pricing, terms and conditions; however,  there is some disagreement about how to put this new action in place.

We (the contracting office) would like to do a bilateral modification to the previous contract so we don't have to transfer GFP and re-write the entire contract, while our legal office is under the opinion that we need to issue an entirely new contract for this action. The GAO cases that address modifications to extend missed options appear to be silent on the issue of "how" to do it properly. They focus on the fact that these can be considered unjustified sole source actions (which ours will not be because we have a J&A), but they appear to remain silent on the issue of whether we can bilaterally extend a contract after the PoP has ended.

Any thoughts on this?

By not exercising the last option in a timely manner, the Government lost its unilateral right to extend the contract PoP at the prenegotiated price. This is the one undeniable consequence of what was administrative negligence.

Since the contractor has tentatively committed to its original price for the option, you may issue a bilateral modification to exercise the option. A new contract is not required simply because the Government relinquished unilateral rights to the option.

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