Overview
FAR 17.208 prescribes the specific solicitation provisions and contract clauses required when a federal agency incorporates options for additional quantities or performance periods. It establishes the criteria for how options are evaluated during the source selection process and how they must be structured within the contract.
Key Rules
- Evaluation of Options:
- 52.217-3: Used when options are included but will not be evaluated for the purposes of contract award.
- 52.217-4: Used when options may be exercised immediately at the time of award.
- 52.217-5: The standard provision for evaluating option prices during award; it requires a determination that there is a "reasonable likelihood" the option will be exercised (must be in writing for sealed bids).
- Supply Contract Options:
- 52.217-6: Used for increased quantities expressed as a percentage or additional units.
- 52.217-7: Used when increased quantities are identified as separately priced line items (CLINs).
- Service Contract Options:
- 52.217-8: Specifically for the "Option to Extend Services," typically used for short-term extensions (up to six months).
- 52.217-9: Used for the "Option to Extend the Term of the Contract," which requires preliminary written notice to the contractor and must state the maximum total duration of the contract.
Practical Implications
- Award Strategy: Offerors must identify which evaluation provision is present, as it determines whether their option-year pricing affects their competitive standing and the "total evaluated price."
- Notice Period Compliance: For service contracts, the government must strictly adhere to the notice requirements in clause 52.217-9 to validly exercise an option; failure to provide timely preliminary notice can result in the loss of the unilateral right to extend the contract.
- CLIN Structure: The selection of these clauses dictates how the Schedule of Prices must be formatted, such as whether options are embedded in existing line items or listed as distinct, separately priced line items.