Exercise of Option - Responsibility per Huttenbauer 1995

Q1 - I did not research the decision and its current validity.  However of note "Responsibility determinations" pursuant to FAR Part 9 are by the very wording of FAR Part 9 are with regard to a "prospective contractors and subcontractors" not what I will call a current contractor on contract.  (Ref. FAR 9.100)   The point I am making is that I believe you are confused about "responsibility" determination versus that of what I will call a "determination" to exercise an option.  You may want to review FAR Part 2 on "option" and "Responsible prospective contractor" as a reference as well.

Q2 - While both the FAR and DFARS are not definitive with days or some other specific timeline read together performance and SAM review must be performed before awarding the option.   Or stated another way "only after" considering performance/SAM currency the option may be awarded.    I would suggest the clauses specific to a contract provide the timing for review.   By example if FAR clause 52.217-9 is in the contract.   Government gives the preliminary notice and then performs the efforts of FAR 17.207(c)  and DFAR 217.207(c) and then makes the determination to award the option one way of the other.  Both efforts done within the period of time and/or days stipulated in the clause.

Q3 - Your question does not in my view relate to Huttenbauer at all.   A review and determination of active SAM record is a regulation (DFARS).   The question would be -What if SAM is not active can you award the option?   My read of DFARS 217.207(c) is that option award could not occur if SAM was not current.  But here is a thought.  Lets say all other stars align to make the option award a good thing, could not the contractor be advised prior to option award that award will not be made unless they get SAM current within the time frame after notice and before the allowed period for award exercise of option expires?

I believe E. Huttenbauer & Son, Inc., B-258018.3, Mar. 20, 1995, 95-1 CPD ¶ 248, stands for the proposition that, if responsibility-type concerns lead an agency to not exercise an option, it is not required to follow the certificate of competency requirements in FAR Subpart 19.6.  I do not believe the decision stands for the premise that you cite, that is, "Contracting Officers should not be performing responsibility determinations with exercise of options" (or that responsibility-type concerns cannot inform the decision whether to exercise an option).

EDIT:  Acknowledging there is no requirement to conduct a responsibility determination prior to exercising an option is not the same thing as PROHIBITING considering responsibility-type concerns in deciding whether to exercise.  I'm glad to see you acknowledge the clause at FAR 52.204-13 and DFARS 217.207(c)(1).

Exclusions are entitles / persons who are debarred, suspended, proposed for debarment, declared ineligible or excluded or disqualified under nonprocurement common rule (see FAR 9.404). An expired sam record does not fall within the ambit. 

Because there was a CoC involved in Huttenbauer should not change the finding.  

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On Q3: The presumption is the Contractor is at fault. There are various agencies that work behind the scenes, DLA, IRS, SBA (sometimes), etc. in reviewing a Contractors sam renewal record. None of which the Contractor has control.  The timeframe in question is not when an option may be exercised, but rather, when is the Contracting Officer required to verify the Contractors sam record before issuance of the exercise of option? Please assume the Contractor did everything correctly in its renewal.

DFAR 217.207(c) says sam must be reviewed prior to exercise of the option - it does not say "when" the sam record must be reviewed. Is this an agency by agency situation?

FAR makes exceptions even for debarred contractors if "compelling" and Agency Head makes the decision to award a contract. Even if an entity did not have an active sam record with its proposal submission - FAR still provides a limited exception per FAR 4.1103(b) (e.g., have 30 days to perfect registration). But DFAR 217.207(c) does not appear to have any exception(s). Seems rather odd to allow a debarred contractor to perform a contract while a non-debarred contractor doesn't receive the exercise of the option period because its sam record expired.   
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My original question still stands - is Huttenbauer overturned? If so, to what extent and which case(s)?

In Huttenbauer, it also stated "[t]hose [17.207] provisions establish no prerequisites for a decision not to exercise an option." Seems like this is an avenue that has been exploited by DoD by issuance of DFAR 217.207 in 2020, by creating such a pre-requisite for a decision not to exercise an option.

And if Huttenbauer is not on point as some have suggested, which case(s) or decision(s) are recommended?

Guest108830 said:

My original question still stands - is Huttenbauer overturned? If so, to what extent and which case(s)?

Others have better research capabilities than I do.   Huttenbauer was still a standard in 2006.  https://www.gao.gov/assets/b-296493.6.pdf

Guest108830 said:

In Huttenbauer, it also stated "[t]hose [17.207] provisions establish no prerequisites for a decision not to exercise an option." Seems like this is an avenue that has been exploited by DoD by issuance of DFAR 217.207 in 2020, by creating such a pre-requisite for a decision not to exercise an option.

And if Huttenbauer is not on point as some have suggested, which case(s) or decision(s) are recommended?

Not quite sure of what you are looking for?   I will say your perception about the DFARS change is probably right on.   As to other cases look for this " The contracting officer is accorded broad discretion in making this determination," in the cases found here /legacy/reg/012703b99e3fcde2.html    Again as you note DFARS is more specific but I do not believe it enters into the world of a determination of responsibility just a determination required by FAR 17.207/DFARS 217.207.  My bet legal counsel would consider the DFARS an absolute, SAM yes or no, and if no then exercise is not in the cards.

Guest108830 said:

when is the Contracting Officer required to verify the Contractors sam record before issuance of the exercise of option?

Be realistic.  What do you think?  Doing  at original contract award is okay, one month into performance, 6 months into performance or at that point where you begin or in the process of making a determination per the contract clause? 

Guest108830 said:

Seems rather odd to allow a debarred contractor to perform a contract while a non-debarred contractor doesn't receive the exercise of the option period because its sam record expired.

But using broad discretion if no SAM and a compelling reason existed maybe you could convince legal and the higher ups that the option should be exercised.   Keep thinking!

Guest108830 said:

And if Huttenbauer is not on point as some have suggested, which case(s) or decision(s) are recommended?

You seem to be describing a matter of contract administration.  If your contract is part of a multiple award vehicle, I would encourage you to take a look at Vanquish Worldwide, LLC v. U.S., 147 Fed. Cl. 390 (2020), and the cases collected there (like Bannum, Inc. v. U.S., 80 Fed. Cl. 239 (2008)).

Huttenbauer appears to still be good; however, it stands for the proposition that if an option is not exercised based on responsibility-like issues, it does not need to be referred to the SBA.  It does not stand for the proposition that responsibility concerns may not be the basis for exercising/not exercising an option.

"In other words, in administrating the contract the contracting agency is free to decide, whether on the basis of concerns about performance or for any other reason, that it does not wish to extend or expand the contract through the exercise of an option.”

"In short, a decision not to exercise an option, even if based on responsibility-type concerns [1] about acceptable contract performance, does not involve a determination that the contractor is not responsible--it is simply one of several decisions--such as whether to issue a cure notice, see FAR Sec. 49.402-3 , whether to impose liquidated damages, see FAR Sec. 49.402-7, and whether to terminate the contract, see FAR part 49, that a contracting agency having such concerns might make in administering its contracts."

"1. It is not uncommon for responsibility-type concerns to be taken into account in situations that do not involve responsibility determinations and therefore do not require SBA referral. See, e.g., Tri-Services, Inc., B-256196.4, Sept. 30, 1994, 94-2 CPD Para. 121."

As for timing, I think the FAR/DFARS are silent because there are dates by which an option must be exercised, so when you plan on exercising and giving notice, it is reasonable to do it then, I'd think.

Guest108830 said:

My original question still stands - is Huttenbauer overturned? If so, to what extent and which case(s)?

The answer is no. Hutttenbauer is still "good law." I verified it on Westlaw®, which says there is no negative history.

FAR does not require a contracting officer to make a new determination of responsibility prior to the exercise of an option. See, however, FAR 17.207(c).

Knowing Huttenbauer is still valid is what's really important. Thank you all for the responses.