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Exercising an Option Year for FFP - supplies


tlr56

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An option year for a FFP software maintenance contract was not exercised in time (ended 01/06/2023). Due to the CR being lifted and funding being released for commitment & obligation, can I bi-laterally modify the contract to exercise the option year & continue with the remaining OYs after the OY POP ended? If the contractor agrees. I would add a memo for record to the contract file that this was an oversight.

This contract was inherited and I could not locate any preliminary notices to the contractor. Thanks in advance! 

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12 hours ago, tlr56 said:

An option year for a FFP software maintenance contract was not exercised in time (ended 01/06/2023)... [C]an I bi-laterally modify the contract to exercise the option year & continue with the remaining OYs after the OY POP ended?

Yes, as a matter of contract law you can exercise the option after the deadline with the contractor's assent.

However, see FAR 6.001(c) and 17.207(f). I have heard it argued that the exercise of an option after the deadline for doing so is an out-of-scope contract mod and subject to competition requirements of FAR Part 6. So there might be an issue with a third party. See Washington National Arena Limited Partnership, Comp. Gen. Dec. B-219136, 65 Comp. Gen. 25, 85-2 CPD ¶ 435:

Quote

Where a contract for visitor reservation services has expired, the contractual relationship which existed is terminated and the issuance of an amendment 4 months after the expiration date to retroactively extend and modify the contract as if it had not expired amounts to a contract award without competition, contrary to the requirements of the Competition in Contracting Act. A protest challenging the amendment is sustained, therefore, and GAO recommends that a competitive procurement for the requirement be conducted...

Upon expiration of Ticketron's contract, neither the government nor Ticketron was obligated by any of the contract terms; Ticketron no longer was bound to provide visitor reservation services, and the government no longer was bound to pay Ticketron commissions for such services. The unexercised option provisions were part of the contract and, thus, necessarily expired when the contractual relationship was terminated. Thus, the attempted retroactive extension of Ticketron's contract was not an extension at all—there was no contract to extend—but the noncompetitive creation of a new contractual relationship with Ticketron.

You might have to prepare a J&A and get it approved. So check with your lawyer. Of course, it's possible that the GAO has changed its mind since 1985. It's also possible that no one will notice.

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8 hours ago, Vern Edwards said:

Yes, as a matter of contract law you can exercise the option after the deadline with the contractor's assent

Adding on to this a little.  There are cases that hold that to properly exercise an option, the government must act in strict accordance with the terms of the contract.  If the government does not, and attempts to exercise the option, the government has breached the contract.  However, the contractor can waive this breach, and agree to perform the option.  In this case, the contractor may be entitled to receive some compensation such as a price adjustment.

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tlr56,

Sounds like this may be a service...it's maintenance after all, so on the off chance that the header indicating supplies is not the whole story, I will venture. If services, you may want to carefully read the inserted language of the option clause. Depending upon the language used, it is possible (perhaps some might say  even likely) that the time period within which the option may be properly exercised extends somewhat beyond the performance PoP. 

See FAR 17.204 (d) "The period may extend beyond the contract completion date for service contracts. This is necessary for situations when exercise of the option would result in the obligation of funds that are not available in the fiscal year in which the contract would otherwise be completed."

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