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Option Mod Authority


Deeps

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The notice stating the Government's intent to exercise the option was not sent to the contractor in a timely manner (60 days) IAW contract FAR 52.217-9.  What is the mod authority to use in this case?  I know it's bilateral but not sure on the authority.  

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It’s a change to the notice terms but the work is in-scope. The contractor can waive the required notice period.

Why not “Other” and cite that the contractor waives the notice period?  Will require supplemental agreement. 

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  • 2 weeks later...
On 2/20/2020 at 3:38 PM, Deeps said:

What is the mod authority to use in this case?  I know it's bilateral but not sure on the authority.

Why not "SUPPLEMENTAL AGREEMENT (Block C)" and cite 52.217-9 as your authority?

Why not "OTHER (Block D)," cite 52.217-9 as your authority and in Section E check they are required to sign?

Both make it bi-lateral . . .

52.217-9 is in the contract to provide the authority to exercise options and also requires the notification. If the contractor waives the notification requirement (which most do when a deadline is not met) then your authority to exercise is still the same. It only changes it to a bi-lateral signature. 

 

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Slightly off topic of the 52.217-9 clause but I believe the idea still applies and supports @Constricting Officer most recent post.  I have added emphasis to the quote I have carved from another thread to demonstrate that it does discuss the matter of this thread to a point.    If you want to read the full thread from which the following was carved from use the "Search" in Forum and find the thread entitled - "Base Period Active, Future Option Expired- Can it be 'revived' by bi-lateral modification"

 

      On ‎7‎/‎16‎/‎2018 at 6:44 AM, Contractor123 said:

The fill in language in the clause states the govt had to provide written notice to the contractor to exercise its option 24 months after award. No preliminary notice was required. The 24 months passed. The CO wants to modify the 24 months to 48 months.  Question is can he do so if both parties agree? If an option has to be exercised in strict compliance with its terms, can the terms be changed after the period to exercise has passed.  

Okay, for everybody's benefit, here is FAR 52.217-7:

Quote

The Government may require the delivery of the numbered line item, identified in the Schedule as an option item, in the quantity and at the price stated in the Schedule. The Contracting Officer may exercise the option by written notice to the Contractor within [insert in the clause the period of time in which the Contracting Officer has to exercise the option]. Delivery of added items shall continue at the same rate that like items are called for under the contract, unless the parties otherwise agree.

I don't know of any GAO case which deals with your problem, untimely exercise of an option, in terms of CICA. However, in Ceredo Mortuary Chapel, Inc. B-232373, 89-1 CPD ¶ 12, January 9, 1989, decided five years after the enactment of CICA, the GAO decided that a contractor could waive untimely notice of the government's intent to exercise an option, which is not the same as the actual exercise. Here is the pertinent text of the decision:

Quote

Ceredo Mortuary Chapel, Inc. protests the exercise of an option to extend contract No. V581P–1526, issued by the Veterans Administration Medical Center, Huntington, West Virginia for ambulance services... We dismiss the protest.

Ceredo argues that because the contracting officer failed to give the required 60 days notice of the government's intent to exercise the option to the incumbent contractor, the option exercise was ineffective, requiring resolicitation of the services.

We do not agree. The notice requirement included in the contract protects the contractor and may be waived either expressly or by conduct. See 3A Corbin, Contracts § 759 (1960). When the condition of notice is waived, a valid contract results. See generally Burroughs Corp., DOTCAB No. 1327, 83–1 BCA ¶ 16,427 (1983); Fourth Street Estates, Inc., GSBCA No. 5813, 81–2 BCA ¶15, 299 (1981). Therefore, as the incumbent contractor apparently accepted the option exercise, the contract is valid for the extended term.

See also Independent Metal Strap Co., Inc., B-231756, 89-2 bCPD ¶ 147, August 17, 1989.

My thinking is that the GAO's reasoning---that the notice deadline protects the contractor and that the contractor thus can waive it---also applies to the deadline for exercising the option, as long as the period of performance has not expired.

If I were the CO, and I was ready to exercise the option, I would not process a supplemental agreement to change the deadline. I would send you a letter or an email asking you to waive it and asking for confirmation of the waiver in writing signed by an authorized representative of your company. Upon receipt of written confirmation I would then issue a unilateral modification exercising the option. I see no CICA or other legal problem with that approach.

As for changing the deadline from 24 months to 48 months, I am not sure whether the CO is ready to exercise now or if the 48th month would be at some time in the future. if the latter, I would change my procedure. I would do a supplemental agreement.

However, you cannot renegotiate the terms of the option without an approved sole source justification in accordance with FAR Part 6. Renegotiation would be treated as a new procurement for which the CO must obtain full and open competition unless an exception applies.

As for price redetermination, I think that contract term would still apply.

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45 minutes ago, joel hoffman said:

The OP also said that they want to create some options for additional extensions to cover any delay in re-procurement. Again determined to be in-scope. Again - its a  bi-lateral change to the terms and conditions.

It doesn’t matter whether in-scope or out of scope for purposes of the commercial items clause...

Joel, I did not see this in Deep's post.  Did you have an offline conversation to get this info?

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10 minutes ago, Retreadfed said:

Joel, I did not see this in Deep's post.  Did you have an offline conversation to get this info?

You are right.  I responded to the Wrong thread!!!  Sorry. 

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