Overview
FAR 17.206 establishes the requirement for contracting officers to evaluate option quantities or periods during the initial contract award process if those options are likely to be exercised. It also provides a specific waiver process for instances where evaluating options is not in the government's best interest.
Key Rules
- Mandatory Evaluation: Contracting officers must evaluate offers for all option quantities or periods if it is determined before solicitation that the government is likely to exercise them.
- Pre-Solicitation Determination: The decision regarding the likelihood of exercising options must be made prior to issuing the solicitation.
- Exceptions to Evaluation: Evaluation is not required if it is determined to be against the government's best interest.
- Approval Authority: Any determination to skip the evaluation of options must be approved at a level above the contracting officer.
- Funding Uncertainty: A common justification for not evaluating options is the "reasonable certainty" that funds will be unavailable to exercise said options.
Practical Implications
- Price Competition: By evaluating options at the outset, the government ensures that the total potential contract value is subject to price competition, preventing contractors from "buying in" with a low base price and inflated option prices.
- Administrative Compliance: If options are not evaluated during the initial award, the government generally cannot exercise them later as a simple unilateral right; doing so might be considered a "sole-source" modification unless a specific exception applies.