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FAR 16.506:  Expiration of FSS Contract, task orders

Comptroller General - Key Excerpts

Expiration of the SOSI FSS Contract

AllWorld alleges that issuance of the task order to SOSI also was improper because its underlying FSS contract expired just three days after the agency issued the task order. As noted, the agency originally issued the task order to SOSI on April 21, 2015. The record shows that SOSI’s underlying FSS contract ended just three days later, on April 24. AR, exh. 9, SOSI Quotation Cover Letter, at 2. According to the protester, because the SOSI FSS contract was set to expire just three days after issuance of the original task order, it was improper to issue the task order to SOSI because the agency cannot, for example, exercise any of the options included in the task order.

The agency responds that it was unobjectionable to issue the task order to SOSI, notwithstanding the fact that its underlying FSS contract was set to expire. The agency points out that SOSI’s underlying FSS contract provides for the completion of orders issued during the FSS contract’s effective period, even if performance occurs after expiration of that period. GSA also takes the position that exercising the options under the task order would be unobjectionable because the exercise of the options does not constitute placement of a new order under SOSI’s FSS contract.

The record shows that SOSI’s FSS contract includes, in pertinent part, the following Federal Acquisition Regulation (FAR) provision:

(d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order. The contract shall govern the Contractor’s and Government’s rights and obligations with respect to that order to the same extent as if the order were completed during the contract’s effective period. . . .

FAR § 52.216-22. Thus, GSA is correct that SOSI’s underlying FSS contract contemplates the circumstances here, namely, a situation where the agency issues a task order that includes a period of performance extending beyond the point in time when the underlying FSS contract expires. It follows that GSA properly could have issued the task order to SOSI prior to the expiration of its FSS contract.

However, we disagree with GSA that it properly may exercise any of the options included in the task order after SOSI’s underlying FSS contract expired. Task orders under FSS contracts are not themselves stand-alone contracts. Rather, the rights and liabilities of the parties under every FSS task order are governed by, and subject to, the terms and conditions of the underlying FSS contract. As reflected in the FAR provision quoted above, “[t]he contract [that is, the underlying FSS contract] shall govern the Contractor’s and Government’s rights and obligations with respect to that order to the same extent as if the order were completed during the contract’s effective period.” FAR § 52.216-22(d).

Exercising an option under a task order creates new contractual responsibilities for each party. Here, for example, unless and until the options actually are exercised by the agency, SOSI is not legally obligated to provide the services contemplated by the options and, correspondingly, GSA is not legally obligated to pay for those services. However, those new contractual responsibilities do not exist in a vacuum, but instead arise under, and are governed by, the terms and conditions of the underlying FSS contract. It follows that GSA cannot legally exercise the options included in the task order without a valid underlying FSS contract.

Our view in this connection is consistent with guidance explicitly found on GSA’s FSS ordering guidelines website. In particular, GSA’s website provides as follows:

Options may be included on orders placed against GSA Multiple Award Schedule (MAS) contracts, provided that the options are clearly stated in the requirement and are evaluated as part of the ordering activity’s best value determination. Such options may be exercised on GSA Schedule contract orders, provided that:

Funds are available;

The requirement covered by the option fulfills an existing government need;

Prior to exercising an option, the ordering activity ensures that it is still in the government’s best interest, i.e., that the option is the most advantageous method of fulfilling the government's need, price, and other factors considered; and

The options do not extend beyond the period of the Schedule contract, including option year periods.

See http://www.gsa.gov/portal/content/200369 (last visited on January 6, 2016; emphasis supplied).

In addition, GSA’s position in this case is directly contradicted by advice it provided in connection with another case considered by our Office. That case involved circumstances where the Air Force was considering issuing a task order against a firm’s FSS contract. The Air Force sought GSA’s advice on the question of whether or not the agency could issue a task order to a firm whose FSS contract expired before exercise of options contemplated under that task order was to occur, and GSA advised that it would be improper to issue a task order under those circumstances. As described in our decision:


On August 29, the Air Force contract specialist contacted the GSA team lead and sought her opinion about whether the agency could exercise an option after the GSA schedule contract expired. In response, the GSA team lead stated that "[a]lthough the Contractor is obligated to complete the Task Order (even if the contract expires) you CANNOT exercise a Task Order Option if the base Contract is Expired."

HP Enterprise Serv’s, LLC, B-405692, Dec. 14, 2011, 2012 CPD ¶ 13 at 3.

In light of these considerations, we conclude that, while GSA’s issuance of the task order to SOSI was not, in and of itself, legally objectionable, the agency cannot properly exercise any of the options included under the task order. The practical effect of this limitation is that, while the RFQ contemplated issuance of a task order with a potential period of performance of three years, the task order issued to SOSI may only be performed for a period of one year. Similarly, the RFQ contemplated a task order that had a base quantity of 24 linguists during each year of performance, and optional quantities of, respectively, 20, 15 and 13 additional linguists during the three years of performance. AR, exh. 6a, Mandatory Pricing Template. None of these optional quantities is available under the task order issued to SOSI. These limitations are of particular concern in light of the fact that the Air Force, not GSA, is the actual acquiring activity here, and there is no indication in the record that this truncated task order will meet the Air Force’s actual requirements. 
(AllWorld Language Consultants, Inc. B-411481.3: Jan 6, 2016)  (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
AllWorld Language Consultants, Inc. B-411481.3: Jan 6, 2016  (pdf)  

U. S. Court of Federal Claims - Key Excerpts

 

U. S. Court of Federal Claims - Listing of Decisions

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