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Not exercising unfunded Option year CLINs under a Level of Effort task order


Trish99

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I have a LOE task order that has several option CLINS. The first option year itself is being exercised. The CLINS are priced.  For the option year, the customer wanted to fund one CLIN. It's being argued that only the funded CLIN should be exercised. My question is should unfunded CLINS remain unexercised until funds are available or should they be opened (exercised) and fund them later if needed? If unfunded CLINs aren't exercised by the time the pop starts, can they be exercised later and funded or are they terminated because they weren't exercised by the date the period of performance began?  FAR 52.217-9 is cited in the order. One supervisor cites 17.207(c) as the rationale. She states; " in order to exercise an option, the KO must first determine if funds are available. We can't exercise options that do not have funding associated with them" I would argue that IDIQs are set up with priced CLINs that are funded through task orders, but perhaps 17.207(c) should have applied to these as well?  Can any one address this?

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Trish,

Our Service Division Office deals with scenarios like yours on a daily basis. We work on many Requirements Contracts including priced CLIN's etc... 

To answer your question: 

Should unfunded CLINS remain unexercised until funds are available or should they be opened (exercised) and fund them later if needed? If unfunded CLINs aren't exercised by the time the pop stars, can they be exercised later and funded or are they terminated because they weren't exercised by the date the period of performance began? 

Yes! leave the unfunded CLIN's alone until:

a) the Requiring Activity request the CLIN's;

b) funds are available

 

At my office we only exercises CLIN's within the Option year that are been requested and funded by the Requiring Activity (RA). IAW, FAR 17.207(c)

If the RA does not request or funds all CLIN's within an Option year, we do not exercise them, "Period".

Perhaps the Government is not longer needing the service within those CLIN's or they may need it later. If the RA request to exercise the rest or some of the remaining CLIN's on a later time. The Contracting Specialist and or Officer creates a new Task Order or Modify existing one to apply new funds on the requested CLIN's and exercises the CLIN's. 

***Now the POP will not exceed the POP for the Option year itself****

Now, to be clear when notifying the contractor of the Government intend to exercise the Option Year. We do not go in details of which CLIN's will be exercise or which one not. Because in reality at that time, the RA only knows one thing only. "The Government will need those services in the near future, please contractor get ready"

 

Hope this helps...

ROD

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It depends.

Depending on the text of the contract and the intention of the parties when the contract was formed and then when the task order was issued, it could be that the task order's first year option must be exercised in its entirety (all of the CLINs) in order for the option exercise to be valid.  Or, it could be that the Government may pick and choose from among the task order's first year option CLINs and exercise some or all at its discretion.

We don't have the contract or task order, so we cannot answer definitively.

If the contractor thinks that all of the option CLINs must be exercised, it may submit a claim saying so under the Disputes clause of the contract.

 

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9 hours ago, ROD said:

Trish,

Our Service Division Office deals with scenarios like yours on a daily basis. We work on many Requirements Contracts including priced CLIN's etc... 

To answer your question: 

Should unfunded CLINS remain unexercised until funds are available or should they be opened (exercised) and fund them later if needed? If unfunded CLINs aren't exercised by the time the pop stars, can they be exercised later and funded or are they terminated because they weren't exercised by the date the period of performance began? 

Yes! leave the unfunded CLIN's alone until:

a) the Requiring Activity request the CLIN's;

b) funds are available

 

At my office we only exercises CLIN's within the Option year that are been requested and funded by the Requiring Activity (RA). IAW, FAR 17.207(c)

If the RA does not request or funds all CLIN's within an Option year, we do not exercise them, "Period".

Perhaps the Government is not longer needing the service within those CLIN's or they may need it later. If the RA request to exercise the rest or some of the remaining CLIN's on a later time. The Contracting Specialist and or Officer creates a new Task Order or Modify existing one to apply new funds on the requested CLIN's and exercises the CLIN's. 

***Now the POP will not exceed the POP for the Option year itself****

Now, to be clear when notifying the contractor of the Government intend to exercise the Option Year. We do not go in details of which CLIN's will be exercise or which one not. Because in reality at that time, the RA only knows one thing only. "The Government will need those services in the near future, please contractor get ready"

 

Hope this helps...

ROD

That really helps a lot. Thank you.  I do think 52.232-18 availability of funds clause should be added for those CLINs not exercised.

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17 hours ago, Trish99 said:

One supervisor cites 17.207(c) as the rationale. She states; " in order to exercise an option, the KO must first determine if funds are available. We can't exercise options that do not have funding associated with them" I would argue that IDIQs are set up with priced CLINs that are funded through task orders, but perhaps 17.207(c) should have applied to these as well?

CLINs on a task order would rarely if ever be analogous to a basic IDIQ contract.  The parties' obligations under the basic IDIQ contract relate to meeting the minimum and ordering procedures.  The Government's obligations under the basic contract usually do not involve the type of obligations that would trigger a separate Recording Act requirement, at least in my organization, where we are required to award the initial task order at the time of the award of the basic, and the minimum cannot be greater than the initial task order.

While you haven't described your CLINs, most CLINs involve a contractor being obligated to perform and the Government being obligated to pay for that performance.  If that is the case for these CLINs, then the supervisor has a point.

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3 minutes ago, Jacques said:

CLINs on a task order would rarely if ever be analogous to a basic IDIQ contract.  The parties' obligations under the basic IDIQ contract relate to meeting the minimum and ordering procedures.  The Government's obligations under the basic contract usually do not involve the type of obligations that would trigger a separate Recording Act requirement, at least in my organization, where we are required to award the initial task order at the time of the award of the basic, and the minimum cannot be greater than the initial task order.

While you haven't described your CLINs, most CLINs involve a contractor being obligated to perform and the Government being obligated to pay for that performance.  If that is the case for these CLINs, then the supervisor has a point.

The CLINs are Level of Effort under a CPFF and tied to labor specific to PWS tasking.  I'm the one that said the IDIQ CLINs are set up as priced CLINs and funded through tasking.  I also said to this supervisor that if the priced task order CLINs are not exercised at the time of the option period begins, perhaps FAR 52.232-18 should be added to the task order. That way no one could argue that not exercising them at the time of option execution renders them 'dead"

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Trish,

Just be careful with 52.232-18.

The RX states: 

32.706-1 Clauses for contracting in advance of funds. 

 (a) Insert the clause at 52.232-18, Availability of Funds, in solicitations and contracts if the contract will be chargeable to funds of the new fiscal year and the contract action will be initiated before the funds are available.

Base on my interpretation this only applies for new fiscal year. Therefore, if we are in the middle of (e.g., MAY and the Option is been exercised but only few of the CLIN's are needed. 52.232-18 will not do us any good. 

Any thoughts out there????

ROD 

 

 

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