CharterParty said:

Here is a question and some thoughts hopefully to gain a better understanding.

What is the question?

Napolik Question added

CharterParty said:

My position is should the fact pattern presented in B-21913 be modified to switch the award authority the conclusion would change.   In the possible scenario above should an Agency fail for any reason to exercise an option under a contract properly awarded against a BAA a bi-lateral modification to continue the original performance be agreed to by the parties then performance may continue absent the need for a FAR 6 J&A.   Is such a modification an abuse of the Agency's authority and outside the regulations?

The BAA is covered by FAR Part 6:

6.102 -- Use of Competitive Procedures.

The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows:

(a) Sealed bids. 

(b) Competitive proposals. 

(c) Combination of competitive procedures. 

(d) Other competitive procedures.

(1) Selection of sources for architect-engineer contracts in accordance with the provisions of 40 U.S.C. 1102 et seq. is a competitive procedure (see Subpart 36.6 for procedures).

(2) Competitive selection of basic and applied research and that part of development not related to the development of a specific system or hardware procurement is a competitive procedure if award results from --

(i) A broad agency announcement that is general in nature identifying areas of research interest, including criteria for selecting proposals, and soliciting the participation of all offerors capable of satisfying the Government’s needs; and

(ii) A peer or scientific review.

(3) Use of multiple award schedules issued under the procedures established by the Administrator of General Services consistent with the requirement of 41 U.S.C. 152(3)(A) for the multiple award schedule program of the General Services Administration is a competitive procedure.

______________________________________________________________________________________________________________________________________________

FAR Part 6 Competition requirements do not apply to contract modifications, including the exercise of priced options that were evaluated as part of the initial competition:

FAR -- Part 6

Competition Requirements

6.000 -- Scope of Part.

This part prescribes policies and procedures to promote full and open competition in the acquisition process and to provide for full and open competition, full and open competition after exclusion of sources, other than full and open competition, and advocates for competition. This part does not deal with the results of competition (e.g., adequate price competition), which are addressed in other parts (e.g., Part 15).

6.001 -- Applicability.

This part applies to all acquisitions except --

(a) Contracts awarded using the simplified acquisition procedures of Part 13 (but see 13.501 for requirements pertaining to sole source acquisitions of commercial items under Subpart 13.5);

(b) Contracts awarded using contracting procedures (other than those addressed in this part) that are expressly authorized by statute;

(c) Contract modifications, including the exercise of priced options that were evaluated as part of the initial competition (see 17.207(f)), that are within the scope and under the terms of an existing contract;

_________________________________________________________________________________________________________________________

Since the BAA is covered by FAR Part 6 and since the option was not exercised, you are not providing for Full and Open Competition if you create a mod to extend the period of performance. The principle set forth in Vern Edwards’ GAO case cite remains valid - Washington National Arena Limited Partnership, B-219136, OCT 22, 1985, and it applies to BAAs. Thus, you must comply with FAR Subpart 6.3 and must write a J&A.

CharterParty said:

My position is should the fact pattern presented in B-21913 be modified to switch the award authority the conclusion would change.   In the possible scenario above should an Agency fail for any reason to exercise an option under a contract properly awarded against a BAA a bi-lateral modification to continue the original performance be agreed to by the parties then performance may continue absent the need for a FAR 6 J&A.

What is your reasoning?

PepeTheFrog agrees with @napolik's analysis.

A more pressing question is:

If an agency violates CICA by awarding "new work" without full and open competition under the guise of a bilateral modification, can they get away with it? Who will find out about it? Who will care enough to actually protest?

In large source selections under FAR Part 15, there is usually a well-defined pool of potential contractors. Some of them are keenly aware of and closely monitor their competitors. In that scenario, it's more difficult for agency to get away with it. The competitors will find out about the improper modification through publicized award notices, FPDS, or loose-lipped gossipers or braggarts at the local drinking hole. Such competitors will care enough to actually protest.

However, in the BAA research and development environment, things are quite different. Although the companies can be considered to be competing against each other, they do not compete directly. The companies are not evaluated against a common statement of work and are not specifically "traded off" against one another. The pool of potential contractors is not well-defined and often numerous and unorganized, consisting of many unrelated companies or research organizations. They don't pay as much attention to each other. Even if they find out about the improper modification, would they care enough to actually protest? For what end? It's not like a FAR Part 15, distinct service requirement where a competitor can swoop in and perform the work instead. In research and development, each approach is unique and it's not feasible to substitute one contractor for another. 

Therefore, there is less practical risk in cheating the CICA system via improper modification within the BAA research and development scenario.

Don Mansfield:

Here is my reasoning.   The sample scenario stated "An agency failed to exercise an option to extend the period of performance and the contract expired in January, in June the contractor and the Agency agree bilaterally to a modification to re-establish and continue originally planned work under the contract to the original option period of performance completion date of December of the year.  The contract was initially award as valid contract against a Broad Agency Announcement and is for Basic Research (Budget Activity 1/2/3)."

Here is the relevant text from B 288969.4 "Once a contract is awarded, our Office will generally not consider protests against modifications to that contract, because such matters are related to contract administration and are beyond the scope of our bid protest function 4 C.F.R. § 21.5(a) (2002); Stoehner Sec. Servs., Inc., B-248077.3, Oct. 27, 1992, 92-2 CPD ¶ 285 at 4. The exception to this general rule is where, as here, a protester alleges that a contract modification is beyond the scope of the original contract, because, absent a valid sole-source determination, the work covered by the modification would otherwise be subject to the statutory requirements for competition. Neil R. Gross & Co., Inc., B-237434, Feb. 23, 1990, 90-1 CPD ¶ 212 at 2, aff’d, Department of Labor--- Recon., B-237434.2, May 22, 1990, 90-1 CPD ¶ 491.

In determining whether a modification triggers the competition requirements in the Competition in Contracting Act of 1984, 10 U.S.C. § 2304(a)(1)(A) (2000), we look to whether there is a material difference between the modified contract and the contract that was originally awarded. Evidence of a material difference between the modification and the original contract is found by examining any changes in the type of work, performance period and costs between the contract as awarded and as modified."

The work does not fall into the category of "the work covered by the modification would otherwise be subject to the statutory requirements for competition".  As pointed out by Pepe " It's not like a FAR Part 15, distinct service requirement where a competitor can swoop in and perform the work instead. In research and development, each approach is unique and it's not feasible to substitute one contractor for another."  Under the GAO test an out of scope modification has not occurred, no material difference between the modified contract and the contract as original awarded, the contractor is continuing the same "type of work" (as Pepe pointed out unique to the firm).  The performance period continues to its original planned end date (The original contract contemplated continuing through December, it was Agency failure to exercise. The contractor agreed to continue through execution of the bi-lateral modification),  let's assume cost is unchanged.  Therefore, their is no one the Agency should/could have offered the work to perform, no statutory requirement to compete the work.

CharterParty said:

The work does not fall into the category of "the work covered by the modification would otherwise be subject to the statutory requirements for competition".

Is the work described in the option you failed to exercise?

Also, FYI, see this DAU Ask A Professor discussion of failure to exercise BAA option: https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=28&cgiQuestionID=113891https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=28&cgiQuestionID=113891

@CharterParty, What matters is whether the work being added by the modification is "within the scope and under the terms of an existing contract." The method used to place the original contract (FAR part 15 v. BAA) is not determinative.

napolik said:

Is the work described in the option you failed to exercise?

Also, FYI, see this DAU Ask A Professor discussion of failure to exercise BAA option: https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=28&cgiQuestionID=113891https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=28&cgiQuestionID=113891

I wouldnt bet my career on what Ask a Professor says. Yesterday I scanned back through the past 11 years of questions and answers in a certain contracting area and was thoroughly unimpressed. A number of the answers are incorrect or only partially correct. 

The referenced AAP question specifically addressed whether the government could “exercise the option” late. Exercising an option is a unilateral right of the government. It didn’t address the possibility of a bilateral agreement to award the “option” at the stated price. 

The answer said that the government can’t “exercise the option” late, which answered the question. It also mentioned extending the period of performance for “no other reason than waiting for funding”, in order to avoid another source selection, to which it was stated would be an attempt to circumvent CICA.  It wasn’t clear whether that meant bilaterally or unilaterally. 

Since other readers will review and may try to apply AAP answers to their specific needs and questions, the answer should provide specific context and should properly frame the question, for context.

I agree with your observations on Ask A Professor. I answered the question raised by the Sig. CP, and I provided the reference as an aside because he cited Ask a Prof in his initial post and because it addressed a BAA.

I believe the Professor did address the issue of using a bilateral mod to provide the support contained in the unexercised option:

Quote

I sympathize with your frustration with the slow funding process and the inability to award an option on time.  Unfortunately, you can not award an option after the contract period of performance has expired. CLIN 001 has expired and CLIN 002 is no longer available because the Gov't could not exercise it without needed funding.  Your references are at FAR 17.204 Contracts (b) The contract shall state the period within which the option may be exercised  You did this with your CLINs/Section F and 52.217-9 "Option to Extend the Term of the Contract" According to this clause and fill-in, the Gov't had the capablity to exercise the option within 10 days of the end of CLIN 001.  

Unquote

Quote 

Starting all over again with a source selection or a sole source justification is very resource intensive and of course it is likely that we will not get the same employees.

Unquote

What is your response to his question - "Is such a modification an abuse of the Agency's authority and outside the regulations?"?

My response is that I don’t think that it is an abuse of authority or outside of the law. 

I believe the poster indicated that the period of performance would not exceed the originally intended period. At any rate, it appears that the scope of work in the pre-priced (competed) option was originally contemplated by the parties, if both parties are in agreement and if the government goes through the steps that are normally required in FAR 17.2 before exercising an option, then go for a bilateral modification.

@Don Mansfield,  I think the method used to place the original contract is incredibly important, in this fact set.  I understand it is not a determinative factor in determining an in-scope change, an Agency can't just say any modification to contract originally awarded under a BAA is in-scope.  I am saying CICA dictates that the Contracting Officer is to compete known requirements or to justify in writing consistent with the exceptions.  It also acknowledged the Government may not be omniscient and allows for the BAA process in Basic Research (Again BA 1,2,3).  

 I have not found any cases only opinions, and I believe that the typical Government Contracting Officer response to the scenario is changed by that key fact, the original award was properly executed against a BAA.   

 Contracting Officers have been bound to compete or Justify a failed to exercise option under a requirement otherwise subject to competitive procedures, when a PoP has lapsed since CICA and the case B-219136.  I believe the key piece of information is the work performed was otherwise known to the Government, in other words otherwise subject to statuary requirements for competition.  

@joel hoffman, you are correct my goal in the question was to lay out a fact pattern at the most basic level.  A Contracting Officer failed to timely exercise an Option in a contract properly awarded against a BAA.  The option was originally contemplated and placed in the contract, and the previous period of performance under the contract has since past. The parties agree to continue performance originally contemplated at award.

Ah, did the parties agree to continue performance in time to avoid a signifant break in performance?  Was there continuity of performance?  I may be missing something key here. 

If  they are continuing performance has there already been a mod to add the services in the option? It isn’t clear to me if or how that actually occurred.

If you are adding to the contract via a mod the work described in the unexercised option, you will be thwarted if you don't do a J&A and if a firm protests your actions.

But, PepeTheFrog may be able to dissuade the R&D competitors from protesting!

@joel hoffman Let's keep the facts as close to B-219136 as possible.  January was the option date, and the modification is executed in June.  Again not a current item, it is just to flush out does the nuance of a BAA award change the normal J&A position.

Ok thx.

Charter,

Assuming, arguendo, that the unexercised option becomes "new work" if the Government subsequently decides to purchase it, I am not convinced that a J&A is needed to turn on the option CLIN by contract modification -- I understand what others are saying, and I agree with them so long as the original contract was based on FAR 6.102(a), (b), or (c).  However, your contract was based on (d)(2) (BAA).  

For contracts covered by FAR Part 6, we may add "new work" to an existing contract as long as we comply with the competition requirements of FAR Part 6 -- competitive proposals are not required for work resulting from a BAA, so as long as your proposed modification (to turn on an option) is covered by FAR 6.102(d)(2), you don't need a J&A to justify not being covered by (a), (b), or (c).

In a normal, non-BAA contract, the "new work" would have to be covered by FAR 6.102(a), (b), or (c), or you would need a J&A.  But you're under (d)(2), not (a), (b), or (c).

CharterParty said:

I have not found any cases only opinions, and I believe that the typical Government Contracting Officer response to the scenario is changed by that key fact, the original award was properly executed against a BAA.

So what? Do you think the GAO or Court uses the "typical Government Contracting Officer response" standard to decide whether a given modification is within scope?

The determination of whether a given modification is within the scope of the contract has nothing to do with the specific solicitation technique used to form the original contract.

See Neil R. Gross & Co., 69 Comp. Gen. 247 (B-237434), 90-1 CPD ¶212:

Quote

In weighing [whether a modification is beyond the scope of the competition], we look to whether there is a material difference between the modified contract and the prime contract that was originally competed…. In determining the materiality of a modification, we consider factors such as the extent of any changes in the type of work, performance period and costs between the contract as awarded and as modified…. We also consider whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred … or whether the modification is of a nature which potential offerors would reasonably have anticipated under the changes clause.

 That's the test. However, you seem to want to infer an exception to the general rule--

On 10/25/2018 at 8:17 AM, CharterParty said:

...should an Agency fail for any reason to exercise an option under a contract properly awarded against a BAA a bi-lateral modification to continue the original performance be agreed to by the parties then performance may continue absent the need for a FAR 6 J&A.

While the nature of R&D work is uncertain and the scope is comparatively less defined than for other contracts, your claim goes too far. Taken to its extreme, you would have to say that it's impossible for the work covered by the unexercised option to be out of scope. It may or may not be within scope.

ji20874 said:

For contracts covered by FAR Part 6, we may add "new work" to an existing contract as long as we comply with the competition requirements of FAR Part 6 -- competitive proposals are not required for work resulting from a BAA, so as long as your proposed modification (to turn on an option) is covered by FAR 6.102(d)(2), you don't need a J&A to justify not being covered by (a), (b), or (c).

In the OP's scenario, the Government lost its right to exercise the option. The proposed bilateral modification would be to add the work originally contemplated by the option that was included in a contract awarded under a BAA.

Having said that, what proof do you have for your assertion that a J&A would not be required for such a modification?

Would it be any cleaner if the bilateral mod was only an agreement to extend the period for exercising the option?  Same work. Same price.

joel hoffman said:

Would it be any cleaner if the bilateral mod was only an agreement to extend the period for exercising the option?

Joel, are you contending that the time for exercising the option could be changed after the period for exercise of the option had passed (expired)?

Every contract awarded under a BAA is sole-source for purposes of negotiating terms and conditions, including price -- but we treat it as a competitive procedure, and I understand why we do.

It is permissible to add "new work" to a contract by bilateral contract modification.  Sometimes, a J&A will be needed.

If I don't need a J&A for an initial contract award that is based on a BAA, then I don't need a J&A to add "new work" to a contract by contract modification if that "new work" is also based on a BAA.

ji20874 said:

If I don't need a J&A for an initial contract award that is based on a BAA, then I don't need a J&A to add "new work" to a contract by contract modification if that "new work" is also based on a BAA.

What proof do you have for your assertion that a J&A would not be required for such a modification?

ji20874 said:

If I don't need a J&A for an initial contract award that is based on a BAA, then I don't need a J&A to add "new work" to a contract by contract modification if that "new work" is also based on a BAA.

Translated:

If I don't need [to show that I departed from CICA but received the required, statutory approval, AKA "J&A"] for an initial contract [that satisfies CICA], then I don't need [to show that I departed from CICA but received the required, statutory approval, AKA "J&A"] to add "new work" [that does not satisfy CICA].

This doesn't make sense and doesn't follow logically. Consider the following.

Yes, the award of the contract pursuant to the BAA for R&D satisfies CICA. Everyone agrees. But you're saying that gives the contracting officer a free pass to tack on an indefinite amount of "new work" in the form of "modifications" that was not evaluated as part of the original BAA solicitation process.

Sure, the contracting officer can make a new award, against the BAA, using the BAA procedures. That new award can fulfill whatever you wanted to accomplish using the "modification." That would be doing this "the hard way." Is that what you're driving at?

But if you want to do this the "easy way," by skipping the full BAA procedures, and instead awarding the "new work" in the form of a "modification," the purpose of the J&A (justification for the use of other than full and open competition) is essentially to confess that you skipped the BAA procedures (which would satisfy CICA). 

Put more simply:

The words "based on a BAA" are not magic words that satisfy CICA. When you use those words to describe the contract award, it means you followed the BAA procedures. The BAA procedures are not likely to include language that says "The Government is free to add unlimited work via bilateral modification following initial awards." So, when you say the "new work" is "based on a BAA," you have done nothing to satisfy CICA or the procedures of the BAA. Does that make sense?

It is permissible to add "new work" to a contract by bilateral contract modification -- a new contract award for "new work" is not required.

Assuming, arguendo, that the unexercised option becomes "new work" if the Government subsequently decides to purchase it, that "new work" can be added to a contract by bilateral contract modification.

Let's simplify by saying we have two choices for procedures, either (A) competitive procedures* or (B) a J&A.  A J&A is not needed if competitive procedures are used.

And, let's say we have two choices in acquiring the "new work," either (1) issuance of a new contract or (2) adding it to a contract by bilateral contract modification

One can choose (A) and (1), or (A) and (2).

Or, one could choose (B) and (1), or (B) and (2).

In some cases, the R&D work represented by the unexercised option might be seen as still available under the BAA, especially if the BAA is still open.  In such a case, one could possibly choose (A) and (2), as posited by the original posting. 

* If the "new work" falls under FAR 6.102(a), (b), or (c), the competitive procedures are sealed bids, competitive proposals, or a combination of competitive procedures.  If the "new work" falls under FAR 6.102(d)(2), the competitive procedures are a BAA.

ji20874 said:

If the "new work" falls under FAR 6.102(d)(2), the competitive procedures are a BAA.

Paragraph (d), Other competitive procedures, identifies 3 procedures in three sub-paragraphs - (d)(1) addresses selection of sources for architect-engineer contracts; (d)(2) addresses basic and applied research; and, (d)(3) addresses use of multiple award schedules. Can you issue without a J&A a contract mod for a lapsed option if the contract involves an A/E contract or a GSA schedule?

A J&A is not always required to add "new work" to an A-E contract.  One can add "new work" to an A-E contract by bilateral contract modification after either (A) the competitive procedure described in FAR 6.102(d)(1), or (B) a J&A.

ji20874 said:

A J&A is not always required to add "new work" to an A-E contract.  One can add "new work" to an A-E contract by bilateral contract modification after either (A) the competitive procedure described in FAR 6.102(d)(1), or (B) a J&A.

And if you fail to exercise an option for an A/E contract, how do you add the work to the contract? Same question as it applies to a GSA schedule.

napolik,

First, do we agree that “new work” can be added to a contract by bilateral contract modification following one of the competitive procedures listed in FAR 6.102, without a J&A?

Yes. But, if you fail to exercise an option, you cannot resurrect it without following one of the competitive procedures set forth in the four paragraphs in FAR 6.102(d) or without creating a J&A.

How was the mod written here?

Via an automated procurement system.

I should have been clearer. I wondered how it was worded. But never mind.

joel hoffman said:

I should have been clearer. I wondered how it was worded. But never mind.

I assume the mod's SOW is cut and pasted from the option that was not exercised.

The government must exercise an option in accordance with the terms of the contract.  If the government was required to exercise the option in January, and did not do so, it lacks authority under the contract to do so six months later.

When parties bi-laterally agree to modify the contract to exercise an option after the period to do so has expired, it is equivalent to a sole-source award.  That is why a J&A is often required.

But, a FAR Part 6 J&A is not always required.  Imagine a contract with a lapsed option period valued at $8,500.  In that case, the “sole source” award is below the micro-purchase threshold.  Because no J&A would be required to issue a sole source award of such work, then a J&A is not needed to agree to a modification to add the work.  Similarly, if the lapsed option period was valued at $175,000, and a sole source could be justified under FAR Part 13.106(b), then a modification supported by a memo from the KO determining only one source reasonably available would be sufficient.  All the legal requirements for competition (or limiting competition) must be met, and the modification is simply an administrative convenience that takes the place of having to award a new contract.

Now let’s apply those principles to a contract awarded under a BAA.  The period to exercise the option has lapsed.  Therefore, as stated above, the parties cannot simply agree to modify the contract.  One option would be to support the modification with a J&A or FAR 13.106(b) memo as appropriate.  However, that is not necessarily the only option.  The original contract was (likely) negotiated and awarded on a sole source basis under the terms of the BAA. 

So, my advice would be to have the contracting officer review the terms of the BAA.  Assuming:

1. the BAA allows for a direct award of a contract,

2. the work could otherwise be awarded as a new contract under the BAA,

3. the option price is still fair and reasonable, and

4. modifying the contract to exercise the option is in the best interest of the government, THEN

the parties may bi-laterally agree to modify the contract and exercise the option PROVIDED the KO documents the file to reflect the above determinations AND as part of that determination states that although a new contract could be awarded, for administrative convenience the parties have agreed to exercise the lapsed option.

If, for some reason, the underlying BAA requires some form of competition, or if the BAA has expired and a new one has not yet been issued, then the contracting officer must justify the limitation of competition in order to directly negotiate, modify the contract, and exercise the option (e.g., FAR Part 6 J&A or FAR 13.106(b)).

Thanks, Lionel!

ji20874 said:

Thanks, Lionel!

Ditto.

Lionel Hutz said:

So, my advice would be to have the contracting officer review the terms of the BAA.  Assuming:

1. the BAA allows for a direct award of a contract,

2. the work could otherwise be awarded as a new contract under the BAA,

3. the option price is still fair and reasonable, and

4. modifying the contract to exercise the option is in the best interest of the government, THEN

the parties may bi-laterally agree to modify the contract and exercise the option PROVIDED the KO documents the file to reflect the above determinations AND as part of that determination states that although a new contract could be awarded, for administrative convenience the parties have agreed to exercise the lapsed option.

Please provide FAR cites and /or GAO decisions supporting your theory.

What about bilaterally modifying the contract option clause notification and availability requirements?  This would allow the government to exercise the option in accordance with the modified option terms.

Jamaal Valentine said:

What about bilaterally modifying the contract option clause notification and availability requirements?  This would allow the government to exercise the option in accordance with the modified option terms.

That would have been the way to go before the contract completion period. But it would have needed to be bilateral supplemental agreement nessitated by non-availability of funding. I think that was the reason. If the previous KO simply failed to provide notice, you would think that someone would have been diligent to bring that up.

There’s more to this story than has been identified. 

How do you modify a contract in June for a year long option that will end at the originally scheduled completion?  It was also hinted that the original employees would have been lost had they not been retained. If there were six month or more delay in award of the work, it seems that the original employees would have been reassigned or look for other jobs. Just sayin’.

Jamaal Valentine said:

What about bilaterally modifying the contract option clause notification and availability requirements?  This would allow the government to exercise the option in accordance with the modified option terms.

GAO has held that the preliminary written notification is a measure that benefits the contractor and may be waived by the contractor.  This waiver could be in the form of a modification, but does not have to be.

If the period in which to exercise the option ends before the end of the contract, then the parties could bi-laterally modify the contract to extend the term in which to exercise the option.  For example, "The Government may extend the term of this contract by written notice to the Contractor within 30 and 60 days before the contract expires; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 90 days before the contract expires. The preliminary notice does not commit the Government to an extension."  In such a case, the parties could agree two weeks before the contract expires to modify the clause to read, "The Government may extend the term of this contract by written notice to the Contractor at any time before the contract expires," or other such language.  The option could then be exercised in accordance with the terms of the clause as modified.

However, by my read of the regulations and GAO case law, once the contract has expired, the option can no longer be exercised.  There may still be contractual obligations that need to be fulfilled or claims to be resolved, but the contract itself is done.  As I noted above, my suggestion for modifying the contract to exercise the option is a legal fiction.  In reality, the KO is awarding a new contract for the work.  The modification is an administrative convenience.

On 10/25/2018 at 11:17 AM, CharterParty said:

An agency failed to exercise an option to extend the period of performance and the contract expired in January, in June the contractor and the Agency agree bilaterally to a modification to re-establish and continue originally planned work under the contract to the original option period of performance completion date of December of the year.

This theory of @ji20874 and @Lionel Hutz is admirable to save some work, but PepeTheFrog is not convinced it is sound.

Timing and the existence or non-existence of a contract to modify

First, when you "agree bilaterally to a modification to re-establish" - What contract are you modifying? There is no contract. As stated, "the contract expired in January." There is no modification possible. It's a legal fiction. You need a new contract, not a modification to something that doesn't exist. Isn't this "modification" effectively a new contract?

Awarding a modification "against the BAA" with no J&A

Under this theory, the agency can tack on an unlimited number of bilateral modifications to the original award, as long as the period for submissions of proposals for the BAA is open. In other words, the agency can perform this shortcut indefinitely, over and over, using the same contractor/performer. Does anyone dispute that consequence? If you can do it once, you can do it twice. Does that not seem like a problem, and something that demonstrates why this shortcut violates the spirit and law of CICA?

Administrative convenience of modification versus new contract, but what about the program office's work (evaluation or decision to fund)?

PepeTheFrog understands that a modification is easier to execute than a new contract. That saves some time. But what about the other work of "awarding against the BAA," which includes the non-contracting side of the agency? What about the peer or scientific technical review? Does that happen each time you use this fanciful theory or shortcut? Is it really saving you that much time? Are you saying this entire shortcut happens in the contracting office, and skips the program office review? If so, is that really following the terms and procedures of the BAA?

PepeTheFrog said:

As stated, "the contract expired in January."

Does the FAR define or state when a contract has expired?  What does it mean when you say that a contract has expired?

Retreadfed said:

Does the FAR define or state when a contract has expired?  What does it mean when you say that a contract has expired?

No. 

In this scenario, "expired contract" means when the delivery date, completion date, or period of performance is exhausted and there are no available (pre-negotiated) options that can be exercised according to the original terms. "End of the road" as far as dates to perform or deliver or options to extend.

@Don Mansfield, poor choice of words on my part with “typical Government Contracting Officer response”  the issue is no less important and the referenced case Neil R. Gross & Co., 69 Comp. Gen. 247 (B-237434), 90-1 CPD ¶212: the quote includes a very important reference to the solicitation methodology “We also consider whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred … or whether the modification is of a nature which potential offerors would reasonably have anticipated under the changes clause”.    

BAA’s are structured to be open calls, many are Funding Opportunity Notices under 2 CFR 200 in addition to Contract Solicitations or even the new hot topic of OTA vehicles, all into one solicitation vehicle.   The method can advise the entire US industry base of research interests of the US Government and the possibility of grants/contracts/OTAs.  The Government decided how/what type of vehicle best fit the circumstances of the response nothing foretold the award was to be  a FAR based contract.  

Options are not even advertised in a BAA solicitation like in a FAR 15 solicitation.  The question of what option authority is necessary is even a question in my mind given 17.200, which makes the option subpart inapplicable.

 @Don Mansfield you state "taken to its extreme, you would have to say that it's impossible for the work covered by the unexercised option to be out of scope. It may or may not be within scope." 

I am saying that any unexercised option under a contract initially awarded under a BAA with that option is within scope and bi-laterally executable .  

Now more generally if a contract initial award under a BAA included an option that for any reason the Government failed to exercise during its unilateral right period, can both parties agree to perform the work originally agreed to at award? Does it run afoul of CICA or the “Spirit of CICA”? Which specifically separated out the BAA.

All, I really appreciate the discussion.

PepeTheFrog said:

In this scenario, "expired contract" means when the delivery date, completion date, or period of performance is exhausted and there are no available (pre-negotiated) options that can be exercised according to the original terms.

Is there anything in the FAR, GAO, appeals board or court case that says such a contract cannot be modified to extend its performance period?

Retreadfed said:

Is there anything in the FAR, GAO, appeals board or court case that says such a contract cannot be modified to extend its performance period?

The Competition in Contracting Act (statute), which the FAR implements, requires full and open competition for new work or work that is outside the scope of the original contract, hence the discussion in this thread about where the line is drawn and whether a J&A is required.

What is your point?

CharterParty said:

Now more generally if a contract initial award under a BAA included an option that for any reason the Government failed to exercise during its unilateral right period, can both parties agree to perform the work originally agreed to at award? Does it run afoul of CICA or the “Spirit of CICA”? Which specifically separated out the BAA.

As long as the modification is within the scope of the competition, then I don't think it would run afoul of CICA. The fact that the work is R&D and the contract was properly awarded under a BAA, I think it would be difficult for a third-party to win a CICA protest. However, a high likelihood that it's ok is not the same as a rule that it's ok.

PepeTheFrog said:

The Competition in Contracting Act (statute), which the FAR implements, requires full and open competition for new work or work that is outside the scope of the original contract, hence the discussion in this thread about where the line is drawn and whether a J&A is required.

All frogs must know that there are many contracts (and contract actions) that are exempt from CICA.  So, maybe it would be better to say that CICA “requires full and open competition for SOME new work or work that is outside the scope of the original contract...”  Is the BAA process one of the exceptions to CICA?

ji20874 said:

All frogs must know that there are many contracts (and contract actions) that are exempt from CICA.  So, maybe it would be better to say that CICA “requires full and open competition for SOME new work or work that is outside the scope of the original contract...”  Is the BAA process one of the exceptions to CICA?

PepeTheFrog does not think that your suggested paraphrasing is accurate. CICA requires full and open competition through the use of competitive procedures unless there is an exception (listed in CICA) or there is a different statutory authorization, for example, "Other Transactions" under 10 USC 2371. CICA is "the default," unless you can find statutory authority to not use CICA. 

CICA also expressly names the FAR to implement what "competitive procedures" means. The BAA process is listed as a competitive procedure at FAR 6.102(d)(2). The BAA process is not an "exception to CICA." The BAA process is a competitive procedure available to fulfill the requirement for full and open competition (i.e. CICA).

What is your point? Are you referring to this language in subsection (c): "(B) to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center"?

CICA

"§253. Competition requirements

(a) Procurement through full and open competition; competitive procedures

(1) Except as provided in subsections (b), (c), and (g) of this section and except in the case of procurement procedures otherwise expressly authorized by statute, an executive agency in conducting a procurement for property or services-

(A) shall obtain full and open competition through the use of competitive procedures in accordance with the requirements of this title and the Federal Acquisition Regulation; and

(B) shall use the competitive procedure or combination of competitive procedures that is best suited under the circumstances of the procurement."

PepeTheFrog said:

CICA is "the default," unless you can find statutory authority to not use CICA.

Right.  That’s why adding “some” made your sentence more correct.

Pepe, my point is that you stated "when you "agree bilaterally to a modification to re-establish" - What contract are you modifying? There is no contract. As stated, "the contract expired in January." There is no modification possible. It's a legal fiction. You need a new contract, not a modification to something that doesn't exist. Isn't this "modification" effectively a new contract?"  What is your authority for saying that an expired contract, as you define it, is not capable of being modified?

Retreadfed said:

What contract are you modifying? There is no contract. As stated, "the contract expired in January." There is no modification possible. It's a legal fiction.

  You can modify a contract after its POP has expired.  It’s not uncommon, nor improper, to do this for late invoices.

PepeTheFrog said:

First, when you "agree bilaterally to a modification to re-establish" - What contract are you modifying? There is no contract.

Of course there is a contract. Just because the contract has expired, does not mean it does not exist.  I recently dealt with a contractor claim filed 4 years after the end of the contract.  I would have loved to have told the contractor that there was no contract.

Have the rights and responsibilities of the parties changed under that contract?  Absolutely.  That is why the option cannot be unilaterally exercised.  But the contract still exists.

The issue is not whether the contract exists, but whether there is authority to modify the contract to allow the parties to exercise the option.

PepeTheFrog said:

As stated, "the contract expired in January." There is no modification possible. It's a legal fiction. You need a new contract, not a modification to something that doesn't exist. Isn't this "modification" effectively a new contract?

Yes, this is exactly my point.  I literally said, “my suggestion for modifying the contract to exercise the option is a legal fiction.  In reality, the KO is awarding a new contract for the work.”

PepeTheFrog said:

Under this theory, the agency can tack on an unlimited number of bilateral modifications to the original award, as long as the period for submissions of proposals for the BAA is open. In other words, the agency can perform this shortcut indefinitely, over and over, using the same contractor/performer. Does anyone dispute that consequence? If you can do it once, you can do it twice. Does that not seem like a problem, and something that demonstrates why this shortcut violates the spirit and law of CICA?

It does not make sense to add an unlimited number of bilateral modifications on to an existing contract because when you start adding work that is not already covered by the underlying contract, then you need to make sure you have evaluated the proposed work, modified the SOW, included any applicable clauses that are needed, etc.  You are not saving yourself any work and are potentially making the contract documents more confusing.  In addition, by extending the contract you might inadvertently revive or extend the period to file a claim.  I can think of many reasons why you would not want to continually add work to a contract or revive an expired contract via a BAA award.  But those are administrative concerns, not CICA violations.

Fortunately, modifying the contract to exercise the lapsed option does not implicate those problems.  The work was already proposed and evaluated.  The terms and conditions have already been agreed upon.  My proposed solution is premised on several prerequisites including “1) the BAA allows for a direct award of a contract,” and “2) the work could otherwise be awarded as a new contract under the BAA…”  As you noted above, a BAA award is not an exception to CICA, it is full and open competition. (See FAR 6.102(d)(2)(1).)

Why would a direct award of a contract via modification of an expired contract be a violation of CICA, if a direct award of a stand-alone contract for that same work would not?  CICA governs the “competition,” it does not mandate the format of the contract award.

PepeTheFrog said:

PepeTheFrog understands that a modification is easier to execute than a new contract. That saves some time. But what about the other work of "awarding against the BAA," which includes the non-contracting side of the agency? What about the peer or scientific technical review?

The peer/scientific review already happened when you awarded the contract.  Get a memo from the technical office saying the previous evaluation and selection decision has not changed.

PepeTheFrog said:

Does that happen each time you use this fanciful theory or shortcut?

Yes.

PepeTheFrog said:

Is it really saving you that much time?

That is up to the contracting officer to decide.  But we are not talking about adding work that requires a new SOW and clauses along with a new technical submission and evaluation.  We are addressing a situation in which the evaluation has already been conducted, all the terms and conditions have already been agreed to by both parties and the same work is still needed.  In that situation, every KO I have worked with has preferred to modify an existing contract rather than start from scratch.

PepeTheFrog said:

Are you saying this entire shortcut happens in the contracting office, and skips the program office review?

No.  Hopefully, the contracting officer is never exercising an option, modifying a contract, or awarding a contract without involving the requiring activity/program office in some way.

Thanks to all for responding. PepeTheFrog now understands and agrees with all the frogs who are saying that the form of the contractual agreement should not matter (i.e. new contract award versus modification to an existing or expired contract) as long as the underlying work it contemplates does or does not violate CICA. 

Retreadfed said:

What is your authority for saying that an expired contract, as you define it, is not capable of being modified?

PepeTheFrog's point is not that it cannot be done, but that by focusing on the new work as essentially a new contract, the issues of CICA are clearer. PepeTheFrog was driving at the opposite stance of what Lionel Hutz explained well, which is that "if a direct award of a stand-alone contract would violate CICA, why would a direct award of a contract via modification of an expired contract not violate CICA?":

Lionel Hutz said:

Why would a direct award of a contract via modification of an expired contract be a violation of CICA, if a direct award of a stand-alone contract for that same work would not?  CICA governs the “competition,” it does not mandate the format of the contract award.

Well said. PepeTheFrog agrees that this should be the focus of the analysis, not the form of the contract (new contract versus modification), but rather the substance of the new work (or work within the scope of the original contract).

jwomack said:

You can modify a contract after its POP has expired.  It’s not uncommon, nor improper, to do this for late invoices.

PepeTheFrog said this, not Retreadfed. Retreadfed agrees with you, jwomack. Retreadfed was quoting PepeTheFrog.

May be worth clarifying what contract expiration means because contracts don't have universally defined expiration dates. Contracts have delivery dates, completion dates, periods of performance, and ordering periods. Contracts can be physically complete, discharged, and closed out. At what point, if any, are modifications unallowable?

Jamaal Valentine said:

At what point, if any, are modifications unallowable?

It depends to a large degree on what clauses are in the contract and whether they survive contract closeout.  A prime example is the ability to revoke acceptance  due to a latent defect under the fixed price supply Inspection clause.  This right is open ended.

So, let's say that for a service contract, an option is exercised "late" during the option's own period of performance.

For instance, Option II from 15 Oct 2018 to 14 Oct 2019 is exercised on 29 Oct 2018.

Would one set retroactively set the effective date to 15 Oct, or set effective date to 29 Oct?

Sunstrider said:

So, let's say that for a service contract, an option is exercised "late" during the option's own period of performance.

For instance, Option II from 15 Oct 2018 to 14 Oct 2019 is exercised on 29 Oct 2018.

Would one set retroactively set the effective date to 15 Oct, or set effective date to 29 Oct?

Have you read FAR 43.101?

Jamaal Valentine said:

Have you read FAR 43.101?

Thank you.

Sunstrider said:

So, let's say that for a service contract, an option is exercised "late" during the option's own period of performance.

For instance, Option II from 15 Oct 2018 to 14 Oct 2019 is exercised on 29 Oct 2018.

Would one set retroactively set the effective date to 15 Oct, or set effective date to 29 Oct?

What do you mean by “is exercised ‘late’ during the option’s own period of performance”?

An option can be “exercised” later than originally provided in the contract only if the parties mutually agreed to an extension of the period during which the government can “exercise” the option.  

Otherwise, it would have to be a supplemental agreement (bilateral mod), not “exercising an option”  (unilateral mod). 

Are you indicating in your example that the mod is issued to add the work during ongoing performance of the optional work? 

Which brings up a question in my mind in the instant case.  The OP indicated that the work was added during the sixth month (June) after it should have started (January)  but appeared to say that it will be finished when originally contemplated (December). The OP also indicated that there would be lack of continuity of those personnel performing the work if it was re-competed. 

Could it be that the contractor was working for over five months without a mod to put it on contract?  Or was the period of performance shortened upon issuance to match the apparent original completion date?  

Either way would involve possible additional issues.

If you start something five months late but mutually agree to complete the effort by the original “period of performance completion date” (?) , it would necessarily be a modified effort, not as originally solicited and competed. 

if the contractor worked for five months without funding or contractual authority in order to retain the workforce, then other hmmm  Issues may be involved. 

Maybe I misunderstood the scenario.