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Option Period per 52.217-9

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What constitutes an option period under the authority of FAR 52.217-9?

Relevant GAO and legal precedent would be appreciated. 

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49 minutes ago, jwomack said:

What has your research shown?

I will be happy to share my research with you.  However, so as to avoid directing or influencing your answer, I would like to know what you, as well as others on the forum, think.  Unless you have a specific question that might suggest an answer, I would like to avoid general questions as responses to my question.  I am not sure we will get very far with that.  The question seems simple enough, does it not? 

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4 hours ago, Guardian said:

What constitutes an option period under the authority of FAR 52.217-9?

The question is a tad vague, wouldn't you say?

constitute

[ kon-sti-toot, -tyoot ]

verb (used with object), con·sti·tut·ed, con·sti·tut·ing.

to compose; form:mortar constituted of lime and sand.
to appoint to an office or function; make or create:He was constituted treasurer.
to establish (laws, an institution, etc.).
to give legal form to (an assembly, court, etc.).
to create or be tantamount to:Imports constitute a challenge to local goods.
Archaic. to set or place.
 
“Option” means a unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract.

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20 minutes ago, REA'n Maker said:

The question is a tad vague, wouldn't you say?

constitute

[ kon-sti-toot, -tyoot ]

verb (used with object), con·sti·tut·ed, con·sti·tut·ing.

to compose; form:mortar constituted of lime and sand.
to appoint to an office or function; make or create:He was constituted treasurer.
to establish (laws, an institution, etc.).
to give legal form to (an assembly, court, etc.).
to create or be tantamount to:Imports constitute a challenge to local goods.
Archaic. to set or place.
 
“Option” means a unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract.

Allow me to rephrase. What is [emphasis added] an option period under 52.217-9?

You did not answer my entire question.  Please read the second, conditional, phrase--

    What constitutes an option period under the authority of FAR 52.217-9?

Anyone?  Bueller?

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5 hours ago, Guardian said:

What constitutes an option period under the authority of FAR 52.217-9?

Relevant GAO and legal precedent would be appreciated. 

Why not a regulation?  17.204 (c) and (g) provide the side boards.

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28 minutes ago, C Culham said:

Why not a regulation?  17.204 (c) and (g) provide the side boards.

I think we're getting warmer.  What about the paragraph between those two, (f)--

 

(f) Contracts may express options for increased quantities of supplies or services in terms of --

(1) Percentage of specific line items,

(2) Increase in specific line items; or

(3) Additional numbered line items identified as the option.

 

What happens if we don't have a bona fide need or adequate funding FOR ALL of the line items labeled "Option" within a given POP?

And how about what 17.207(f) says? --

 

(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 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 --

(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.

  • (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 16.102(c));

 

May we concentrate on the text I've singled out in bold print? --

[T]he option must...be exercisable at an amount specified in or reasonably determined from the terms of the basic contract, [for example] -- [a]n amount to be determined by applying provisions (or a formula) provided in the basic contract...."

What do you think that means exactly, aside from the obvious, e.g., shall not change unit prices?  GAO, legal precedent, anything to support a thought; how about just a thought?

Hasn't the GAO opened the door to changing OP POPs when it decided 52.217-8 could be used between OPs exercised pursuant to 52.217-9.  How much more flexibility might the CO have?

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2 hours ago, Guardian said:

The question seems simple enough, does it not? 

Sounds like you want others to do your research, does it not?

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17 minutes ago, jwomack said:

Sounds like you want others to do your research, does it not?

I wasn't asking for anyone to go out of their way to do research on this.  If they elect to, that is their decision.  Sometimes I learn the most in helping others.  There are people on this forum that have a firm command of the administrative and case law.  If someone has a case I could look at, it might help me moving forward.  I spent a couple hours looking through cases the other evening, but couldn't find anything directly applicable.

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3 minutes ago, Guardian said:

I spent a couple hours looking through cases the other evening, but couldn't find anything directly applicable.

Applicable to what?  You have asked several questions here.  What exactly if the issue that you are trying to research?  In regard to your original question, the clause does not use the term "option period" so I am confused as to the relevance of that term to the clause.

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Options come in different forms.  The clauses at FAR 52.217-6 through -9 cover common forms.  You may use whichever clause meets your needs, or you may tailor one of these clauses if needed, or you may write your own homemade clause.  I have done all three in my career.

The term "option period" is not used in the -9 clause.

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1 hour ago, ji20874 said:

Options come in different forms.  The clauses at FAR 52.217-6 through -9 cover common forms.  You may use whichever clause meets your needs, or you may tailor one of these clauses if needed, or you may write your own homemade clause.  I have done all three in my career.

The term "option period" is not used in the -9 clause.

That's helpful, but I don't know why you are bringing up -6 through -8, when the very title of my post is "...52.217-9."  I agree with you that there is a difference between an "option" and an "option period" and many contracting professionals wrongly use the term OP to refer to an option.  Whereas 52.217-9 doesn't use the term OP, the period or "term" (and it's extension) is the purpose of the clause, i.e., Option to Extend the Term of the Contract.  That said, I accept your terminology and will discard mine except inasmuch as I need it to reference how the CLIN descriptions were worded.

I asked several questions within this post, but the first one was "what is an option per FAR 52.217-9"?  I have read -9 several times over; it describes the conditions which the Government must meet to exercise an option, but does not say what an option is.  So then perhaps the answer to my question is, "52.217-9 does not define what an option is; the answer to that question must be sought outside the clause, but within the contract."

Here's a scenario that should clarify my question -- I inherited a contract that has ten line items (CLINs), each for a different set of services at a fixed quantity and fixed rate, in other words, FFP.  My program office does not have funding (a commitment) for one of those ten CLINS.  We sent a preliminary notice of intent to the contractor per 52.217-9, indicating our intent but not guarantee to exercise "option period two."  My question is this, do I have the unilateral authority under 52.217-9 to exercise (unilaterally) nine of those ten CLINS, each of which is marked "option period two," along with additional descriptions?  The contract never expressly states that, if exercised, they would necessarily be exercised together.

I could not find any GAO cases that addresses this exact question.

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8 hours ago, Guardian said:

What constitutes an option period under the authority of FAR 52.217-9?

Relevant GAO and legal precedent would be appreciated. 

I don't understand the question. FAR 2.101 defines 'option'; FAR Subpart 17.2 prescribes policies and procedures for the use of options; and FAR 52.217-9 outlines the specific terms and conditions of a particular option to extend the term of a contract (see FAR 17.208(g)).

I recommend asking your supervisor and/or posting in the beginners forum.

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43 minutes ago, Jamaal Valentine said:

I don't understand the question. FAR 2.101 defines 'option'; FAR Subpart 17.2 prescribes policies and procedures for the use of options; and FAR 52.217-9 outlines the specific terms and conditions of a particular option to extend the term of a contract (see FAR 17.208(g)).

I recommend asking your supervisor and/or posting in the beginners forum.

Jamaal,

Did you read through this entire thread?  Did you read my last question as spelled out in the scenario I described?  I cited what I believe to be the relevant paragraphs under 17.2 for discussion. 17.208(g) is the prescription.  Ok. 

How does the definition under 2.101 answer the question I asked above?

How is a beginner going to answer this question, when I can't get an acceptable answer from a qualified contracting officer?  

Forgive me for assuming, but I don't think you have a ready answer.

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2 hours ago, Guardian said:

My question is this, do I have the unilateral authority under 52.217-9 to exercise (unilaterally) nine of those ten CLINS, each of which is marked "option period two," along with additional descriptions?

In contracting many things are dependent on facts of the contract and realationship of those facts..  For your question questions such as 1)How does you price schedule read, 2) Exact wording of the 52.217-9 clause - all blanks filled in, and 3) Is an availability of funds clause in the contract.  Most likely other facts as the question is unfolded.

Beyond getting more facts here is a stab at the fix to your question.  You are extending the term of the contract and not exercising options of CLINS.  Maybe your fix is to exercise the option and remove the CLIN.  All in one mod or the removal in a subsequent mod.

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51 minutes ago, Guardian said:

Did you read through this entire thread?

No, why would I; I was responding to your opening question. 

55 minutes ago, Guardian said:

Did you read my last question as spelled out in the scenario I described?

No. Is it better than the original? (I'm skeptical that it's improved or a single question, but I'll check.) 

58 minutes ago, Guardian said:

How is a beginner going to answer this question, when I can't get an acceptable answer from a qualified contracting officer?

The beginners forum is for members who need basic help. It provides gentler and sometimes more responsive commentary.

1 hour ago, Guardian said:

Forgive me for assuming, but I don't think you have a ready answer.

If you want help you'll need to ask a good question and/or use courtesy.

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3 hours ago, Guardian said:

That's helpful, but I don't know why you are bringing up -6 through -8, when the very title of my post is "...52.217-9." 

 

I brought them up because it seemed you didn't know what an option was under the -9 clause -- one way to tell what is different about the -9 option is to look at the other option forms.

3 hours ago, Guardian said:

My question is this, do I have the unilateral authority under 52.217-9 to exercise (unilaterally) nine of those ten CLINS, each of which is marked "option period two," along with additional descriptions?  The contract never expressly states that, if exercised, they would necessarily be exercised together.

 

Thanks for the clarification.  I never would have realized this was your question from the original posting.

But your question still cannot be answered without knowing more facts.  Sometimes, the -9 clause is used to extend the term of the contract by exercising separately-priced CLINs.  It appears you are questioning whether your next option exercise (1) must include all 10 "option period two" CLINs; or (2) may include only 9 of those CLINs.

Question 1:  Did the contractor's proposal include any all-or-none text, or any other text based on para. (h) of the provision at FAR 52.212-1 or para. (f)(5) of the provision 52.215-1?  

Question 2:  Would a reasonable, prudent person, looking at your contract, feel that the agreement of the parties at the time of contract formation was that (1) Option Period 2 comprises all ten CLINs that must be exercised all-or-none, or (2) Option Period 2 has ten CLINs of which some or all may be exercised?

I hope this is helpful to you.  If you continue to post here, please try to be courteous.

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19 hours ago, Guardian said:

perhaps the answer to my question is, "52.217-9 does not define what an option is; the answer to that question must be sought outside the clause, but within the contract."

Yes.  An option is whatever it is defined to be elsewhere in the contract.

19 hours ago, Guardian said:

The contract never expressly states that, if exercised, they would necessarily be exercised together.

I would assume these things to be severable then...unless a pre-award meeting of the minds implied differently.

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@Guardian This may be painful, but remember you asked for it.

21 hours ago, Guardian said:

...there is a difference between an "option" and an "option period" and many contracting professionals wrongly use the term OP to refer to an option.  Whereas 52.217-9 doesn't use the term OP, the period or "term" (and it's extension) is the purpose of the clause, i.e., Option to Extend the Term of the Contract.

What are the differences? (noting that “option” means a unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract.)

Are you simply distinguishing the option (unilateral right) from the period (term of the option)? FAR Subpart 17.2 references options, option quantities and periods.

21 hours ago, Guardian said:

I asked several questions within this post, but the first one was "what is an option per FAR 52.217-9"?  I have read -9 several times over; it describes the conditions which the Government must meet to exercise an option, but does not say what an option is.  So then perhaps the answer to my question is, "52.217-9 does not define what an option is; the answer to that question must be sought outside the clause, but within the contract."

Let's start with the rules. FAR 4.1003 establishes requirements for separate line items. FAR 4.1005-1 outlines the data elements for line items; paragraphs ( c ) & ( d )--in particular--relate to options. Pair this information with the information, and common methods, at FAR 17.204.

How does your contract identify the options under 52.217-9? (FAR 17.204(f)(1), (2), or (3)...maybe (g) or something different)

FAR 17.204(f)(3) seems to apply because you provided that you have:

21 hours ago, Guardian said:

a contract that ten line items (CLINs), each for a different set of services at a fixed quantity and fixed rate, in other words, FFP...each of which is marked "option period two," along with additional descriptions?

You should be getting closer to refining (or defining) what an option is pursuant to your contract clause. (a unilateral right to exercise the identified schedule CLINS in strict accordance with their terms...but what are their terms? Synthesizing your contract terms & conditions including the schedule CLINs and option clause (52.217-9) will tell you)

21 hours ago, Guardian said:

My program office does not have funding (a commitment) for one of those ten CLINS.  We sent a preliminary notice of intent to the contractor per 52.217-9, indicating our intent but not guarantee to exercise "option period two."  My question is this, do I have the unilateral authority under 52.217-9 to exercise (unilaterally) nine of those ten CLINS, each of which is marked "option period two," along with additional descriptions?  The contract never expressly states that, if exercised, they would necessarily be exercised together.

Presumably your option clause states (1) a preliminary notification requirement; and (2) a period within which the option(s) may be exercised. If you've satisfied these and the options are separately identified why wouldn't the contract terms provide the government the unilateral right to exercise all, some, or none of the options in strict accord?

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19 hours ago, ji20874 said:

Thanks for the clarification.  I never would have realized this was your question from the original posting.

Yes, my convoluted arrangement of questions was purposeful and I for one think it led to an excellent discussion.  Yes, there was a method to the madness.  Maybe its for the best that others first assume I'm a newbie.  Thanks for being patient with me. 

 

In response to Guardian's statement, "The contract never expressly states that, if exercised, they would necessarily be exercised together. "

3 hours ago, jwomack said:

Yes.  An option is whatever it is defined to be elsewhere in the contract.

I would assume these things to be severable then...unless a pre-award meeting of the minds implied differently.

Thanks jwomack, this too is what my research shows, that is, contracting officers have a certain amount of discretion in exercising options.

 

In response to Guardian's question and statement, respectively, "[D]o I have the unilateral authority under 52.217-9 to exercise (unilaterally) nine of those ten CLINS, each of which is marked "option period two," along with additional descriptions?  The contract never expressly states that, if exercised, they would necessarily be exercised together."

2 hours ago, Jamaal Valentine said:

Presumably your option clause states (1) a preliminary notification requirement; and (2) a period within which the option(s) may be exercised. If you've satisfied these and the options are separately identified why wouldn't the contract terms provide the government the unilateral right to exercise all, some, or none of the options in strict accord?

Thanks, Jamaal.  This is really what I was looking for.  I tend to agree.  If you come across any GAO or legal cases that support this conclusion, it would be helpful if you could post the citations.

 

I appreciate everyone's contributions to this discussion and their help.

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I think what Guardian is asking is can he/she exercise an option for an additional period of services but unilaterally change the scope to delete certain contract line items because there isn’t enough funding. 

In other words not exercise the option as written or priced. 

Unless the deleted line items are totally severable, I would suspect that there might be certain fixed costs that would not be recovered if those CLINs aren’t included in the scope for the next year. Thus, the contractor’s unchanged work could be impacted.

In that case, the contractor might have an out if they don’t agree with the price of the changed scope or they could claim impact costs or someone else might object to changing the scope of the option. 

I believe that there is plenty of caselaw covering instances of the government not exercising options as written. But I’m on my sailboat, St Somewhere with my wife on the Florida Coast this week and don’t have the inclination to perform research. :)

 

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47 minutes ago, joel hoffman said:

I believe that there is plenty of caselaw covering instances of the government not exercising options as written. But I’m on my sailboat, St Somewhere with my wife on the Florida Coast this week and don’t have the inclination to perform research. :)

Ahh, a naysayer rears his head from the sea.  No one has been able to produce a case that provides an answer to this "beginner's question" thus far.  I have come across several cases, but none specifically addressing the exclusion of a CLIN.  Enjoy your adventure, Joel! 

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Guardian,

You are making a fundamental mistake.  Joel gave an excellent and correct answer.  The question of whether you can exercise nine of ten option CLINs will come from within the four corners of your contract -- if there is a dispute, the judge or other arbiter will read the contract and decide based on the contract and his or her understanding of the intent of the parties at the time of contract formation.  So you must not look to case law for an answer to your question.  The key is whether the ten option two CLINs are ten parts of a whole, or whether they are ten severable and separately-exercisable CLINs.

I don't like to cite case law unless the case is applicable to the facts.  I don't know your facts (you haven't answered my relevant questions), so I won't try to find cases.

No one here has read your contract.  Does your reading of the contract allow you to exercise nine of the ten option two CLINs?  Then do it.

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1 hour ago, ji20874 said:

Guardian,

You are making a fundamental mistake.  Joel gave an excellent and correct answer.  The question of whether you can exercise nine of ten option CLINs will come from within the four corners of your contract -- if there is a dispute, the judge or other arbiter will read the contract and decide based on the contract and his or her understanding of the intent of the parties at the time of contract formation.  So you must not look to case law for an answer to your question.  The key is whether the ten option two CLINs are ten parts of a whole, or whether they are ten severable and separately-exercisable CLINs.

I don't like to cite case law unless the case is applicable to the facts.  I don't know your facts (you haven't answered my relevant questions), so I won't try to find cases.

No one here has read your contract.  Does your reading of the contract allow you to exercise nine of the ten option two CLINs?  Then do it.

I agree that Joel gave an excellent answer.  Every court case involves different circumstances, whether they differ just a little or a lot.  My point was this--that I have not been able to find one single case that addresses an agency trying to exclude one or more CLINs that are associated with a particular "option period," i.e., period of performance.  Do I think I might locate a case with the exact same circumstances as mine?  Unlikely.  Might I find a case that poses the larger question I have asked?  Maybe.  The contract does not expressly state that this cannot be done.  The services have otherwise been consistent from year to year, for two consecutive years.  Not exercising this one CLIN would not scale the services back that much by any measure.  What else would you like to know?  As a CO, I think the safest bet is to have it signed by both parties and forego the authority of 52.217-9.  Might I be able to do it under the Option to Extend the Term of the Contract clause?  Sure.  Might the contractor dispute that decision?  Sure, if they see fit in doing so and feel they were unfairly treated under the perceived contract terms.  If I had a definite unwavering answer, I would not have brought it to WIFCon.  I don't bring easy questions here.  Do you not think I have attorneys, as do you?  Do you not think I have addressed this with them?  Did you not consider that I have perhaps gotten different responses?  I do not know what a reasonable, prudent person might think,  but I have some idea what I think :-).  I earnestly appreciate your advice, as well as Joel's and that of everybody else.  I think we can all agree that not everyone has the same opinion here, is leaning in the same direction, and yes you are totally correct, I have not provided you my contract to read.

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14 hours ago, Guardian said:

As a CO, I think the safest bet is to have it signed by both parties and forego the authority of 52.217-9.

Have what signed by both parties?

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