option exercise

[contract girl]

We are about to exercise an option however we don't want to fund the entire CLIN and some tasks won't be funded this is a labor hour contract. Are there any steps that we need to take to for this?

[Vern Edwards]

1 hour ago, contract girl said:

We are about to exercise an option however we don't want to fund the entire CLIN and some tasks won't be funded this is a labor hour contract. Are there any steps that we need to take to for this?

It appears that you plan to change the scope of the contract.

You must either exercise the option as is and then partially terminate the contract or modify the option before you exercise it.

If the partial termination or modification changes the scope of the contract as originally competed (a "cardinal" change), then you may face a protest from one of the original competitors seeking a new competition for the option work. See Poly-Pacific Technologies, Inc. GAO Decision B-296029, June 1, 2005:

Quote

The Competition in Contracting Act (CICA) requires “full and open competition” in government procurements as obtained through the use of competitive procedures. 31 U.S.C. 3551–3556 (2000), amended by the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 108–375, 326, 118 Stat. 1811 (2004). Once a contract is awarded, however, our Office will generally not review modifications to that contract, because such matters are related to contract administration and are beyond the scope of our bid protest function. 4 C.F.R. 21.5(a); Sprint Comm. Co. , B–278407, B–278407.2, Feb. 13, 1998, 98–1 CPD 60 at 5–6. An exception to this rule arises where a protest alleges that a contract modification changes the work from the scope of the original contract, since the work covered by the modification would otherwise be subject to the statutory requirements for competition absent a valid determination that the work is appropriate for procurement on a sole-source basis. MCI Telecomms . Corp. , B–276659.2, Sept. 29, 1997, 97–2 CPD 90 at 7. Although challenges to the relaxation of contract requirements are less common than challenges to contract modifications that enlarge a contract's scope of work, our Office recognizes that both fall within this exception, and we will consider whether modifications of performance requirements result in work that should be subject to competition. See Marvin J. Perry & Assoc. , B–277684, B–277685, Nov. 4, 1997, 97–2 CPD 128; Avtron Mfg., Inc. , B–229972, May 16, 1988, 88–1 CPD 458.

Cited and briefly discussed by the Court of Federal Claims in Golden Mfg. Co. v. U.S., 107 Fed.Cl. 264, 274-276 (2022).

See also "Postscript: Deductive Changes Outside The Scope of the Contract", The Nash & Cibinic Report, October 2005.

To the best of my knowledge the GAO has not changed its stance on this.

[Retreadfed]

On 7/10/2024 at 10:25 AM, contract girl said:

We are about to exercise an option

A quick question for clarification:  are you with the government or a contractor?

[joel hoffman]

Deleted. Thanks, Bob