Option Exercise

They are called options for a reason. Claims based on failure to exercise an option are very unlikely to be successful.

The modification exercises the option. It says, "The purpose of this modification is (1) Exercise Option Period 3; (2) Provide funding in the amount of X for X for the month of October, 2013".

CLIN 3001 in the exercise mod is for 12 Months @ Unit Price = Total Price (Unit X 12). The remaining CLINS are subCLINS, which break the 12 months into increments of 1 month, 5 months and 6 months. The 5 and 6 month CLINS are described as "Optional CLIN".

Is your view that failure to fund or "order" one of the "Optional" CLINS validly avoids a Termination for Convenience?

Well the Government is definitely trying to change the original terms of the option for the 3rd year that was part of the solicitation at the time of award. It appears to be an attempt to incrementally fund the option and to split the current 12 month period into further options in the event that full funding is not made available. To answer your question, if you agree to the bilateral change, I'd think, probably - yes.

I don't know if a court or board would rule that the modification is valid if later challenged. If you can't live with the terms, you can decline to sign it. Or you could decline and attempt to negotiate terms that would better suit you or allow you to recoup unabsorbed costs due to an early end to the services...

The agency has been readying a solicitation to re-procure the services prior to expiration of the current contract, in the hope of reducing the price. If we countersign the exercise modification, can the CO avoid a Termination for Convenience process merely be declining to fund the "Optional CLINS"?

Sorry - I overlooked the above possible motive for the agency to try to modify the next yearly option. However, the essence of my answer is the same. if you agree to the bilateral change, I'd think, probably - yes.

I don't know if a court or board would rule that the modification is valid if later challenged. If you can't live with the terms, you can decline to sign it. If your concern is not being afforded a TFC in the event that the Government ends the next year early, you could decline and attempt to negotiate terms that would allow you to recoup unabsorbed costs due to an early end to the services,

Agree with Joel.

Ask the CO for clarification of the government's intent, to include specifically asking what would happen in the event the other subCLINs are not exercised/funded. This meeting-of-the-minds should take any ambiguity out of the equation.

They are looking to get themselve flexibility for some reason.

Tell the CO that if he changes the CLIN structure he's changing the terms of the option, which violates FAR 17.207. Ask him: What's going on? Why are you doing this?

Tell him also that the supplementa agreement won't be binding without consideration, and ask him what they're offering. Finally, ask him what the givernment will do if you won't sign.

Thank you all.