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Options that are not CLIN's??

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In R&D the work can be quite unpredictable and fairly undefined. Vendor's are not able to price the SOW's I attach to RFP's as they are very vague. In order to accommodate this, I usually attach an anticipated level-of-effort to the CPFF Term RFP so all vendors come in on the same playing field. The issue arises when we say, for example, "Agency anticipates 20,000 hours for the base year and each option for a total of 100,000 hours." Once the contract award has been made the work itself fluctuates: the level-of-effort can be accelerated or decelerated depending the way the R&D is being conducted (IAW a level-of-effort clause stating so). This causes issues because the work required in the base year may actually become 22,000 hours, and the next year the work required could become 17,000 hours, etc. Here's my scenario:

The R&D contract would have one CLIN: CLIN 0001 for 20,000 labor hours (attached to a labor mix) with an estimated CPFF amount of $5M and a period of performance of 1/1/17 - 12/31/17.

The contract would contain 4 options (that are not CLIN's). Each option would contain 20,000 hours, $5M estimated CPFF and will extend the base by 12 months (no set period of performance).

The option clause would state "can exercise option anytime prior to expiration of the term." 

Once I exercise Opt 1, CLIN 0001 would be revised to: CLIN 0001: 40,000 hours, $10M estimated CPFF and a period of performance of 1/1/2017 - 12/31/2018.

Same thing with Options 2-4. Each Option would (FAR 17.204(f)(2)) increase specific line items (CLIN 0001). In the end, the contract would be CLIN 0001: 100,000 hrs, $25M 1/1/17-12/31/2022.

The reason for this is due to the fluctuating work requirements, uncertainty and unpredictability of the burn rate. If in Month 9 of the base contract year all hours are expended, I could then exercise the next option which will dump into CLIN 0001 and allow us more hours, $ and time. This is not to be confused with exercising an option early as the clause states they can be exercised at any time and the options themselves wouldn't have a start and end date, just an amount of time.

Would this acceptable? For this scenario only 2 yr R&D funds and working capital funds would be used.




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In short, you want to write options to increase the level of effort. You ask if such options would be "acceptable," by which I presume you are asking if they would be permissible.

There is no rule in FAR against such options. So the answer to your question is yes, such options are permissible, unless your agency's policy prohibits their use.

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One issue I can foresee is I would end up with a severable services contract with a POP that exceeds the RDTE’s period of availability.


Contract is 1/17-1/18

6/17 – option 1 exercised, bringing end date to 1/19.

11/17 – option 2 exercised, bringing end date to 1/20.

11/17 – obligate FY17 or 18 RDTE funds for a severable services contract with a PoP that extends until 1/20 – beyond the RDTE funds period of availability (9/19). FY19 or FY20 funds would be appropriate for work done in 1/20.  I would be creating an obligation for money not yet appropriated.  

Would funding this with 2 year RDT&E funds be permissible?



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You know what? I'd have to ask you some questions and get some answers in order to help you, and I'm not interested in that kind of piecemeal back and forth. Surely you have one or more attorneys or experienced contracting persons in your organization who can answer your questions. I suggest that you talk to them or wait for someone else here to help you.

I wish you well.

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