Do you pre-price the potential 6 months under FAR 52.217-8 just like you do with options under FAR 52.217-9?

[Tzarina of Compliance]

So the question I have and I searched the archives and I can not find an answer to:

 

Situation:  CPFF Contract with base period of 3 years and 2 x 12-month option periods.  The contract contains both the -8 and -9 option clauses (FAR 52.217-8 and FAR 52.217-9).   The contractor bid a Total Estimated Cost (TEC) & Fixed fee for the base period and each of the 12-month option periods.  But the contractor did not bid the potential option to extend under the -8 clause for 6 months.  

If the CO extends last option period by 6 months while waiting for a follow on contract to start (delay in procurement etc) and the contractor has spent all the TEC and earned full Fixed Fee under the last 12-month option, does the CO have to complete a J&A to increase the TEC and add more fee (if any) for the additional 6 month period of performance?  

Can the CO extend without J&A?  Should the CO have requested at the proposal stage for the contractor to pre-price the potential 6 months under the -8 clause?

I guess it may have to be the same question for Continuity of Services clause if also included. FAR 52.237-2

Applogies for potentially a stupid questions under a cost type contract.....    

 

[Vern Edwards]

1 hour ago, Tzarina of Compliance said:

Can the CO extend without J&A?

@Tzarina of ComplianceIf the -8 option was unpriced and unevaluated prior to award, then according to the GAO the agency must prepare a J&A in order to exercise it. The GAO cited FAR 17.207(f) as the basis for its opinion.

See "Exercising Options: An Unanticipated Issue," in The Nash & Cibinic Report, June 2010, which discusses Major Contracting Services, Inc., Comp. Gen. Dec. B-401472, 2009 CPD ¶ 170, 51 GC ¶ 332, recons. denied, 2009 CPD ¶ 250.

See also Magnum Opus Technologies, Inc. v. U.S., 94 Fed.Cl. 512, 537-538 (2010)

From the GAO's reconsideration decision:

Quote

We sustained MCS's protest because we found that the exercise of the option did not comply with FAR requirements. Specifically, FAR sect. 17.207(f) requires that a contracting officer, before exercising an option, make a written determination that the exercise of the option is in accordance with the terms of the option and the requirements of FAR sect. 17.207 and FAR Part 6, and further specifies that in order to meet the requirements of FAR 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. We found that the option to extend DAV's contract had not been evaluated as part of the initial competition, so that the agency was required to justify the use of noncompetitive procurement procedures in accordance with FAR Subpart 6.3 before exercising this option.

The article in The Nash & Cibinic Report said, among other things:

Quote

So now agencies must either establish a line item for and evaluate the price of the FAR 52.217-8 option or do a better job of writing sole-source justifications. We presume that agencies will do the former, but we are not certain. The FAR Councils have opened FAR Case 2010-003 in order to revise the requirements of FAR Subpart 17.2, “Options,” as they apply to extensions of services contracts solely for the purpose of bridging to prevent a break in service. The team charged with writing a proposed rule is under its second deadline extension. A number of solutions are possible, and we presume that sooner or later the Councils will settle on one or more of them.

I don't think the FAR councils issued a rule to address the issue. If they did, I haven't found it. In a 2012 post in this Forum, a member reported that FAR Case 2010-003 was closed without action because the DAR Council and the CAA Council could not reach an agreement.

The Nash & Cibinic article also discussed the Continuity of Services clause.

[ji20874]

The 52.217-8 option and the 52.237-3 phase-out are wholly different matters.  You must not conflate them, or think them to be similar in any way.

Edited October 8, 2021 by ji20874
correct clause no. (thanks, Vern)

[Vern Edwards]

3 minutes ago, ji20874 said:

The 52.217-8 option and the 52.237-2 phase-out are wholly different matters.  You must not conflate them, or think them to be similar in any way.

I think ji20874 meant 52.237-3, Continuity of Services, not 52.237-2, Protection of Government Buildings, Equipment and Vegetation.

He's quite correct that 52.217-8 and 52.237-3 are entirely different.

[Tzarina of Compliance]

50 minutes ago, Vern Edwards said:

@Tzarina of ComplianceIf the -8 option was unpriced and unevaluated prior to award, then according to the GAO the agency must prepare a J&A in order to exercise it. The GAO cited FAR 17.207(f) as the basis for its opinion.

See "Exercising Options: An Unanticipated Issue," in The Nash & Cibinic Report, June 2010, which discusses Major Contracting Services, Inc., Comp. Gen. Dec. B-401472, 2009 CPD ¶ 170, 51 GC ¶ 332, recons. denied, 2009 CPD ¶ 250.

See also Magnum Opus Technologies, Inc. v. U.S., 94 Fed.Cl. 512, 537-538 (2010)

From the GAO's reconsideration decision:

The article in The Nash & Cibinic Report said, among other things:

I don't think the FAR councils issued a rule to address the issue. If they did, I haven't found it. In a 2012 post in this Forum, a member reported that FAR Case 2010-003 was closed without action because the DAR Council and the CAA Council could not reach an agreement.

The Nash & Cibinic article also discussed the Continuity of Services clause.

This is precisely what I was looking for.  Many thanks for this.  and @ji20874 I totally understand that these two are different clauses.  I was just thinking of how that would work under Continuity of Services clause if it was not pre-priced either.    Thank you @Vern Edwards - very interesting about the FAC 2010-003.  I will go and read all of these now.  I guess contractors should be asking the Agency which includes this clause in the contract at the time of proposal if they expect the contractor to price that option on monthly basis for up to 6 months.  Thank you!

[ji20874]

The 52.237-3 phase out (Continuity of Services clause) does not have to be priced or evaluated before award in order to be available at the end of contract performance.

[Tzarina of Compliance]

8 hours ago, ji20874 said:

The 52.237-3 phase out (Continuity of Services clause) does not have to be priced or evaluated before award in order to be available at the end of contract performance.

Thank you.