Overview
FAR 17.104 defines multi-year contracting as a specialized acquisition method for known requirements spanning up to five years, allowing agencies to award contracts even when the total funding for all years is not yet obligated. It establishes the framework for funding compliance under OMB Circular A-11 and distinguishes the unique administrative process of "cancellation" from standard "termination for convenience."
Key Rules
- Time Limitation: Multi-year contracts are limited to a maximum of five years unless a specific statute authorizes a longer duration.
- Procurement Methods: This method is versatile and can be utilized in both sealed bidding and competitive negotiations.
- Funding Compliance: Contracts must adhere to OMB Circular A-11; specifically, obligated funds must be sufficient to cover potential cancellation or termination costs, and fixed assets must be fully funded or funded in viable stages.
- Cancellation vs. Termination:
- Cancellation occurs specifically between fiscal years and must apply to all subsequent years' quantities.
- Termination for Convenience can occur at any time and can be applied to partial or total quantities.
- Agency Flexibility: Agency heads are granted the authority to modify multi-year requirements and the standard "Cancellation Under Multi-year Contracts" clause (FAR 52.217-2) to fit unique acquisition circumstances.
Practical Implications
- This section allows the government to secure long-term price stability and administrative efficiency for recurring needs without requiring the full five-year budget to be "in hand" at the time of award.
- Contractors must understand that while a multi-year contract offers a longer horizon, the government's obligation to continue into subsequent years is contingent upon funding, protected by specific cancellation procedures rather than standard termination protocols.