Exercising Options Government Contracts

There are several sections in Part 52 of the FAR that deal with the exercise of options. For the purposes of this article, we will only deal with the two that deal with service contracts, FAR 52.217-8, Service Extension Option and FAR 52.217-9, Contract Duration Extension Option. Clause -9 requires the government to notify the contractor in writing of its intention to exercise the option a certain number of days before the contract expires. This has been interpreted as meaning that the Contractor must receive notice within the contractually agreed period. If the contractor does not receive the notification in time, any attempt to exercise the option is ineffective. The Federal Procurement Regulations (“FAR”) 2.101 define an “option” as “a unilateral right in a contract by which the government may decide, for a specified period of time, to purchase additional supplies or services required by the contract or to elect to extend the term of the contract.” There are a few important points in this definition. First, that an option is a unilateral right that is transferred to the government. This means that the government is not contractually obligated to exercise this option. Instead, the government may choose not to exercise this option. If the government decides not to exercise an option, the contractor generally has no recourse because failure to exercise an option does not constitute termination of the contract. On the other hand, if the government decides to exercise an option, the contractor is required to provide performance; Otherwise, the contractor may be in default with all associated consequences (p.B a bad CPARS, potentially excess replacement costs, negative agents and certificates, etc.). (f) Before exercising an option, the agent must make a written decision in support of the contractual act that the exercise complies with the conditions of the option, the requirements of this Division and Part 6. In order to meet the requirements of Part 6 with regard to full and open call for competition, the option must have been evaluated during the initial selection procedure and must be capable of being exercised at an amount that can be specified or reasonably determined under the terms of the basic contract, e.B.

question 1. What is the effective date? When you exercise an option, the work is usually already done (this is the case in your situation). There is already a period of contractual performance. The current performance of the contract will be continued until the end of the contractually agreed period. You exercise the option at some point before the end of the performance period, as described in the terms and other terms of your contract. By exercising the option, you will reinstate the effective date in accordance with the terms and other terms of your contract. The effectiveness must already be specified in the option. (a) Unless otherwise approved by the Head of the Contracts Office, service contracts with option periods require the Contractor to receive prior written notice of the Government`s intention to exercise the option at least sixty (60) calendar days prior to the date of exercise of the option. Failing to provide such notice within the time limit set out in the contract, the Government waives the right to unilaterally exercise the option and requires the negotiation of an amendment to the bilateral treaty to extend the period of performance where such an extension is permitted. In addition to advance notice, the Government must notify the contractor in writing of the exercise of the option within the time limit set out in the contract. If notification of the exercise of the option is received late, this attempt to exercise the option will be considered invalid.

Most of us have seen contracts that include options. However, many of us probably haven`t thought much about who they are and how exactly they`re supposed to work. This article is intended to provide information on these topics. As this brief discussion shows, the question of whether an option has been exercised correctly can be complex. If you have any questions or concerns regarding the exercise of options on your contracts, do not hesitate to ask us for advice and support. With respect to clause -8, the government does not have to inform the contractor in advance of its intention to exercise the option provided for in that clause. Instead, the government is only required to notify the contractor in writing of the exercise of the option within the time limit set out in the clause. .