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BPA's vs. IDIQ's: What's the difference???

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<_< What is the difference between a BPA and IDIQ?

BPA's - SAP (supplies, services, R&D), construction. No administrative burden.

IDIQ - above SAP (supplies, services, R&D, construction) Single or MAC. Requires administration of options.

Please, someone give a me a little light on this...

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<_< What is the difference between a BPA and IDIQ?

BPA's - SAP (supplies, services, R&D), construction. No administrative burden.

IDIQ - above SAP (supplies, services, R&D, construction) Single or MAC. Requires administration of options.

Please, someone give a me a little light on this...

In general, the textbook answer is that a Blanket Purchase Agreement is not a contract and an Idefinite-Delivery Indefinite-Quanity contract is a contract. However, it is a little more complicated than that.

There are two kinds of BPAs.

First, there is the BPA used for simplified acquisitions, which is described in FAR 13.303. As described therein, a BPA is like a charge account. You should read that FAR section. This kind of BPA is definitely not a contract.

Second, there is the BPA written against a GSA Federal Supply Schedule contract, which is explained in FAR 8.405-3. You should read that FAR subsection. GSA FSS contracts are IDIQ contracts. A BPA awarded against one of them is an ordering agreement under a contract. I maintain that since it is an agreement against a contract it is effectively contractual in nature, but there are many who would disagree with me.

The best way to begin to understand BPAs is to read the FAR references I have given you and to come back here if you still have questions.

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IDIQ - above SAP (supplies, services, R&D, construction) Single or MAC. Requires administration of options.

That is clearly wrong. There is no requirement that an IDIQ contract contain options. In my opinion, it is generally a bad idea.

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Options on an ID/IQ contract: Straight from the heralded "Department of Redundancy Department."

Seriously, why do we have options on ID/IQs? I'm looking for a brutally honest answer from someone who awards/administers these and knows why. I really don't get it. And it's not rare. In fact, I don't know that I've ever seen an ID/IQ **without** option periods. Why do we do this?

My guess--and it IS a guess--is that there is a benefit for PCOs to do it this way (perhaps fewer reporting/briefing requirements due to some "option loophole"), but I really don't know. Does anyone have a brutally honest answer?

There's a saying in the Artificial Intelligence community that an idea (or algorithm) can be so bad, it's not even wrong. Generally, this means such an idea is either a) complete nonsense, or B) completely redundant/unnecessary. To me, adding options to an ID/IQ contract is an example of an idea that is redundant/unnecessary.

Question for the Lawyers and/or PCOs and/or Buyers who award/admin ID/IQs with options: What am I missing? There has to be a reason we do this. I just don't know what it is.

Looking forward to an insightful thread.

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Great rant.

Now why don't you say why you think options are a bad idea? This thread was started by a person who doesn't know the difference between a BPA and an IDIQ contract. Now you and Don are saying that options on IDIQ contracts are bad. How is that person and others like him/her supposed to understand what you're going on about? It would help the discussion if you would explain your thinking, so others can decide whether they agree with you or not. That might make the thread more "insightful."

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Great rant.

Now why don't you say why you think options are a bad idea? This thread was started by a person who doesn't know the difference between a BPA and an IDIQ contract. Now you and Don are saying that options on IDIQ contracts are bad. How is that person and others like him/her supposed to understand what you're going on about? It would help the discussion if you would explain your thinking, so others can decide whether they agree with you or not. That might make the thread more "insightful."

Really. I have experienced that point of view (options being redundant to IDIQ) in certain circumstances and tended to avoid options and instead had a longer contract term for the issuance of orders (with a prescribed maximum performance time for orders issued prior to the deadline). And people would say, well then you gotta use it for that whole term...Well, sure, it is available to use but aside from meeting any minimums - not really, as these would not also necessarily be a Requirements vehicle...it could just lie fallow if you did not need or want to use it. Plus any minimums could be made within the term of the contract - say within two years, rather than in any compelling one year base period prior to option exercise.....given more breathing room for minimums, if that is a concern with some folks.

I have been in situations where the project folks demanded option years automatically for IDIQ's and not wanting to push the matter, I have said sure, I can do that...and then built a good case for not exercising the option(s) which usually I sold them on. And on that subject, I have seen what I consider an all to frequent almost knee jerk reaction by project folks to want every contract vehicle to have options (extended time) to the max and they consider it a no brainer that the CO would go along with that and naturally exercise them. All kinds of reasons not to go along with that...depending on the circumstances.

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Great rant.

Now why don't you say why you think options are a bad idea? This thread was started by a person who doesn't know the difference between a BPA and an IDIQ contract. Now you and Don are saying that options on IDIQ contracts are bad. How is that person and others like him/her supposed to understand what you're going on about? It would help the discussion if you would explain your thinking, so others can decide whether they agree with you or not. That might make the thread more "insightful."

On my experience, most of IDIQ's for engineering services on my Agency have options from 2-4 plus base. I really appreciate if everybody elaborates their reasons why options are not a good idea on IDIQ's? I also have seen BPA's for supplies and services with options as DELL, HP, Xerox, etc.

Is it because we are limiting competition with the implementation of options?

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sarah.munozmarquez-

You wrote:

===

?I ...tended to avoid options and instead had a longer contract term for the issuance of orders (with a prescribed maximum performance time for orders issued prior to the deadline).?

===

Amen, I say. But why do you say that you tend to avoid options and just go with a longer ordering period? I personally think you?re on to something here, and that something is efficiency in my mind. It?s also using the ID/IQ contract vehicle like it was intended to be used, so I would argue there?s an element of professionalism as well.

Let?s assume, for the purposes of this discussion, the ordering period of this ID/IQ is 5 years (so we?re comparing a 5 year ordering period to a 1-year basic plus four 1-year option periods). To me, these two contracting approaches are equivalent in terms of utility to the user (and PM), but there are at least two notable differences for Contracting Officers:

1) The version of the ID/IQ with options takes more effort to award and to administer, and

2) The version of the ID/IQ with options could end the contract earlier (by not exercising an option), whereas absent a termination, the contract with the longer ordering period and no options would remain in effect (albeit ?lying fallow?).

So I conclude, for some reason that I honestly don't understand, PCOs would prefer to have the option to have no contract instead of one that is ?lying fallow,? despite the fact that a longer ordering period would appear to be cleaner (and less work as far as I can tell) to award and administer. That is, the PROs of not having a contract after an unexercised option (#2 above) apparently outweigh the CONs of the extra effort associated with creating and administering the contract with options (#1 above).

My question is: Why? And Vern, this is a serious question, I really don?t know. I suspect there is something in my #2 above that has value, but I have no idea what it is.

You also wrote:

===

?Any minimums could be made within the term of the contract - say within two years, rather than in any compelling one year base period prior to option exercise.....given more breathing room for minimums, if that is a concern with some folks.?

===

I?m pretty sure I disagree with you here, but I?m not sure exactly what you?re saying. Vern or Don can explain this much better than I can, but having options to exercise does nothing in regard to extending the authority to obligate funds. You?ll use funds that are current at the time of contract award to fund the minimum, so you have until these funds expire to do so, but no more. So I don?t know what you mean by having ?more breathing room for minimums.? I think you may be referring to a fiscal law/appropriation issue that your finance and/or legal folks would have to address, not a matter of contracting. That is, options have no bearing on funding the ID/IQ minimum (which serves as consideration for the contract award itself).

You also wrote:

===

?I have been in situations where the project folks demanded option years automatically for IDIQ's and not wanting to push the matter, I have said sure, I can do that...and then built a good case for not exercising the option(s) which usually I sold them on. ?

===

You lost me here. If you didn?t exercise the option, then you obviously didn?t require an ordering period past the time when that option came up to be exercised. Building a case to not exercise an option on an ID/IQ is, for the purposes of this discussion, equivalent to arguing for a shorter ordering period (in the scenario with the ID/IQ without options). So I?m a bit confused about what you?re asking or suggesting now. If you know you?re only going to need services for, say, three years, I wouldn?t set up an ID/IQ with an ordering period of five years (muchless one with 1 one-year basic plus 4 one-year options). I?d set it up for an ordering period of three years, because that?s what you think you need. Again, not exercising the option on year four is equivalent to acknowledging that you really only needed the contract for three years, so (with the benefit of hindsight), you should have awarded an ID/IQ with a three year ordering period.

But here?s my point: Even an ID/IQ with a 5-year ordering period that starts ?lying fallow? on Year 4 is, to me, preferable to a ?Base Plus 4? ID/IQ. The former is cleaner and more efficient. Even if we find we are wrong about how long we would need the services, it takes one award, not one award plus four options being exercised. The latter approach is inefficient to me (but again, I fully acknowledge that there could very well be a benefit to that approach).

You also wrote:

===

?I have seen what I consider an all to frequent almost knee jerk reaction by project folks to want every contract vehicle to have options (extended time) to the max and they consider it a no brainer that the CO would go along with that and naturally exercise them.?

===

I?d ask the project folks making the request to explain what they think an ID/IQ is and why they need or want options on an ID/IQ. Ask them to clearly articulate the difference between having options and not having options--on an ID/IQ. I?m a PM, and quite frankly, I don?t know any PMs who can articulate a significant difference (other than possibly what I pointed out above, and I consider those to be insignificant from a PM perspective). Vern recently posted a rather advanced paper on Options on ID/IQs, but its focus is on creatively extending services, and not on simply cutting task orders that are clearly within scope (which is essentially what we are talking about).

Lastly, you asked for someone to elaborate on ?why options are not a good idea on IDIQ's.? Is it because we are limiting competition with the implementation of options?

I say they?re not a good idea because they?re unnecessary and inefficient. Options are more work, and there?s no apparent return on that extra work (at least to me). Our PK folks have enough to do, and awarding options on an ID/IQ takes time that I, as a PM, would rather they spend on something else.

Here?s the issue in a nutshell to me: What do you get out of exercising the four options in our scenario? My quick answer is you get an ID/IQ with a 5-year ordering period, which is exactly what you could have had from the beginning by awarding a contract with a 5-year ordering period with no options. So why bother with the options? The most common answer to that is that you can end the contract by simply not exercising an option (i.e., without formal termination). That may have value, but why is this better than simply letting the contract ?lie fallow? if the requirement ?dries up? and you award no task orders for, say, the last two years? I suspect the answer to this is that contracts that ?lie fallow? come with overhead and/or generate reporting requirements that PCOs/buyers try to avoid because they have higher priority tasks to attend to, but I honestly don?t know. Can you find out?

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Seriously, why do we have options on ID/IQs? I'm looking for a brutally honest answer from someone who awards/administers these and knows why. I really don't get it. And it's not rare. In fact, I don't know that I've ever seen an ID/IQ **without** option periods. Why do we do this?

I think that many 1102s either do not know that it's permissible to have a multiple-year IDIQ contract without options or they do know and are unwilling to try something different. I've been on the same quest to find a good reason why there are so many IDIQ contracts with options for years and have yet to find an answer.

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I think that many 1102s either do not know that it's permissible to have a multiple-year IDIQ contract without options or they do know and are unwilling to try something different. I've been on the same quest to find a good reason why there are so many IDIQ contracts with options for years and have yet to find an answer.

The threat to forego exercise of an option does have a salutary effect on contractor performance. Administratively, it is probably easier to withhold an option exercise than to terminate a contract.

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I think that many 1102s either do not know that it's permissible to have a multiple-year IDIQ contract without options or they do know and are unwilling to try something different. I've been on the same quest to find a good reason why there are so many IDIQ contracts with options for years and have yet to find an answer.

What's even more puzzling to me is the belief that each option must have a new min and max for ordering.

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Don-

Thanks for the reply.

Napolik-

The threat to forego exercise of an option does have a salutary effect on contractor performance. Administratively, it is probably easier to withhold an option exercise than to terminate a contract.

Maybe. But do you think this logic applies to a Multiple Award ID/IQ? I do not, and I have seen options on MATOCs.

You also wrote:

"Administratively, it is probably easier to withhold an option exercise than to terminate a contract."

Agree, but it's easier (and I say generally smarter) to do nothing than to exercise an option. A longer ordering period obviates the need for options, no?

Formerfed-

Not sure I've ever seen mins on options. How sheltered am I?

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Don-

Thanks for the reply.

Napolik-

Maybe. But do you think this logic applies to a Multiple Award ID/IQ? I do not, and I have seen options on MATOCs.

You also wrote:

"Administratively, it is probably easier to withhold an option exercise than to terminate a contract."

Agree, but it's easier (and I say generally smarter) to do nothing than to exercise an option. A longer ordering period obviates the need for options, no?

Formerfed-

Not sure I've ever seen mins on options. How sheltered am I?

I think you underestimate the impact on a contractor of the decision to exercise or to forego an option. It is an easy means of focusing the contractor's attention on providing top flight performance.

If the contractor is not performing as well as you?d like, doing nothing may not be an option.

I understand the benefits of using an extended ordering period vice options. I like options for the reasons I state. I do not make the exercise of the options a labor of Hercules.

Contracting is an art, not a science. Every contracting officer is an artist who has many brush strokes available to create a masterpiece.

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Don-

Thanks for the reply.

Napolik-

Maybe. But do you think this logic applies to a Multiple Award ID/IQ? I do not, and I have seen options on MATOCs.

You also wrote:

"Administratively, it is probably easier to withhold an option exercise than to terminate a contract."

Agree, but it's easier (and I say generally smarter) to do nothing than to exercise an option. A longer ordering period obviates the need for options, no?

PM, you make many good points, most of which I am in agreement. However, there is one issue that you have not addressed in your arguments for an extended ordering period instead of using options. That is the effect of allowing a contract to lay fallow has on the contractor. At some point, it would appear only fair to inform the contractor that no more orders will be issued if a contract has been in existence for three years, such as in your example. Otherwise, the contractor may be retaining personnel, or possibly expanding its workforce, in anticipation of further orders. In other words, the risk to the contractor may be much greater in this situation than in the way things frequently work now with options. I am not saying that contractors do not face risks now after the government orders the minimum quantity, only that such risk may be increased so that contractors may be deterred from seeking such work.

Formerfed-

Not sure I've ever seen mins on options. How sheltered am I?

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Guest carl r culham

It seems the discussion in this thread has forgotten about FAR 17.1. While I agree consideration of multiyear contracts is advisable this thread makes it seem like it is a simple decision, just do not have options have multiyear. I would suggest that the decision is a little more detailed in consideration of the policy and requirements stated in FAR 17.1. I would agree with one comment in the thread that responses do not do justice to explaining rationales for selecting a multiyear over a option year contract..

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It seems the discussion in this thread has forgotten about FAR 17.1. While I agree consideration of multiyear contracts is advisable this thread makes it seem like it is a simple decision, just do not have options have multiyear. I would suggest that the decision is a little more detailed in consideration of the policy and requirements stated in FAR 17.1. I would agree with one comment in the thread that responses do not do justice to explaining rationales for selecting a multiyear over a option year contract..

The discussion involves an IDIQ contract with a 5 year ordering period vice an IDIQ contract wiith a 12 month ordering period plus four, 1 year options. It does not involve use of a multi year contract.

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I think you underestimate the impact on a contractor of the decision to exercise or to forego an option. It is an easy means of focusing the contractor's attention on providing top flight performance.

If the contractor is not performing as well as you?d like, doing nothing may not be an option.

I understand the benefits of using an extended ordering period vice options. I like options for the reasons I state. I do not make the exercise of the options a labor of Hercules.

Contracting is an art, not a science. Every contracting officer is an artist who has many brush strokes available to create a masterpiece.

I like your last statement!

If we are doing our jobs properly, a contractor should know they aren't performing as well as expected. Communications, and lots of it, is a big part of what we do. I believe telling a contractor they won't get any more business until they improve under a multiple year ordering period is just as effective as the threat to not exercise an option.

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I agree with what formerfed wrote yesterday:

"I believe telling a contractor they won't get any more business until they improve under a multiple year ordering period is just as effective as the threat to not exercise an option."

I think this is an important point, and if anyone disagrees substantively with this statement, I?d like to hear your argument countering it.

Furthermore, in the case of multiple-award contracts, the argument to "threaten" a contractor by not exercising an option simply doesn't work (unless all of the awardees are underperforming). That is, you wouldn't end a contract with one poor performer and two good ones by not exercising an option. You'd award the task order to one of the two ?good? contractors and make the other contractor understand what he's doing (or not doing) that is impacting our desire to award to him.

Having the longer ordering period also gives us the ability (in the case of MATOCs) to allow a contractor to improve and win an award later in the ordering period. This obviously would not be possible if an option were not exercised, and the contract ended before that time. Thus, having a longer ordering period can also impact past performance assessments for a contractor that performs poorly at first but improves under that same contract (possibly years later). I think it is fair to give contractors the opportunity to perform (especially small businesses), and not exercising an option would end the contract before they have an opportunity to improve performance and thereby improve their past performance rating. Could that be a reason we do it? I don?t know. And I?m not a bleeding-heart-liberal, but I think it?s generally in our best interest to have competition, and I believe this approach fosters competition.

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PM63A4:

I understand your argument that it is not necessary to include options in an IDIQ contract, since the CO can simply stop ordering, and that you think that options are needlessly "redundant." However, I think that you are overstating your case. There may be good reasons to use options in multiple-award IDIQ contracts (MATOCs).

The law and FAR require that agencies using MATOCs must give all contractors a fair opportunity to be considered for the award of a task or delivery order. That is a legal and contractual obligation. As long as a firm holds an active task order contract, it must be given a fair opportunity to compete for orders and it has the right to protest competitions in excess of $10 million. Moreover, the firm can file a claim under the Contract Disputes Act of 1978 and the Disputes clause if it thinks that the government has breached its obligation to give it a fair opportunity. Options would give the agency an chance to drop any of the awardees with which it no longer wants to do business. All it has to do is decline to exercise an option in the firm's contract and document its reasons. A firm whose option has not been exercised has little effective legal recourse, unless it can show that the agency acted in bad faith. After its option has not been exercised, the firm need not be given an opportunity to compete and it cannot protest the award of any task and delivery order thereafter.

As for "threatening" an offeror that it won't get more business until it improves its performance, I think you and formerfed ought to think that through. Unless you are talking about getting the contractor to improve its performance under one or more ongoing tasks, how is the contractor going to improve its performance if the CO won't give it more business? (The same goes for threatening not to exercise an option.) If you are talking about improvement under an ongoing task, can you fairly make such a threat if the contractor has performed well under other tasks? Won't the decision to award or not depend on the outcome of the competition and the big picture? Won't you have to evaluate a proposal from the firm in any case? In any event, it is never a good idea to "threaten" a contractor with an adverse action. Boards and courts frown on threats. If you are going to take an adverse action, then take it and document the file. Threats can be seen as acts of bad faith.

In short, as long as a MATOC continues in effect, the government is tied to that contractor, whether it issues orders against the contract or not. Options give an agency a relatively easy way out of a contract short of termination for convenience. In my experience, a termination will require more paperwork than deciding not to exercise an option. Besides, it is not a good idea to leave a fallow contract lying around. If you don't want to do business with the firm anymore, then end it. The easiest way to do that is to not exercise the next option.

In your last post you wrote:

Furthermore, in the case of multiple-award contracts, the argument to "threaten" a contractor by not exercising an option simply doesn't work (unless all of the awardees are underperforming). That is, you wouldn't end a contract with one poor performer and two good ones by not exercising an option. You'd award the task order to one of the two ?good? contractors and make the other contractor understand what he's doing (or not doing) that is impacting our desire to award to him.

Is it your belief that the government cannot refuse to exercise the option of one MATOC contractor while exercising the options of the others? If so, you are wrong. Each contract stands alone in that regard. If there are multiple awardees, the government is not faced with the choice of exercising the options of all or exercising none.

So, I agree that you have a point, but only up to a point. Options on IDIQ contracts are not necessarily a bad idea.

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My comment is based on the contractor having poor past performance. Depending on how the ordering process is, that effectively eliminates them. I would be frank is letting the contractor know how they are performing. The company could submit information on how they remedied the situation which may allow them to be a viable competitor again.

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It is difficult to generalize. Consider this statement you made earlier:

If we are doing our jobs properly, a contractor should know they aren't performing as well as expected. Communications, and lots of it, is a big part of what we do.

While that's certainly true, it assumes that the period of performance of a task order is long enough to permit the parties to communicate and make adjustments while the work progresses. But many tasks are of short duration, and there may be very little communication until after everything is over. The same if true if the agency is not well or effectively staffed.

I believe telling a contractor they won't get any more business until they improve under a multiple year ordering period is just as effective as the threat to not exercise an option.

Maybe, but there is a big difference between "no more business until you improve" and no option. The first is like punishing the contractor with a "time out," while the second is a death sentence. Which is more scary?

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Vern-

Thanks again.

I understand the "fair opportunity" requirement for awards of task/delivery orders. You covered that in your "FAR Part 15 Process Model and Process Inefficiency" paper.

As for protests on task orders in excess of $10M, I see what you're saying, but we've had options on ID/IQs long before contractors had the right to protest DO/TO awards in excess of $10 million (which I believe started in 2008, if memory serves). So there are plenty of examples (including all ID/IQs awarded before 2008) in which the risk of protest was not a concern, so you can?t argue "risk of protest" was a reason we had options on ID/IQs prior to 2008. But I fully acknowledge that it has applicability now.

Next, I concur that "options give the agency a chance to drop any of the awardees with which it no longer wants to do business." However, I wonder if we in the government ever take advantage of this. In response to your question:

===

Is it your belief that the government cannot refuse to exercise the option of one MATOC contractor while exercising the options of the others? If so, you are wrong. Each contract stands alone in that regard. If there are multiple awardees, the government is not faced with the choice of exercising the options of all or exercising none.

===

My belief when I wrote that was that, while the government can exercise some but not all of the options on a MATOC, it rarely, if ever, does. I suspect you may have done it, but I don?t know that a lot of other PCOs have. Quite honestly, I thought such an action would be subject to protest, but I was surprised to learn that a firm whose option has not been exercised has little effective legal recourse. I fully understood that an option was a unilateral right of the government, but for some reason I incorrectly believed options on ID/IQs might be viewed differently by the courts/Comptroller General. So you set me straight there.

Couple of questions for you:

After reading your answer and reading Jones, Russotto & Walker, B-283288.2, I now assume there are no court cases in which a contractor successfully protested a CO?s decision to exercise some, but not all, options on a MATOC. However, I noticed that you seem to have said something different about the government acting in bad faith (i.e. "unless" instead of "even if").

Question: Even if the government is determined to have acted in bad faith, does the contractor have **any** legal recourse? If so, what?

NOTE: I suspect the answer might be in B-244741. I searched for "B-244741" on WIFCON and the web, but all I could find was the B-283288.2 case that referenced B-244741, not B-244741 itself. So I don't what B-244741 says.

My next question is academic, but I?d be interested in your thoughts. What if you had a MATOC with only two contractors? The PCO has to document his decision to use a MATOC when awarding the contract IAW FAR Part 16.504. In this case, I would argue a decision to not exercise an option for one of these two contractors effectively (if not legally) turns this multiple-award contract into a single-award contract. I would think that this would call into question the original award (i.e., would undermine the FAR requirement that reads: "The contracting officer must document the decision whether or not to use multiple awards in the acquisition plan or contract file."). Wouldn?t the courts have to entertain a protest under these circumstances (again, since the act of exercising the option for only one contractor would call into question the basis for the original award)?

Again, thanks for the education. You pounded out a little ignorance today. I honestly thought a decision to exercise some but not all options on a MATOC would be riskier for the government than the risk of protest on any given Task Order, but I now see that contractors have little or no recourse when the government elects to not exercise an option (even in the case of a single contractor on a multiple-award ID/IQ). So I can see that options on ID/IQ contracts are not necessarily a bad idea (but I would add that I think we put options on ID/IQ contracts without thinking of all the reasons you outlined in your answer...).

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For the benefit of others, as Vern alluded to, the Comptroller General will not even entertain a protest against an agency's decision not to exercise an option, since the Comptroller General considers the decision of whether to exercise an option a matter of contract administration, which is outside of the purview of the Comptroller General's procurement protest review functions. This is true even when the protester alleges that the Government is acting in bad faith.

From Jones, Russotto & Walker, B-283288.2, December 17, 1999:

"FAILURE TO EXERCISE OPTIONS

While Jones styles its protest as a protest against defective specifications, Jones principally challenges the agency's determination to issue a new solicitation rather than exercise the options under the existing contracts. Jones argues that HUD's decision to issue a new solicitation constituted a premature termination of Jones's existing contract which was arbitrary, capricious and without justification. The protester contends that HUD's failure to exercise the options shows bad faith on the part of the agency, and that HUD should set the new solicitation aside until the agency can prepare a sound replacement.

The Federal Acquisition Regulation (FAR) defines an option as a "unilateral right" of the government to elect to purchase additional supplies or services or to extend the term of a contract, and makes clear that a contracting agency is under no requirement to exercise an option (FAR 17.201, 17.207).

Our Office will not consider an incumbent contractor's protest of an agency's refusal to exercise an option under an existing contract since this decision is a matter of contract administration outside the scope of our bid protest function. We will not consider the matter even where, as here, the protester alleges that the agency's decision to not exercise an option in its contract was made in bad faith."

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My belief... was that, while the government can exercise some but not all of the options on a MATOC, it rarely, if ever, does.

I know that agencies have done it--see the reference to Government Technical Services, Inc. v. U.S below--but I don't know how rare it is and I don't know the basis for your belief. I think your belief is sheer speculation. In any case, if it is rare, so what?

Couple of questions for you:

After reading your answer and reading Jones, Russotto & Walker, B-283288.2, I now assume there are no court cases in which a contractor successfully protested a CO?s decision to exercise some, but not all, options on a MATOC.

Only one court has protest jurisdiction--the U.S. Court of Federal Claims. Like the GAO, that court will not entertain a protest based on the government's failure to exercise an option. See Government Technical Services LLC v. U.S., 90 Fed. Cl. 522 (2009), in which the court refused to entertain a protest concerning the Corps of Engineers? failure to exercise the option of one of the contractors under a MATOC, saying that the matter does not fall within its protest jurisdiction under the Tucker Act. The Court said that such a matter had to be pursued as as a claim under the Contract Disputes Act.

Question: Even if the government is determined to have acted in bad faith, does the contractor have **any** legal recourse? If so, what?

In Bannum, Inc. v. U.S., 80 Fed. Cl. 239 (2008) the Court of Federal Claims held that failure to exercise an option due to bad faith is a breach of contract that entitles the contractor to recover the value of the option. See also Hi-Shear Tech. Corp. v. U.S., 53 Fed. Cl. 420 (2002) and Dangfeng Shen Ho v. U.S., 49 Fed. Cl. 96 (2001). I do not know of a case in which a court or board has found the government guilty of bad faith in refusing to exercise an option, but I haven?t looked.

My next question is academic, but I?d be interested in your thoughts. What if you had a MATOC with only two contractors? The PCO has to document his decision to use a MATOC when awarding the contract IAW FAR Part 16.504. In this case, I would argue a decision to not exercise an option for one of these two contractors effectively (if not legally) turns this multiple-award contract into a single-award contract. I would think that this would call into question the original award (i.e., would undermine the FAR requirement that reads: "The contracting officer must document the decision whether or not to use multiple awards in the acquisition plan or contract file."). Wouldn?t the courts have to entertain a protest under these circumstances (again, since the act of exercising the option for only one contractor would call into question the basis for the original award)?

I don't think refusing to exercise the option of one of the two contractors would turn what had been a multiple award contract into a single award contract. It would not change the fact that there had been multiple awards. The law does not say that an agency must continue to do business with all firms in order to ensure that it has multiple contractors. In any case, only one court has protest authority, the Court of Federal Claims, and as I pointed out above, that court has held that it does not have jurisdiction to handle refusal to exercise an option as a bid protest. The contractor would have to file a claim under the Disputes clause, and I don't see how it would have any contractual basis for arguing that the government should keep at least two contracts in effect.

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