52.217-8 Option to Extend Services (Evaluation)

[ArmyofOne]

This question is based on evaluating a proposal, based on this authority, which has a total (POP) period of performance of 16 months (Base period of 12 months and one 4-month option period).  It’s understood the clause and explanation of how the government intends to evaluate the proposal is included in the solicitation.   

Would it be appropriate to evaluate/calculate the 52.217-8 (6-month) period by taking one month (or the last month) of the option period and multiply it by 6 months for the total 6 month “-8” evaluation period?  

Similarly, if the total POP is a base period of 12 months, would it be appropriate to calculate the 52.217-8 (6-month) period by taking one month (or the last month) of the base period and multiply it by 6 months for the total “-8” evaluation period?

[Witty_Username]

Yes, both of those options seem appropriate, particularly if you explain exactly what you are going to do in the solicitation.

[Don Mansfield]

Why not create a line item for the option?

[joel hoffman]

56 minutes ago, Witty_Username said:

Yes, both of those options seem appropriate, particularly if you explain exactly what you are going to do in the solicitation.

I prefer this than new line items in the original contract award. The -8 clause didn’t intend a separate option but an extension of existing terms. 

Edited July 26, 2023 by joel hoffman

[Witty_Username]

On 7/26/2023 at 9:02 AM, Don Mansfield said:

Why not create a line item for the option?

You lose flexibility if you create a line item with a specific period of performance (in terms of both start date and duration). With just the "-8" clause and no specific line item if you decide not to exercise all available "-7" or "-9" options, or if you just need an additional month or two of service for transition to a new contract, you can unilaterally use as much of the "-8" as you need to at any point.

[REA'n Maker]

On 7/26/2023 at 9:02 AM, Don Mansfield said:

Why not create a line item for the option?

DHS prohibits creating separate -8  CLINs for the reasons cited by Witty.  But you have to "evaluate the -8 by adding the price for six months of performance to the total proposed price" even though the vendor never proposed it (that's exactly how it reads: "evaluate by adding".)  But don't include it in the contract price. Or in the Congressional Notification. Or anywhere else for that matter.   😐

[C Culham]

1 hour ago, REA'n Maker said:

But you have to "evaluate the -8 by adding the price for six months of performance to the total proposed price" even though the vendor never proposed it (that's exactly how it reads: "evaluate by adding".)

Depending on what provision is included in the solicitation - 52.217-5 carries the quoted wording.   52.217-3 and 4 do not.   Point being evaluate as your solicitation says you must.   

[REA'n Maker]

57 minutes ago, C Culham said:

Point being evaluate as your solicitation says you must.   

 How arithmetic addition equates to an evaluation is beyond me. 

If the point was to capture the full potential government obligation it would make sense, but you literally write a+b=c in the PNM and move on, never to mention or consider the product of your mad math skills at any other point in the process.

[joel hoffman]

I believe that the government is evaluating, as part of the price analysis,  to compare pricing between competitors if the -8 clause would be exercised.

I don’t think that the full potential government obligation is the concern. One can’t exercise the -8 extension unless it has funds available at that time. 

[REA'n Maker]

25 minutes ago, joel hoffman said:

I believe that the government is evaluating, as part of the price analysis,  to compare pricing between competitors if the -8 clause would be exercised.

How could 'evaluating' a number you derived by adding 50% of the last option price to every proposal possibly affect an award decision?  It's a wash. (I suppose it's possible that it could affect an award decision if someone's pricing was really unbalanced but that's a problem in itself regardless of any  -8 calculations).

Quote

I don’t think that the full potential government obligation is the concern.  One can’t exercise the -8 extension unless it has funds available at that time. 

I was referring to reporting, not really the procurement process per se.  You can't exercise the -9 without available funds either and we include the -9 options in the total price so why not the -8?  We are under no more obligation to exercise the -9 than the -8.

[joel hoffman]

28 minutes ago, REA'n Maker said:

How could 'evaluating' a number you derived by adding 50% of the last option price to every proposal possibly affect an award decision?  It's a wash. (I suppose it's possible that it could affect an award decision if someone's pricing was really unbalanced but that's a problem in itself regardless of any  -8 calculations).

I was referring to reporting, not really the procurement process per se.  You can't exercise the -9 without available funds either and we include the -9 options in the total price so why not the -8?  We are under no more obligation to exercise the -9 than the -8.

What do you have to “report”? The -8 extension isn’t part of the contract price unless or until the government needs to extend performance using the option clause.

See, for example: 

 

 

[REA'n Maker]

8 minutes ago, joel hoffman said:

What do you have to “report”?

TCV in FPDS, Congressional Notifications, etc.  

 

Quote

Guest Vern Edwards

Posted July 12, 2014

Well, I don't think what I proposed is especially complex. It's really rather simple 6th grade arithmetic.

My thinking was that since you can't be sure when you'll exercise that option -- after the first year, after the third, who knows -- an average of all years might provide a more complete and balanced measure. But, if you're going to get upset, we'll do it your way.

Frankly, I think the GAO's decision was stupid, and the agency should have refused to follow their recommendation.

😃😆🤣

Classic

[joel hoffman]

5 hours ago, REA'n Maker said:

TCV in FPDS, Congressional Notifications, etc.  

 

😃😆🤣

Classic

If there is no CLIN for it at contract award, then why report it? Why would it be included in the total contract value at award?
It will be an in-scope, unilateral mod to the contract, if utilized.

It’s then reported as an in-scope mod (contract action) if the provision is exercised, like any other mod, correct?

Edited July 28, 2023 by joel hoffman
Added “unilateral”

[Jamaal Valentine]

14 hours ago, Witty_Username said:

You lose flexibility if you create a line item with a specific period of performance (in terms of both start date and duration). With just the "-8" clause and no specific line item if you decide not to exercise all available "-7" or "-9" options, or if you just need an additional month or two of service for transition to a new contract, you can unilaterally use as much of the "-8" as you need to at any point.

Would you need to evaluate it in these separate contexts in order to satisfy the evaluation requirements under FAR 17.207(f)? For example, evaluate the “-8” price for each separate period of performance.

[joel hoffman]

On 7/28/2023 at 10:01 PM, Jamaal Valentine said:

Would you need to evaluate it in these separate contexts in order to satisfy the evaluation requirements under FAR 17.207(f)? For example, evaluate the “-8” price for each separate period of performance.

No. See my link to the previous thread.

[joel hoffman]

On 7/28/2023 at 10:01 PM, Jamaal Valentine said:

Would you need to evaluate it in these separate contexts in order to satisfy the evaluation requirements under FAR 17.207(f)? For example, evaluate the “-8” price for each separate period of performance.

No. See my link to the previous thread.

I agree with Vern’s 2014 comment in that thread: “Frankly, I think the GAO's decision was stupid, and the agency should have refused to follow their recommendation.”

Extensions pursuant to the -8 clause had been made for years before that case arose. It is a simple concept, intended for situations where delays in follow on contracts occur or an agency otherwise needs to extend the final period of services for a short period.

The clause was in the solicitation and contract- all the competitors were aware that the situation could arise once at some point.*

Why overcomplicate by having to evaluate an extension for the possibility that it could occur at any one* of the contract periods? There are too many alternative possibilities.

* clarifying that the extension would be to whatever is the final period (base or a final option period, if any options were exercised).

Edited July 30, 2023 by joel hoffman
Clarified that the extension would be for the final contract period.

[C Culham]

Having read this thread over and over and the referenced thread of 2014 I wonder if it is not, we CO’s (past tense for me) that have complicated the evaluation of the -8 clause.   In the GAO decision and its reconsideration, the GAO distinguishes that FAR 17.207(f) has two parts “the option must (1) have been evaluated as part of the initial competition, and (2) be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract.”  In other words, evaluation and the amount exercisable are distinct from each other, correct?  So as noted why complicate the evaluation, even I might add with formulas and the like.

I propose this wording (as follows) since -5 has to have wording substantially like that as stated in the FAR. Noted especially that FAR 52.217-5 is a clause that has been around since July 1990, or in other words not updated in light of the Major case.   All things being equal the option to extend services is based on pricing of the basic contract (base period) or any one of the option periods, if so exercised,  so in a sense the evaluation of the basic contract and option periods is the determinate of an offerors pricing since the option to extend will be based on this same pricing, correct?

 

 FAR 52.217-5 - Except when it is determined in accordance with FAR 17.206(b) not to be in the Government’s best interests, the Government will evaluate offers for award purposes by adding the total price for all optional periods (FAR 52.217-9) to the total price for the basic requirement.  Further the Government evaluation of offers for award purposes with regard to the option to extend services (FAR 52.217-8) will be based on, and inclusive of,  the evaluation of total price for optional periods and basic requirement.   Evaluation of options will not obligate the Government to exercise the option(s).

Required documentation would simply parrot that “any exercise of -8 will be based on the current basic or optional period of an awarded contract pricing therefore evaluation of pricing related to any exercise of -8 is inclusive of the overall evaluation of the contract pricing proposed by the offeror.”

I will let you all decide if this would pass GAO muster.

[Jamaal Valentine]

On 7/30/2023 at 7:53 AM, joel hoffman said:

No. See my link to the previous thread.

Two questions: 

1. Is your ‘no’ based on/consistent with the associated case law? (I don’t see a link)

2. What link or what previous thread? (I’ll read it)

[joel hoffman]

12 hours ago, Jamaal Valentine said:

Two questions: 

1. Is your ‘no’ based on/consistent with the associated case law? (I don’t see a link)

2. What link or what previous thread? (I’ll read it)

https://www.wifcon.com/discussion/index.php?/topic/2653-dash-8-clause-far-52217-8-and-major-contracting-services-gao-decision/

Here was the link to the previous thread, which included a link to the Major Contracting Services GAO Decision, which was the focus of the thread (if you clicked on the embedded thread in my reply to REA’n Maker last Friday).

However the link in that thread to the referenced Major Contracting Services Protest was changed.

Here is a current link to that Protest Decision:

https://www.wifcon.com/discussion/index.php?/topic/2653-dash-8-clause-far-52217-8-and-major-contracting-services-gao-decision/

In the scenario of that Protest, it was determined during the initial contract period that the Prime Contractor didn’t  qualify as a Service-Disabled Veteran-Owned Small Business Concern (SDVOSBC) so the Army wasn’t allowed to exercise any.if the options. However, it exercised the -8 clause to extend the base period by four months to allow for a new competition.

The GAO determined that the four month extension amounted to a new sole source acquisition, not an in-scope extension.

Since the price of that extension had not been evaluated, the contract couldn’t be extended by the in-scope use of the -8 clause.

Note that the Army may likely have exercised the -9 options had the contractor been an SDVOSBC. It was prevented from exercising even the first option.

_____________________________
The GAO stated:

The option to extend the contract here under FAR clause 52.217-8 was not evaluated as part of the initial competition, so that the exercise of this option amounts to a contract extension beyond the scope of the contract, and therefore effectively constitutes a new procurement. Laidlaw Envtl. Servs. (GS), Inc.; International Tech. Corp.--Claim for Costs, B-249452, B-250377.2, Nov. 23, 1992, 92'2 CPD para. 366 at 4; seeTechno-Scis., Inc., B-257686, B-257686.2, Oct. 31, 1994, 94-2 CPD para. 164 at 8 n.3.

Thus, the agency could not have met the FAR Part 6 standards for full and open competition by simply exercising the option under FAR clause 52.217-8. FAR sect. 17.207(f); see Antmarin Inc.; Georgios P. Tzanakos; Domar S.r.l., B-296317, July 26, 2005, 2005 CPD para. 149 at 8 n. 8. In such circumstances, the agency must justify the use of noncompetitive procurement procedures in accordance with FAR Subpart 6.3 before exercising the unevaluated option. Laidlaw Envtl. Servs. (GS), Inc.; International Tech. Corp.--Claim for Costs, supra.”

____________________________

Since the most common course of action seems to be award of all the -9 options, it would be reasonable to anticipate only having to invoke the -8 option after the last of the options. If the agency doesn’t necessarily intend to award all the options, at the time of the initial contract/order, then it may have to evaluate other scenarios per the reasoning in this Protest Decision.

But, consistent with the Major Contracting Services Protest Decision it doesn’t necessarily HAVE to evaluate a -8 extension for EVERY option - only for the one that it eventually extends. 

 

[joel hoffman]

Jamaal, I haven’t researched any subsequent protests for comparison or currency of that Decision.

The crux of that decision seemed to result from the Army assuming they could extend the contract period as an in-scope mod, using -8 option. GAO said it couldn’t, then critiqued it for awarding the new sole source action without evaluating the price or considering other qualified competitors from the (original task order field?) . 

The Army argued that the four month extension could be justified as an urgent and compelling exception to full and open competition. The GAO then said , yes BUT that exception also favors using as much competition as practicably available. Based upon the scope and the short duration of that extension, I think GAO was nuts to think that a new competition was practical.