Not Exercising Options for a Requirements Contract/Switching Vendors?

I'm soliciting a requirements type contract with a base and four option periods. I received a call from a new vendor that thinks they may be able to provide the services within the next two years. If I stay with the requirements contract, can I not exercise an option period and go with a new contract to the other vendor if they become qualified? I read FAR 16.503(a) A requirements contract provides for filling ALL actual purchase requirements... as saying if I have a contract with one vendor then I have to stay the course with that vendor. But does this include options?

I thought I read (but can't find) a GAO case where the GAO ruled that if the Government had a continuing need, that not exercising an option and going with another vendor was not allowed.

Thanks

The standard FAR option clause for services - 52.217-9 - gives you a unilateral right, not an obligation, to exercise the option. If you decline to exercise the option, you cannot " ... go with a new contract to the other vendor ..." unless you have prepared a sole source determination or J&A, or you have competed the requirement.

I read FAR 16.503(a) A requirements contract provides for filling ALL actual purchase requirements... as saying if I have a contract with one vendor then I have to stay the course with that vendor. But does this include options?

I thought I read (but can't find) a GAO case where the GAO ruled that if the Government had a continuing need, that not exercising an option and going with another vendor was not allowed.

No, it does not apply to options, and I have never heard of any such GAO decision.

You can decline to exercise the option and award a new contract to a different company. If you make a sole source award you will need a J&A.

If the FAR allows you to not renew an option and go with another vendor, then that seems to defeat the purpose of a requirements contract.

Of course going to a new vendor would require a new solicitation and I'm sure the old vendor would provide a proposal.

If the FAR allows you to not renew an option and go with another vendor, then that seems to defeat the purpose of a requirements contract.

Why do you say that? During the base period of the contract, and during the POP of any exercised option, the government is obligated IAW with the requirements clause. I'm unaware of anything in the FAR specifying a minimum ordering period.

If the FAR allows you to not renew an option and go with another vendor, then that seems to defeat the purpose of a requirements contract.

Then you would just have a base period and no options.

Why do you say that? During the base period of the contract, and during the POP of any exercised option, the government is obligated IAW with the requirements clause. I'm unaware of anything in the FAR specifying a minimum ordering period.

I see a requirements type contract as one that provides the contractor with some reassurance that the minimum quantities that I've stated in the solicitation will be purchased form that contractor. This thought is supposed to provide me with better pricing. The contractor can pre-purchase materials since he knows he will be supplying these items 16.501-2((4). If I have a base and 4 options years and past history shows that I have a continuous need for these items, at some risk, the contractor can plan ahead and save money. Now, I don't exercise my next option, and the contractor knows that I have a need, it seems underhanded that I enticed him with a requirements contract and then bailed out.

scarolina:

You are badly misinformed and confused. Among other things, a requirements contract does not specify a minimum quantity to be purchased. You should go away and do some reading. Please go read a book.

Vern,

I've attended your FAR Bootcamp, so I understand your response. Now back to business.

The FAR does allow for a minimum stated quantity as noted in FAR 16.503(a)(1) and (2) and if I can give the contractor a reasonable minimum number of units, then I know it helps in the scheme of pricing.

Thanks for answering my original question about the option periods. As I read your response, I have no obligation to exercise an option on a requirements contract, even though I still have the need and I can re-solicit my requirement with the possibility of going to a different vendor.

Thanks again,

scarolina,

You are NOT reading. Look at what you cited below carefully.

16.503 Requirements contracts.

(a) Description. A requirements contract provides for filling all actual purchase requirements of designated Government activities for supplies or services during a specified contract period (from one contractor), with deliveries or performance to be scheduled by placing orders with the contractor.

(1) For the information of offerors and contractors, the contracting officer shall state a realistic estimated total quantity in the solicitation and resulting contract. This estimate is not a representation to an offeror or contractor that the estimated quantity will be required or ordered, or that conditions affecting requirements will be stable or normal. The contracting officer may obtain the estimate from records of previous requirements and consumption, or by other means, and should base the estimate on the most current information available.

(2) The contract shall state, if feasible, the maximum limit of the contractor?s obligation to deliver and the Government?s obligation to order. The contract may also specify maximum or minimum quantities that the Government may order under each individual order and the maximum that it may order during a specified period of time.