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To Contents	To Exercise or Not -- What is the Option?
By Anonymous on Monday, April 14, 2003 - 03:34 pm: BACKGROUND: The Government competitively awarded a contract for services with a performance period of 90 days firm. The contract also includes the FAR clause 52.217-8 Option to Extend Services and specifies “the Contracting Officer may exercise the option by written notice to the Contractor within 20 DAYS of contract conclusion. QUESTIONS: 1. The Government is past the 20 days notification limitation i.e. it is now 18 days until contract conclusion. I assume that since we did not give written notice within 20 days of contract conclusion in accordance with the clause, we have lost the UNILATERAL right to exercise an option using the authority of this clause. However, the Contractor is willing to continue performing for us and to discuss an agreed upon period up to and including the 6 month period described in 52.217-8. He also understands that if we mutually agree to a lesser period than the 6 months (let’s say 45 days), the Government will consider its unilateral rights under the clause to be restored upon execution of the option (i.e. the Government will again have its right to extend unilaterally up to 6 months total (or, for an additional 135 days (180 days (6 months as per the clause) – the 45 days as bilaterally agreed). Is this assessment correct? 2. Understanding that before the Government can exercise any option(s), it needs to address the requirements identified in FAR 17.207 including the requirements of Part 6, is it acceptable to use FAR 52.217-8 as the authorizing clause to exercise the option? By this I mean that some of my colleagues consider the use of the clause to be appropriate only in instances “in extremis”, whereas I say that any time “continuity of operations is required” and there is a significant “potential cost of disrupted services”, this clause is the way to go (again only once all requirements with regards 17.207 and Part 6 have been sufficiently addressed). Any thoughts? By Phil C. on Tuesday, April 15, 2003 - 08:26 am: My thoughts to answer your questions: To address the 2nd question, I disagree that 217-8 is the way to go “anytime continuity of operations is required and there is a significant potential cost of disrupted services.” I think 217-8 should only be used as a “stop-gap” measure, if due to circumstances it’s the tool the KO has available to get the required service provided. Moreover, if repetitive use of 217-8 is occurring the activity and /or contracting office have some fundamental problems such as; statements of work/performance which do not accurately reflect how long a job will take, and poor practices to have follow-on contracts awarded in a timely manner to avoid using 217-8 to extend services. It seems by continually using 217-8, a band-aid is being applied vice a more lasting solution. I’d prefer to exercise the option by using 52.217-9 (extend term) or similar agency clause. I think 217-9 provides a better opportunity for continuity of service via the use of base and option periods. Of note, the potential for 5 years with a base and options periods being up to 1 year in duration. Also, the Govt should be able to realize overall lower costs (decreased Govt and possible lower contractor). If using 217-8 as the go to method, the KO is then awarding, extending for 6 months, awarding, etc. I think there are better alternatives. Of course, 217-8 has its place as a stop gap measure if circumstances arise. In the situation described, 217-8 is the tool for the KO to use. I agree that the Government has lost its unilateral right to exercise the option to extend services. Reviewing Formation of Government Contracts by Cibinic and Nash, Third Edition, on page 1271 it’s stated “The Government must exercise options in a timely manner and in exact compliance with the option terms”. In the situation described, its 18 days before end of the performance period and the option mod has not been issued. Thus, I think the Govt. no longer has the unilateral right as 217-8 of the contract prescribed a 20 day period. Possibly the meaning of “timely” is different from what I’m thinking. If so, this could rightfully allow the KO to unilaterally exercise the option at 18 days or less. I’d feel more comfortable exercising the option via bilateral modification, so that I’d have the contractor’s agreement in writing and don’t have to worry about an REA down the road. In this case, being the contractor appears willing to stand by his original pricing, a bilateral mod would be easy enough to execute. However, if the opposite were true, the contractor saying too bad its past 20 days, then I’d be looking harder for a way do extend the term unilaterally. If the option period of the bilateral mod is going to be less than 6 months, the maximum time period permitted by FAR 52.217-8, I would obtain the contractors agreement to give the government the unilateral right to exercise the remaining portion of the “unused” portion of the 6 month period. Another option (too many options), as cited from page 1272 of Formation of Government Contracts “If a contractor leads the Government to believe that it can exercise the option without strictly complying with the clause, it will be estopped from asserting the strict compliance rule, AmeCorp., GSBCA 5913, 82-1 BCA 15,738”. It seems the government has been in contact with the contractor and he will continue to perform if the option mod is exercised before the performance period (contract) ends. The KO could issue the mod unilaterally and see what happens. By Anonymous on Tuesday, April 15, 2003 - 08:49 am: I don't understand why you can't exercise the option now. The clause says you can do so "within 20 DAYS of contract conclusion." You're 18 days from contract conclusion now -- that sure sounds like "within 20 days of contract conclusion" to me. BTW, the total extension can't exceed 6 months. You couldn't extend by 45 days now and then extend again later for an additional 6 months (at least not without a sole source justification, as this would be tantamount to a new award). By Vern Edwards on Tuesday, April 15, 2003 - 09:20 am: First Anonymous: With respect to your colleagues' contentions about exercising the option under FAR clause 52.217-8, you might want to take a look at the GAO's decision in the matter of Laidlaw Environmental Services (GS), Inc.; International Technology Corporation -- Claim for Costs, B- 249,452, B- 250,377, B- 250377.2, 92-2 CPD ¶ 366. The GAO sustained a protest that exercise of an option under that clause was an improper sole source contracting action. The circumstances of the case might not apply to your situation, but it might be worth your time to read it. See, too, Akal Security, Inc., B-244386, 91-2 CPD ¶ 336, in which the GAO explained FAR § 52,217-8 as follows: "FAR § 52.217-8 merely provides the agency with a right to seek up to an additional 6 months of contract performance beyond the 36-month period where exigent circumstances (such as delay in award of a follow-on contract) create the need for continued performance. See FAR § 37.111." By Anonymous on Tuesday, April 15, 2003 - 01:36 pm: Vern et al, Thanks for the information. I appreciate your responses and their timeliness. Vern, how do you do your research? Is there a way to find the GAO decisions based on some search criteria I may be missing? I searched GAO using "52.217-8" and didn't get any result and "options" resulted in a ton of results that principally had to do with the evaluation of options at the time of award...am I missing something, or is there a reference/research guide you could recommend??? Tx, Anon By Vern Edwards on Tuesday, April 15, 2003 - 02:08 pm: Anonymous: I use Westlaw (which costs an arm and a leg). If you are using the Government Printing Office site, that database includes only decisions issued after 1994. The decisions that I cited to you were all older than that. I don't think any GAO decision has mentioned 52.217-8 since 1992, which is probably why you didn't find any. The Westlaw database goes back to the 1920s. Vern By Anonymous on Wednesday, April 16, 2003 - 10:05 am: To Anonymous who initiated this thread, If your customer requires continued performance, by all means rely on FAR 52.217-8 to issue a unilateral modification to extend the existing contract for six months, or the period of time you reasonable expect it will take your contracting activity to competitively award a follow-on contract, whichever is shorter. Anonymous of April 15th at 8:49 correctly commented that 18 days from contract conclusion is in fact “within 20 days of contract conclusion.” Just look up the definition of “within” in Webster’s. The word means “inside of” or “before the end of”. Also, compare FAR 52.217-8 with FAR 52217-9. The latter clause states that the Government may extend the term of the contract by written notice to the Contractor “within” X before the conclusion of the contract, provided that the Government gives the Contractor a preliminary written notice of its intent to extend “at least” X before the contract expires. Additionally, a practice tip I recommend is that if you include FAR 52.217-8 in a contract with a complex schedule or several option periods, it is helpful to draft the schedule of the contract to specify what rates will apply at any point in time that FAR 52.217-8 may be exercised. This is because the plain language of the clause states the Government may require continued performance of any services within the limits and “at the rates specified” in the contract. I interpret this to mean that “the rates” in the schedule should be clearly “specified” as a prerequisite to exercising the option(s) available under the clause. Finally, though the inclusion an option to extend services for up to six months in a contract with a performance period of “90 days firm” is curious, if this option exercise clause was included in a solicitation that resulted in a competitively awarded contract, then the General Accounting Office is likely to consider any protest of exercising the option under the clause to have been filed in an untimely manner. Further, GAO ordinarily considers option exercises to be matters of contract administration outside of scope of their jurisdiction. Finally, if your customer does require continued performance and you are only exercising the option for the period of time you reasonable expected it will take your contracting activity to competitively award a follow-on contract, then even if one assumes for the sake of argument that the option exercise was improper, in all likelihood an after the fact J&A could be generated to document that the Government has a legitimate requirement for continued service (without any disruption) as a stop-gap measure until such time as a follow-on contract can be competitively awarded and the incumbent contractor is the only responsible source for meeting that requirements within the timeframes required. GAO routinely accepts documents generated by the Government after the after the fact. Cheers, Ned Kelly By Vern Edwards on Wednesday, April 16, 2003 - 10:50 am: Anonymous: A couple of observations about Ned Kelly's remarks-- First, "within 20 days of contract conclusion" is strange language and I'm not sure what the person(s) who wrote it intended or supposed it to mean. (I'd be willing to bet that they meant "not later than 20 before contract conclusion.") But it doesn't matter, since the contractor doesn't object to the exercise of the option. So, sure, go ahead and exercise the option. Second, if the GAO refuses to hear a protest from another firm about the exercise of the option, it won't be because the protest is untimely in relation to the original contract award, but, as Ned indicated, because the exercise of an option is a matter of contract administration. But don't count on that, because the GAO has considered such protests in the past when it felt that the exercise of an option violated CICA. See the cases I cited, above. Third, Ned went too far when he said that the GAO "routinely" accepts documents generated by the government after the fact, although they often have done so. But if you decide that you must prepare a J&A based on the unusual and compelling urgency exception to full and open competition, then FAR 6.302-2(c)(1) says you can prepare and obtain approval of the J&A after the option has been exercised "when preparation and approval prior to award would unreasonably delay the acquisition." By Anonymous on Wednesday, April 16, 2003 - 02:37 pm: Vern, I agree with your observations. First, based on the facts presented, the contracting officer should “go ahead and exercise the option.” Second, as a procedural matter, GAO will refuse to hear a protest allegation on jurisdictional grounds (i.e., the protest allegation involves a matter of contract administration) in preference to dismissing the protest allegation on timeliness ground (i.e., FAR 52.216-8 was contained in the competitive solicitation, so any objection to it should have been filed prior to the solicitation closing date in order to be considered timely). It was undisciplined of me to have spoken first of timeliness and then of jurisdiction. Concurrently, I suspect you would agree that GAO’s decisions explaining its timeliness rules are easier to understand than GAO’s decisions explaining the circumstances under which it will review option exercises. As an aside, permit me to state here for those without the benefit of readily accessible GAO decisions that in Laidlaw Environmental Services, Inc.; International Technology Corporation--Claim for Costs, B-249452, B-250377.2, 92-2 366 (November 23, 1992) the agency issued a solicitation to procure Waste Management Services for a specific three month period and that solicitation did not contain FAR 52.217.8. After soliciting four sources to participate in a limited competition, the agency competitively awarded a contract to International Technology Corporation and on the very same day modified that contract to incorporate FAR 52.217.8 (which authorizes the government to extend performance under the contract for a period not to exceed 6 months). In that case, the agency conceded that the 6-month option was outside the scope of the 3-month contract and effectively constituted a new procurement. GAO’s rationale for sustaining the protest was: “In our view, the urgent circumstances leading to this sole-source contract extension resulted from the Navy's failure to adequately plan for the procurement in advance. On the same day it awarded the interim contract to ITC, the Navy amended the contract by authorizing up to a 6-month option to extend. Yet the Navy neither provided offerors with an opportunity to compete for the additional requirements at that time or during the 3-month interim contract. n5 Based on the record, it is apparent that the Navy did not properly plan in advance for its requirements and this sole-source contract was unjustified. See K-Whit Tools, Inc., B-247081, Apr. 22, 1992, 92-1 CPD P 382.” Third, in stating that GAO “routinely” accepts documents generated by the Government after the fact, I was using the word “routinely” to denote the “habitual or mechanical performance of an established procedure” (as opposed to commenting on how frequently this occurs). I would encourage all who are involved in contracting work to consult the dictionary early and often. In addition, I offer these citations in support of the proposition that GAO has an established procedure of considering documents generated after the fact by agency personnel (who are presumed to act in good faith in the absence of convincing evidence to the contrary): United Terex, Inc., B-275962.2, 97-1 CPD P 196 (May 30, 1997): While documents prepared in response to a protest reflecting an evaluation or source selection rationale may be accorded less weight than contemporaneous documentation, we consider the entire record including statements and arguments made in response to a protest in reviewing an agency's evaluation and source selection. Solid Waste Integrated Sys. Corp., B-258544, Jan. 17, 1995, 95-1 CPD 23 at 5 n.4. LTR Training Systems, Inc., B-274996; B-274996.2, 97-1 CPD P 71 (January 16, 1997): In a supplemental agency report, the contracting officer furnished a declaration in which he elaborated upon the reasons for his source selection decision. n2 Specifically, the contracting officer stated that he reviewed both SSET reports and the responses received from both offerors during discussions and conducted his own independent review, which led him to conclude that despite the SSET scoring, the two proposals were essentially equal. n2 LTR objects to our consideration of this declaration because it is not contemporaneous with the selection decision. However, while we generally give more weight to contemporaneous records than to those prepared after the fact, we consider all documents of record, including explanations for evaluations and selection decisions furnished in response to a protest. Benchmark Sec., Inc., B-274655.2, Feb. 4, 1993, 93-1 CPD P 133. JJH, Inc., B-247535.2, 92-2 CPD P 185 (September 17, 1992): JJH takes exception to our considering documents such as Appendix A because they were not prepared contemporaneously with the actual evaluation and selection. The protester suggests that such documentation is not reliable because it merely ratifies an earlier, allegedly defective, decision that the agency is seeking to preserve in the face of a protest. Although we may give less weight to documentation supporting an agency's original selection that is developed after the decision has been made, we do consider such documents, along with the entire record, if they are presented in a timely manner so that the protester has an opportunity to comment on them. See Aircraft Porous Media, Inc., B-241665.2; B-241665.3, Apr. 8, 1991, 91-1 CPD P356. Truth be told, where I went out on a limb was predict based on existing decisions and the current personnel in GAO’s Bid Protest Group that GAO would accept a sole source (as opposed to urgency) J&A generated after the fact and conclude that if there had been a legitimate basis for a sole source justification, then the contracting officer’s failure to document in writing that sole source justification prior to exercising the option is merely a procedural defect that does not prejudice the protester. Thus far, to the best of my knowledge, GAO has only ruled that written justifications that substantially complied with CICA requirements, but contained procedural defects, did not prejudice protesters. In closing, notwithstanding my views on how GAO might rule on particular facts, I agree wholeheartedly with your views on the limitations of a contract officer’s authority. FAR 6.302-1(d) and FAR 6.303 read together require a J&A to be executed prior to awarding a sole source contract. And, FAR 1.602- 1(b) prescribes that “[n]o contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met.” Regardless of whether a contacting officer’s warrant authorizes him or her to award contract in “unlimited” amounts, the standard language on a U.S. Government’s SF 1402, Certificate of Appointment, states: “Subject to the limitations contained in the Federal Acquisition Regulation and to the following: [Fill-in the Blank].” Unfortunately, some U.S. Government contracting officers do not understand the principles of Agency Law well enough to realise the express limitations upon their authority to bind the U.S. Government. Cheers, Ned

To Exercise or Not -- What is the Option?

By Anonymous on Monday, April 14, 2003 - 03:34 pm:

BACKGROUND: The Government competitively awarded a contract for services with a performance period of 90 days firm. The contract also includes the FAR clause 52.217-8 Option to Extend Services and specifies “the Contracting Officer may exercise the option by written notice to the Contractor within 20 DAYS of contract conclusion.

QUESTIONS:
1. The Government is past the 20 days notification limitation i.e. it is now 18 days until contract conclusion. I assume that since we did not give written notice within 20 days of contract conclusion in accordance with the clause, we have lost the UNILATERAL right to exercise an option using the authority of this clause.

However, the Contractor is willing to continue performing for us and to discuss an agreed upon period up to and including the 6 month period described in 52.217-8.

He also understands that if we mutually agree to a lesser period than the 6 months (let’s say 45 days), the Government will consider its unilateral rights under the clause to be restored upon execution of the option (i.e. the Government will again have its right to extend unilaterally up to 6 months total (or, for an additional 135 days (180 days (6 months as per the clause) – the 45 days as bilaterally agreed).

Is this assessment correct?

2. Understanding that before the Government can exercise any option(s), it needs to address the requirements identified in FAR 17.207 including the requirements of Part 6, is it acceptable to use FAR 52.217-8 as the authorizing clause to exercise the option?

By this I mean that some of my colleagues consider the use of the clause to be appropriate only in instances “in extremis”, whereas I say that any time “continuity of operations is required” and there is a significant “potential cost of disrupted services”, this clause is the way to go (again only once all requirements with regards 17.207 and Part 6 have been sufficiently addressed).

Any thoughts?

By Phil C. on Tuesday, April 15, 2003 - 08:26 am:

My thoughts to answer your questions:

To address the 2nd question, I disagree that 217-8 is the way to go “anytime continuity of operations is required and there is a significant potential cost of disrupted services.” I think 217-8 should only be used as a “stop-gap” measure, if due to circumstances it’s the tool the KO has available to get the required service provided. Moreover, if repetitive use of 217-8 is occurring the activity and /or contracting office have some fundamental problems such as; statements of work/performance which do not accurately reflect how long a job will take, and poor practices to have follow-on contracts awarded in a timely manner to avoid using 217-8 to extend services.

It seems by continually using 217-8, a band-aid is being applied vice a more lasting solution. I’d prefer to exercise the option by using 52.217-9 (extend term) or similar agency clause. I think 217-9 provides a better opportunity for continuity of service via the use of base and option periods. Of note, the potential for 5 years with a base and options periods being up to 1 year in duration. Also, the Govt should be able to realize overall lower costs (decreased Govt and possible lower contractor).

If using 217-8 as the go to method, the KO is then awarding, extending for 6 months, awarding, etc. I think there are better alternatives. Of course, 217-8 has its place as a stop gap measure if circumstances arise. In the situation described, 217-8 is the tool for the KO to use.

I agree that the Government has lost its unilateral right to exercise the option to extend services. Reviewing Formation of Government Contracts by Cibinic and Nash, Third Edition, on page 1271 it’s stated “The Government must exercise options in a timely manner and in exact compliance with the option terms”. In the situation described, its 18 days before end of the performance period and the option mod has not been issued. Thus, I think the Govt. no longer has the unilateral right as 217-8 of the contract prescribed a 20 day period.

Possibly the meaning of “timely” is different from what I’m thinking. If so, this could rightfully allow the KO to unilaterally exercise the option at 18 days or less. I’d feel more comfortable exercising the option via bilateral modification, so that I’d have the contractor’s agreement in writing and don’t have to worry about an REA down the road. In this case, being the contractor appears willing to stand by his original pricing, a bilateral mod would be easy enough to execute. However, if the opposite were true, the contractor saying too bad its past 20 days, then I’d be looking harder for a way do extend the term unilaterally.

If the option period of the bilateral mod is going to be less than 6 months, the maximum time period permitted by FAR 52.217-8, I would obtain the contractors agreement to give the government the unilateral right to exercise the remaining portion of the “unused” portion of the 6 month period.

Another option (too many options), as cited from page 1272 of Formation of Government Contracts “If a contractor leads the Government to believe that it can exercise the option without strictly complying with the clause, it will be estopped from asserting the strict compliance rule, AmeCorp., GSBCA 5913, 82-1 BCA 15,738”. It seems the government has been in contact with the contractor and he will continue to perform if the option mod is exercised before the performance period (contract) ends. The KO could issue the mod unilaterally and see what happens.

By Anonymous on Tuesday, April 15, 2003 - 08:49 am:

I don't understand why you can't exercise the option now. The clause says you can do so "within 20 DAYS of contract conclusion." You're 18 days from contract conclusion now -- that sure sounds like "within 20 days of contract conclusion" to me.

BTW, the total extension can't exceed 6 months. You couldn't extend by 45 days now and then extend again later for an additional 6 months (at least not without a sole source justification, as this would be tantamount to a new award).

By Vern Edwards on Tuesday, April 15, 2003 - 09:20 am:

First Anonymous:

With respect to your colleagues' contentions about exercising the option under FAR clause 52.217-8, you might want to take a look at the GAO's decision in the matter of Laidlaw Environmental Services (GS), Inc.; International Technology Corporation -- Claim for Costs, B- 249,452, B- 250,377, B- 250377.2, 92-2 CPD ¶ 366. The GAO sustained a protest that exercise of an option under that clause was an improper sole source contracting action. The circumstances of the case might not apply to your situation, but it might be worth your time to read it.

See, too, Akal Security, Inc., B-244386, 91-2 CPD ¶ 336, in which the GAO explained FAR § 52,217-8 as follows:

"FAR § 52.217-8 merely provides the agency with a right to seek up to an additional 6 months of contract performance beyond the 36-month period where exigent circumstances (such as delay in award of a follow-on contract) create the need for continued performance. See FAR § 37.111."

By Anonymous on Tuesday, April 15, 2003 - 01:36 pm:

Vern et al,

Thanks for the information. I appreciate your responses and their timeliness. Vern, how do you do your research? Is there a way to find the GAO decisions based on some search criteria I may be missing? I searched GAO using "52.217-8" and didn't get any result and "options" resulted in a ton of results that principally had to do with the evaluation of options at the time of award...am I missing something, or is there a reference/research guide you could recommend???

Tx,

Anon

By Vern Edwards on Tuesday, April 15, 2003 - 02:08 pm:

Anonymous:

I use Westlaw (which costs an arm and a leg). If you are using the Government Printing Office site, that database includes only decisions issued after 1994. The decisions that I cited to you were all older than that. I don't think any GAO decision has mentioned 52.217-8 since 1992, which is probably why you didn't find any. The Westlaw database goes back to the 1920s.

Vern

By Anonymous on Wednesday, April 16, 2003 - 10:05 am:

To Anonymous who initiated this thread,

If your customer requires continued performance, by all means rely on FAR 52.217-8 to issue a unilateral modification to extend the existing contract for six months, or the period of time you reasonable expect it will take your contracting activity to competitively award a follow-on contract, whichever is shorter.

Anonymous of April 15th at 8:49 correctly commented that 18 days from contract conclusion is in fact “within 20 days of contract conclusion.” Just look up the definition of “within” in Webster’s. The word means “inside of” or “before the end of”. Also, compare FAR 52.217-8 with FAR 52217-9. The latter clause states that the Government may extend the term of the contract by written notice to the Contractor “within” X before the conclusion of the contract, provided that the Government gives the Contractor a preliminary written notice of its intent to extend “at least” X before the contract expires.

Additionally, a practice tip I recommend is that if you include FAR 52.217-8 in a contract with a complex schedule or several option periods, it is helpful to draft the schedule of the contract to specify what rates will apply at any point in time that FAR 52.217-8 may be exercised. This is because the plain language of the clause states the Government may require continued performance of any services within the limits and “at the rates specified” in the contract. I interpret this to mean that “the rates” in the schedule should be clearly “specified” as a prerequisite to exercising the option(s) available under the clause.

Finally, though the inclusion an option to extend services for up to six months in a contract with a performance period of “90 days firm” is curious, if this option exercise clause was included in a solicitation that resulted in a competitively awarded contract, then the General Accounting Office is likely to consider any protest of exercising the option under the clause to have been filed in an untimely manner. Further, GAO ordinarily considers option exercises to be matters of contract administration outside of scope of their jurisdiction.

Finally, if your customer does require continued performance and you are only exercising the option for the period of time you reasonable expected it will take your contracting activity to competitively award a follow-on contract, then even if one assumes for the sake of argument that the option exercise was improper, in all likelihood an after the fact J&A could be generated to document that the Government has a legitimate requirement for continued service (without any disruption) as a stop-gap measure until such time as a follow-on contract can be competitively awarded and the incumbent contractor is the only responsible source for meeting that requirements within the timeframes required. GAO routinely accepts documents generated by the Government after the after the fact.

Cheers,

Ned Kelly

By Vern Edwards on Wednesday, April 16, 2003 - 10:50 am:

Anonymous:

A couple of observations about Ned Kelly's remarks--

First, "within 20 days of contract conclusion" is strange language and I'm not sure what the person(s) who wrote it intended or supposed it to mean. (I'd be willing to bet that they meant "not later than 20 before contract conclusion.") But it doesn't matter, since the contractor doesn't object to the exercise of the option. So, sure, go ahead and exercise the option.

Second, if the GAO refuses to hear a protest from another firm about the exercise of the option, it won't be because the protest is untimely in relation to the original contract award, but, as Ned indicated, because the exercise of an option is a matter of contract administration. But don't count on that, because the GAO has considered such protests in the past when it felt that the exercise of an option violated CICA. See the cases I cited, above.

Third, Ned went too far when he said that the GAO "routinely" accepts documents generated by the government after the fact, although they often have done so. But if you decide that you must prepare a J&A based on the unusual and compelling urgency exception to full and open competition, then FAR 6.302-2(c)(1) says you can prepare and obtain approval of the J&A after the option has been exercised "when preparation and approval prior to award would unreasonably delay the acquisition."

By Anonymous on Wednesday, April 16, 2003 - 02:37 pm:

Vern,

I agree with your observations.

First, based on the facts presented, the contracting officer should “go ahead and exercise the option.”

Second, as a procedural matter, GAO will refuse to hear a protest allegation on jurisdictional grounds (i.e., the protest allegation involves a matter of contract administration) in preference to dismissing the protest allegation on timeliness ground (i.e., FAR 52.216-8 was contained in the competitive solicitation, so any objection to it should have been filed prior to the solicitation closing date in order to be considered timely). It was undisciplined of me to have spoken first of timeliness and then of jurisdiction. Concurrently, I suspect you would agree that GAO’s decisions explaining its timeliness rules are easier to understand than GAO’s decisions explaining the circumstances under which it will review option exercises.

As an aside, permit me to state here for those without the benefit of readily accessible GAO decisions that in Laidlaw Environmental Services, Inc.; International Technology Corporation--Claim for Costs, B-249452, B-250377.2, 92-2 366 (November 23, 1992) the agency issued a solicitation to procure Waste Management Services for a specific three month period and that solicitation did not contain FAR 52.217.8. After soliciting four sources to participate in a limited competition, the agency competitively awarded a contract to International Technology Corporation and on the very same day modified that contract to incorporate FAR 52.217.8 (which authorizes the government to extend performance under the contract for a period not to exceed 6 months). In that case, the agency conceded that the 6-month option was outside the scope of the 3-month contract and effectively constituted a new procurement. GAO’s rationale for sustaining the protest was: “In our view, the urgent circumstances leading to this sole-source contract extension resulted from the Navy's failure to adequately plan for the procurement in advance. On the same day it awarded the interim contract to ITC, the Navy amended the contract by authorizing up to a 6-month option to extend. Yet the Navy neither provided offerors with an opportunity to compete for the additional requirements at that time or during the 3-month interim contract. n5 Based on the record, it is apparent that the Navy did not properly plan in advance for its requirements and this sole-source contract was unjustified. See K-Whit Tools, Inc., B-247081, Apr. 22, 1992, 92-1 CPD P 382.”

Third, in stating that GAO “routinely” accepts documents generated by the Government after the fact, I was using the word “routinely” to denote the “habitual or mechanical performance of an established procedure” (as opposed to commenting on how frequently this occurs). I would encourage all who are involved in contracting work to consult the dictionary early and often. In addition, I offer these citations in support of the proposition that GAO has an established procedure of considering documents generated after the fact by agency personnel (who are presumed to act in good faith in the absence of convincing evidence to the contrary):

United Terex, Inc., B-275962.2, 97-1 CPD P 196 (May 30, 1997): While documents prepared in response to a protest reflecting an evaluation or source selection rationale may be accorded less weight than contemporaneous documentation, we consider the entire record including statements and arguments made in response to a protest in reviewing an agency's evaluation and source selection. Solid Waste Integrated Sys. Corp., B-258544, Jan. 17, 1995, 95-1 CPD 23 at 5 n.4.

LTR Training Systems, Inc., B-274996; B-274996.2, 97-1 CPD P 71 (January 16, 1997): In a supplemental agency report, the contracting officer furnished a declaration in which he elaborated upon the reasons for his source selection decision. n2 Specifically, the contracting officer stated that he reviewed both SSET reports and the responses received from both offerors during discussions and conducted his own independent review, which led him to conclude that despite the SSET scoring, the two proposals were essentially equal. n2 LTR objects to our consideration of this declaration because it is not contemporaneous with the selection decision. However, while we generally give more weight to contemporaneous records than to those prepared after the fact, we consider all documents of record, including explanations for evaluations and selection decisions furnished in response to a protest. Benchmark Sec., Inc., B-274655.2, Feb. 4, 1993, 93-1 CPD P 133.

JJH, Inc., B-247535.2, 92-2 CPD P 185 (September 17, 1992): JJH takes exception to our considering documents such as Appendix A because they were not prepared contemporaneously with the actual evaluation and selection. The protester suggests that such documentation is not reliable because it merely ratifies an earlier, allegedly defective, decision that the agency is seeking to preserve in the face of a protest. Although we may give less weight to documentation supporting an agency's original selection that is developed after the decision has been made, we do consider such documents, along with the entire record, if they are presented in a timely manner so that the protester has an opportunity to comment on them. See Aircraft Porous Media, Inc., B-241665.2; B-241665.3, Apr. 8, 1991, 91-1 CPD P356.

Truth be told, where I went out on a limb was predict based on existing decisions and the current personnel in GAO’s Bid Protest Group that GAO would accept a sole source (as opposed to urgency) J&A generated after the fact and conclude that if there had been a legitimate basis for a sole source justification, then the contracting officer’s failure to document in writing that sole source justification prior to exercising the option is merely a procedural defect that does not prejudice the protester. Thus far, to the best of my knowledge, GAO has only ruled that written justifications that substantially complied with CICA requirements, but contained procedural defects, did not prejudice protesters.

In closing, notwithstanding my views on how GAO might rule on particular facts, I agree wholeheartedly with your views on the limitations of a contract officer’s authority. FAR 6.302-1(d) and FAR 6.303 read together require a J&A to be executed prior to awarding a sole source contract. And, FAR 1.602- 1(b) prescribes that “[n]o contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met.” Regardless of whether a contacting officer’s warrant authorizes him or her to award contract in “unlimited” amounts, the standard language on a U.S. Government’s SF 1402, Certificate of Appointment, states: “Subject to the limitations contained in the Federal Acquisition Regulation and to the following: [Fill-in the Blank].” Unfortunately, some U.S. Government contracting officers do not understand the principles of Agency Law well enough to realise the express limitations upon their authority to bind the U.S. Government.

Cheers,

Ned