Exercising Options during shutdown

Started by MAY-D-FAR-B-WIT-U · Jan 17, 2019 · 40 replies

  1. M

    MAY-D-FAR-B-WIT-U

    Jan 17, 2019 · 7y ago

    Original post

    The current option period of a contract is set to expire, we have previous year funds to exercise the next option period and we sent out the intent letter before the shutdown, but due to the shutdown, there is no staff available to obligate the funds. I am looking for any legal precedent or GAO decisions that will allow us to revive the contract, assuming this shutdown will not be over until after the current period expires. Thank you.

  2. j

    ji20874

    Jan 17, 2019 · 7y ago

    I don't think you need any precedent cases -- if both parties (Government and contractor) are okay with a belated option exercise, well, no one else matters, right?

  3. J

    Jamaal Valentine

    Jan 17, 2019 · 7y ago

    ji20874 said:

    I don't think you need any precedent cases -- if both parties (Government and contractor) are okay with a belated option exercise, well, no one else matters, right?

    Do you mean that it's not proper, because an option must be exercised in strict accordance, but who cares if it's not challenged or audited?

  4. j

    ji20874

    Jan 17, 2019 · 7y ago

    Jamaal,

    You mustn't mischaracterize what I said.

    Do you have any good advice for the original poster?  I suppose the original poster is trying to do what is good for his or her agency by keeping a needed contractor's services.  Please offer some constructive help.  It's okay with me if your advice differs from mine -- the more people that try to be helpful, the better.

  5. R

    Retreadfed

    Jan 17, 2019 · 7y ago

    MAY-D-FAR-B-WIT-U said:

    I am looking for any legal precedent or GAO decisions that will allow us to revive the contract, assuming this shutdown will not be over until after the current period expires.

    If the current POP expires before you get funds obligated for the option, do you expect the contractor to continue working? 

    ji is generally correct in what he has stated, however, if the option is not exercised in accordance with the terms of the contract, the contractor is entitled to an equitable adjustment to the contract.  Thus, you may get the option, but not at the price you thought.

  6. M

    MAY-D-FAR-B-WIT-U

    Jan 17, 2019 · 7y ago

    My concern is a third party (possiblly one of the offerors during the award) would be happy to see the contract die and have another opportunity at the requirement in a recompete. I am thinking if I was a third party, I would argue that failure of the government to exercise the option means the contract is dead and should be recompeted regardless of the intent letter. The intent letter itself says the letter is not an obligation and does not commit the government in anyway. Maybe am just trying to anticipate a solution for a problem that does not exist.

    ji20874,

    Can a third party challenge the belated option exercise?

  7. M

    MAY-D-FAR-B-WIT-U

    Jan 17, 2019 · 7y ago

    Retreadfed said:

    If the current POP expires before you get funds obligated for the option, do you expect the contractor to continue working?

    There are government employees on the program who are working and they expect the support to continue because they have the funds. I am also considering the possibility of someone simply sending an ATP to the contractor saying funds are available and proceed with the terms of the option period. With the exception of finding someone with a warrant who isn't furloughed, does anyone foresee a problem with this?

  8. j

    ji20874

    Jan 17, 2019 · 7y ago

    This is a common occurrence.  How many times has it happened over history where option exercise funds were not available on Oct. 1, and yet the contractor continued working at its own risk for a few days and the option exercise (when it happened) was made with an effective date back to Oct. 1?  This is not new.  Matters like this are best handled without fanfare, with a focus on practicality rather than ivory tower sophistries.

  9. l

    leo1102

    Jan 17, 2019 · 7y ago

    If you do not have confirmation from an authorized budget person that the funds are available, then you can not tell the contractor that funds are available.

    You can exercise the option without funding if the proper clauses are in the contract (Availability of Funds).  The contractor has the right to not perform if no funding is provided.

    It is a double edged sword - you can exercise without funds and the contractor may or may not perform or you let the contract die and you risk the chance that you will have to reprocure.

    I recommend you consult with your contracting officer and policy branch.

  10. C

    C Culham

    Jan 17, 2019 · 7y ago

    Consideration of the fact that this is a beginners forum let me attempt to offer the practicality along with references.

    Exercise of an option requires specific determinations to be made - FAR 17.207.  GAO case law on this is fairly clear and can be found here /legacy/reg/012703b99e3fcde2.html

    Continuing a contract absent the timely exercise of an option brings up questions with regard to CICA, as well as  the same considerations that are to be made when the option is exercised, and can be appropriately addressed through single source or sole source processes, especially in such unique circumstances as a longer than ever lapse of budget situation.  This in my view relates to ji's previous post with regard a bi-lateral agreement to continue the contract as if the option was exercised unilaterally. 

    I echo that as suggested by leo to contact a CO prior to any action you might take.  While dealing with the unusual situations created by budget lapse contractors determine how to best address the risks they are faced with regarding continued contract performance just as the "someones" in government are in handling the same matters but realize the matter of unauthorized commitments is a standard that does not go away. 

    So  work with the tools that are at your disposal and work through the situation as in the end there are fixes that will work  that are not only are practicable but follow the guiding principles of the FAR.  And a little of both as ingredients to your fix will either narrow or completely eliminate the risk of others questioning your approach to the fix.

  11. M

    Matthew Fleharty

    Jan 17, 2019 · 7y ago

    Retreadfed said:

    If the current POP expires before you get funds obligated for the option, do you expect the contractor to continue working? 

    ji is generally correct in what he has stated, however, if the option is not exercised in accordance with the terms of the contract, the contractor is entitled to an equitable adjustment to the contract.  Thus, you may get the option, but not at the price you thought.

    Are you sure that a contractor is entitled to an equitable adjustment?  If the Government exercises an option not in accordance with the terms of the contract and the contractor begins performing, can that contractor come back at a later date (but within 30 days) and request an equitable adjustment to the contract?  If so, according to what clause?

  12. R

    Retreadfed

    Jan 17, 2019 · 7y ago

    Matthew, see CTA, Inc. 00-2 BCA 30,947 and White Sands Construction, Inc.  ASBCA Nos. 51875 and 54029.  Also, see Glascow Investigative Solutions, Inc. ASBCA No. 58111 (9 April 2013).

  13. D

    Desparado

    Jan 17, 2019 · 7y ago

    My agency considers the contract "dead" if an option is not exercised timely.  I don't necessarily agree, but I don't have any legal decisions that I know of to cite to convince our OGC otherwise.  There is going to be a lot of problems if this goes a couple of weeks longer and we have to do a bunch of bridge or sole-source contracts.

  14. J

    Jamaal Valentine

    Jan 17, 2019 · 7y ago

    ji20874 said:

    Jamaal,

    You mustn't mischaracterize what I said.

    Sorry. That wasn't my intention. I simply asked a clarifying question - that you artfully dodged. (the OP asked you a specific question too: Can a third party challenge the belated option exercise?)

    Nonetheless, the OP was looking for something very specific...something I cannot provide:

    "any legal precedent or GAO decisions that will allow us to revive the contract"

    Since the OP was looking for something very specific, why not focus on that first? Then add any additional commentary. As-is, your comment seems to suggest skirting the rules.

    Since this is a beginners forum,  I think it would be fair to explain the options rules and then potential courses of action (e.g., FAR deviation or sole source approval - should be easy given the circumstances; or award what amounts to a sole source contract via so-called exercising the option).

  15. D

    Don Mansfield

    Jan 17, 2019 · 7y ago

    @MAY-D-FAR-B-WIT-U,

    Is the contractor working, or are they waiting for the Government to re-open to continue work?

  16. M

    MAY-D-FAR-B-WIT-U

    Jan 21, 2019 · 7y ago

    The contractor is working under the current period which expires in a couple of days.

  17. D

    Don Mansfield

    Jan 22, 2019 · 7y ago

    I think the best you can do is exercise the option late and request that the contractor waive its right to object to an improper exercise. If the right to object to an improper option exercise can be waived implicitly through performance, then it can be waived expressly. Here are some cases where the contractor waived its right:

    Quote

    Objection to improper exercise waived by performance

    Walters & Co., Inc. v. U.S. (CtCl 1978) 24 CCF ¶81,806, 576 F2d 362; aff'g (1976) ASBCA No. 19335, 76-1 BCA ¶11,767.

    Continued performance without objection waived defective exercise

    Contract Automotive Repair and Management v, GSA (1999) GSBCA Nos. 12773, 12774, 13627, 99-2 BCA ¶30,530.

    Performance of option without objection caused waiver of right to object

    USD Technologies, Inc. (1987) ASBCA No. 31305, 87-2 BCA ¶19,680.

    If the contractor objects to the improper exercise and wants to renegotiate terms, then I think you would have a CICA issue (i.e., you would have to justify negotiating on a sole source basis).

  18. D

    Desparado

    Jan 23, 2019 · 7y ago

    Don - I read those decisions I have a question that I couldn't find the answer to in any of those cases.  When does a contract "expire"?  Clause 52.217-9 reads:

    Option to Extend the Term of the Contract (Mar 2000)

    (a) The Government may extend the term of this contract by written notice to the Contractor within _____ [insert the period of time within which the Contracting Officer may exercise the option]; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least ___ days [60 days unless a different number of days is inserted] before the contract expires. The preliminary notice does not commit the Government to an extension.

    (b) If the Government exercises this option, the extended contract shall be considered to include this option clause.

    (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed ___________ (months)(years)

    (End of Clause)

    So when does the contract "expire" as referenced in ( a )?  Is it when the contract is closed out?  Is it when the period of performance ends? As this shutdown goes longer and longer and COs are not able to exercise options because the contracts are excepted, this will become more and more of an issue.  Are there any cases (I couldn't find any) that would set a precedent on the legality (or lack thereof) of exercising an option after the PoP ends?

  19. j

    ji20874

    Jan 23, 2019 · 7y ago

    I don't think you need any precedent cases -- if both parties (Government and contractor) are okay with a belated (or defective) option exercise, well, no one else matters, right?

  20. D

    Desparado

    Jan 23, 2019 · 7y ago

    ji20874 said:

    I don't think you need any precedent cases -- if both parties (Government and contractor) are okay with a belated (or defective) option exercise, well, no one else matters, right?

    Sadly, not correct.  Our OGC and Office of Acquisition Management matter...  and right now they are of the opinion that when the PoP ends, the contract is dead (their words).  I was looking for some cases that I could use to point out that may not necessarily be true (unless of course, it is)

  21. D

    Don Mansfield

    Jan 23, 2019 · 7y ago

    Desparado said:

    Don - I read those decisions I have a question that I couldn't find the answer to in any of those cases.  When does a contract "expire"?

    For purposes of interpreting FAR 52.217-9, I think the contract expires when the period of performance is over. That seems to be what the Board assumed in American Contract Servs., Inc., ASBCA 46788, 94-2 BCA ¶ 26,855, recons. denied, 94-3 BCA ¶ 27,025, aff'd, 53 F.3d 348 (Fed. Cir. 1995).

    Desparado said:

    Are there any cases (I couldn't find any) that would set a precedent on the legality (or lack thereof) of exercising an option after the PoP ends?

    I don't think it's illegal, it's just not in compliance with the contract. The contractor can waive Government noncompliance, just like the Government can waive contractor noncompliance.

  22. j

    ji20874

    Jan 24, 2019 · 7y ago

    Desparado,

    If your agency superiors want those contracts to die, then you let them die.  

    Or, if they want to act prudently and in the agency’s best interests with regard to those contracts, they can choose the path that I and Don recommended for your and the original poster’s consideration.  

    It’s a choice.

  23. L

    Lionel Hutz

    Jan 24, 2019 · 7y ago · edited 7y ago

    MAY-D-FAR-B-WIT-U, can you clarify one point for me?  In your first post you stated,

    On 1/17/2019 at 4:34 AM, MAY-D-FAR-B-WIT-U said:

    we have previous year funds to exercise the next option period and we sent out the intent letter before the shutdown, but due to the shutdown, there is no staff available to obligate the funds.

    It was unclear to me whether you mean there are no contracting officers available to exercise the option (which obligates the funds), or there are no financial management folks available to record the obligation. 

    However, later you stated,

    On 1/17/2019 at 5:40 PM, MAY-D-FAR-B-WIT-U said:

    With the exception of finding someone with a warrant who isn't furloughed, does anyone foresee a problem with this?

    This makes me think that, in fact, there are no warranted contracting officers that can exercise the option.  Can you confirm whether that is correct or not?

  24. L

    Lionel Hutz

    Jan 24, 2019 · 7y ago

    On 1/17/2019 at 5:34 PM, MAY-D-FAR-B-WIT-U said:

    Can a third party challenge the belated option exercise?

    Yes. 

    It is well settled that an option must be exercised exactly in accordance with the terms of the option clause.  Failure to do so renders the exercise invalid.  When you invalidly exercise a “late option,” you have in effect awarded a sole source contract for that option work.  Unless you have a J&A or Memo Limiting Competition supporting that action, that invalid option exercise is a violation of statutory requirements for competition as implemented through FAR Parts 6 and 13.

    It is true that if you exercise the option late and the contractor agrees to perform, either expressly in the modification or by performing without objection, then the contractor has waived it’s right to later object to the option exercise.  But, that does not mean that the exercise of the option complied with law, regulation, or the terms of the contract.

    Board of contract appeals cases addressing the issue of an invalid option exercise rely on the doctrine of waiver. (E. Walters & Co. v. United States, 217 Ct. Cl. 254, 256, 576 F.2d 362, 363 (1978)) (“plaintiff's silence constituted a waiver of its rights to an equitable adjustment because of the exercise of the option for increased quantities of the procured item.”) 

    The doctrine of waiver “precludes a contractor from challenging the validity of a contract … where it fails to raise the problem prior to execution, or even prior to litigation, on which it later bases its challenge.”  Whittaker Elec. Sys. v. Dalton, 124 F.3d 1443, 1446 (Fed. Cir. 1997) (citing United Int'l Investigative Servs. v. United States, 109 F.3d 734, 738 (Fed. Cir. 1997); E. Walters & Co., 576 F.2d at 367-68).  In other words, if a company accepts an option extension and performs, the company cannot later argue that it is not subject to the terms of the contract simply because it was not exercised in accordance with option clause or applicable law.  It is an equitable principle used to prevent an unjust result after the fact.  However, it does not give the parties the authority to waive the application of law merely because both parties mutually agree.

    Would you say that it’s okay for a contracting officer to award a sole source contract without adequate justification, as long as both parties agree to “waive” any violations?  Would it matter to you that after performance the contractor would not be able to object to the terms of the contract on the grounds that the award violated CICA?  No, of course not.  A different contractor, auditor, IG inspector, or any other third party would be well within their right to object to such an award, and the GAO would not hesitate to uphold such a protest.  It is the same situation here.  If you cannot get a contracting officer to exercise the option, then perhaps you can support a “late” option exercise with a valid J&A or Memo Limiting Competition.  This would be very fact specific, however, it might be a possibility.

    The bottom line is that when there is a lapse in funding and the government shuts down, bad things are going to happen and it is not within your power to fix everything.  If someone takes the position that he is going to “get things done” regardless of the law because he "knows what’s right” and “no one will know about it or complain,” then there is nothing really to discuss.  My recommendation would be to do what you can to minimize the impact, but stay within the bounds of applicable law and regulation.

  25. j

    joel hoffman

    Jan 24, 2019 · 7y ago

    I’d say, get it done. If someone protests, they protest. So what? The government is shut down for an unprecedented period. Get the job done.

    And while at it, discuss your proposed course of action with your contractor, who likely wants and needs the work. 

    Go forth and do good things.

  26. j

    ji20874

    Jan 24, 2019 · 7y ago

    Lionel's case law citation may be inapt.  Instead, the citation actually seems to support the doctrine of waiver and the notion that the contractor may waive the informality or defect of an imperfect (or late) option exercise, but in doing so cannot demand an adjustment in terms -- indeed, the court ruled that the imperfect option exercise, once accepted by the contractor, is fully enforceable.  If the option exercise was invalid ab initio, the court would have said so and the decision would have been different.

    All the talk about CICA only applies if the option exercise changes terms, such as by increasing price, quantity, or scope.  If terms and scope are unchanged, then CICA is not implicated.  A simple late option exercise caused by a funding lapse need not implicate CICA.

    We need to be practical, reasonable, and realistic -- funding lapses have occurred more or less regularly for many, many years, and for many of those circumstances, contracting officers exercised options late with effective dates back to the start of the funding lapse.  If the agency and contractor are happy (and there is no change in terms or scope), then no one else matters.  I disagree with Lionel's certainty that the GAO will uphold a third-party protest in such a case.

    A contracting officer who exercises an option as we are discussing acts honorably and within the law, provided he or she does what the FAR and agency regulations require for an option exercise.  Of course, the contracting officer may be the least important and most irrelevant person on the Government side.  If the contracting officer's managers, reviewers, attorneys, finance officials, or others object to the option exercise, then the contracting officer will never issue the option exercise -- those persons and organizations are free to be afraid of the imaginary boogeyman.  A contracting officer must follow his or her agency's rules, whether reasonable or not.

  27. j

    joel hoffman

    Jan 24, 2019 · 7y ago

    ji, I agree with you.  

    Let me add - if the naysayers in the organization object, they need to solve it and get the job done.

  28. L

    Lionel Hutz

    Jan 24, 2019 · 7y ago

    ji20874 said:

    the contractor may waive the informality or defect of an imperfect (or late) option exercise, but in doing so cannot demand an adjustment in terms -- indeed, the court ruled that the imperfect option exercise, once accepted by the contractor, is fully enforceable.

    I agree.  But, here, the issue is not whether the contract will be enforceable if the contractor does not object.  The issue is whether a late exercise of the option is permitted under applicable statutes, regulations, and contract provisions.

    The OP specifically asked if a third party could protest an invalid option exercise.  The answer is yes.

    You can have an enforceable contract even when you have violated a procurement law to create those contractual obligations. 

    For example, let’s say a contracting officer solicits services on an LPTA basis with 2 technical evaluation criteria.  Under those criteria Offeror A is the lowest priced technically acceptable offeror.  However, in conducting the evaluation, the contracting officer relies on an unstated 3rd evaluation factor, which results in the selection of Offeror B.  Award is then made to Offeror B.

    -Is there a contract?  Yes.

    -Did the contracting officer comply with applicable laws and regulations concerning how to solicit and award a contract?  No.

    -If Offeror A protests, will they succeed in overturning the award to Offeror B?  Yes, absolutely.

    -If Offeror A does not protest and Offeror B performs, can Offeror B later succeed on a claim alleging there is no contract because it was improperly awarded?  No, it has waived its right to object to the contract award.

    It's the same situation here.  If the contractor does not object, and performs, you can create a contractual obligation by proceeding with a late option exercise.  However, you will not be in compliance with statute and regulation when doing so.

    ji20874 said:

    If the option exercise was invalid ab initio, the court would have said so and the decision would have been different.

    While that’s an interesting theory, the Federal Circuit disagrees with you, stating, “When a contract or a provision thereof is in violation of law but has been fully performed, the courts have variously sustained the contract, reformed it to correct the illegal term, or allowed recovery under an implied contract theory; the courts have not, however, simply declared the contract void ab initio."  American Tel. & Tel. Co. v. United States, 177 F.3d 1368, 1376 (Fed. Cir. 1999).

    In contrast to your assertion, courts will not rule the exercise void ab initio.  They will give effect to the terms DESPITE the fact that the contracting officer violated the law.  For another example, see the case of E. Walters & Co. v. United States, which stated, "Granted that this use of the 'option' provision was clearly prohibited by the procurement regulations, and for good and sufficient policy reasons, the fact that a procurement practice is prohibited does not necessarily mean that it is therefore actionable.  The discipline to be administered in such cases is a responsibility of the cognizant procurement officials within the agency in which the violation took place.  It is not a type of discipline to be administered by this court, in the form of judgment for the party allegedly aggrieved by the violation of the procurement regulation."  E. Walters & Co. v. United States, 217 Ct. Cl. 254, 263-64, 576 F.2d 362, 366-67 (1978) (emphasis added.)

    So, it is clearly settled that you can violate the law by improperly exercising an option, and yet still have enforceable contractual rights if the contractor waives its objections through performance.

    ji20874 said:

    All the talk about CICA only applies if the option exercise changes terms, such as by increasing price, quantity, or scope.

    I disagree.  When the period of performance is over and the period to exercise the option lapses, the contracting officer lacks authority to extend the period of performance using that option.  Under what authority is the contracting officer authorizing the contractor to do the work?  One contract has ended, and now he has awarded the work to the contractor without competition and in violation of FAR Parts 6 and/or 13.

    ji20874 said:

    funding lapses have occurred more or less regularly for many, many years, and for many of those circumstances, contracting officers exercised options late with effective dates back to the start of the funding lapse.

    I disagree.  In most years, there is no funding lapse because there is a continuing resolution.  Further, in this case, there is no funding lapse.  The OP stated that prior year funds are available for this contract.  The issue hangs on whether the option will be exercised in time.

    ji20874 said:

    A contracting officer who exercises an option as we are discussing acts honorably and within the law, provided he or she does what the FAR and agency regulations require for an option exercise.

    Except, of course, the law requires the contracting officer to exercise the option in accordance with the terms of the option clause, which the contracting officer cannot do if the period to exercise the option has lapsed. 

    Anyway, this has been an interesting discussion.  But, at the end of the day, this is a beginners forum, and MAY-D-FAR-B-WIT-U asked for "legal precedent or GAO decisions that will allow us to revive the contract," and whether "a third party challenge the belated option exercise?"

    My answers are:

    (1) There is plenty of authority stating that a late option exercise can be enforced against the contractor if the contractor performs and does not object.  We've already cited some of those.

    (2) You will not find any legal precedent that says a "late" option exercise that does not comply with the terms of the option clause is authorized.

    (3) A third party can challenge a belated option exercise on the grounds that the original contract expired, and the invalid option exercise was an improper sole source award.

    If folks want to "get the job done" regardless of legal authority, that is their prerogative.  But to suggest such a course of action in a beginners forum without adequately explaining the potential downsides is, in my opinion, doing MAY-D-FAR-B-WIT-U a disservice.

  29. j

    joel hoffman

    Jan 24, 2019 · 7y ago

    To clarify, I did not say to exercise an option inproperly. With the government shut down, the original poster has no means to “exercise” anything unilaterally.The suggestion has been made to bilaterally modify the contract. For the amount of time that this discussion is been going on, they could’ve started that process.

    If this is a DOD contract, there are a couple of different exceptions to full and open competition that could be used to support a bilateral modification to add the option

  30. G

    Guest PepeTheFrog

    Jan 24, 2019 · 7y ago

    @Lionel Hutz's explanation was very well stated. Most importantly, it distinguished between the "validity" of the contract regarding the signatories, courts, GAO, and potential protesters.

    It's one thing for a signatory to waive its right to complain about an improperly exercised option. It's another issue to consider that others can protest and that the improperly exercised option violates CICA. This point has been hammered home several times in this thread and others.

    Other posters don't seem to be able to make this distinction in their heads.

  31. D

    Don Mansfield

    Jan 24, 2019 · 7y ago

    Lionel Hutz said:

    Did the contracting officer comply with applicable laws and regulations concerning how to solicit and award a contract?  No.

    Do you know of any cases where:

    1. Government did not exercise option on time

    2. Contractor kept working/Government kept overseeing

    3. Government sent notice of option exercise late

    4. No change to contract terms and conditions

    5. Third party protests that Government violated CICA

    6. Third party won case?

    If what your saying is true, I would expect there to be such a case.

  32. G

    Guest PepeTheFrog

    Jan 24, 2019 · 7y ago

    Wifcon has become like the ancient Sodom and Gomorrah.

    All of this sinful confusion, conflation of terms, unjustified answers, and poorly defined questions.

    It's just begging Vern to re-ignite his posting career, throw lightning bolts on the sinners, and set the forum ablaze with cleansing fire.

  33. L

    Lionel Hutz

    Jan 24, 2019 · 7y ago

    Don Mansfield said:

    Do you know of any cases where:

    1. Government did not exercise option on time

    2. Contractor kept working/Government kept overseeing

    3. Government sent notice of option exercise late

    4. No change to contract terms and conditions

    5. Third party protests that Government violated CICA

    6. Third party won case?

    If what your saying is true, I would expect there to be such a case.

    I don't, although I have not searched for one. 

    Why would you expect there to be a case?  I would expect there would not be a case.  A published protest would require the third party to know that an option was exercised late, which they are unlikely to know.  And, even if they do know it was exercised late, it would require that party to know it was a protestable issue.  So, the litigation risk is relatively small.  But maybe it is more likely in a situation where other contractors know the option cannot be exercised due to a shutdown? I don't know.

    In any event, the likelihood of a protest may make someone feel "safer" about a course of action, but it has no impact on the propriety of that action

  34. D

    Don Mansfield

    Jan 24, 2019 · 7y ago

    If a third party knew they could force a competition by protesting such an issue, I would expect to see someone try. 

    You are misrepresenting your conclusion--that the proposed course of action is a violation of CICA--as a matter of fact. You've made a convincing argument in support of your conclusion, but we don't really know whether the GAO or COFC would go along if they haven't been presented with the same facts. Maybe they would see a reasonable distinction between prior cases dealing with improper option exercises and cases where all parties acted as if the option were exercised and the late notice was just an "oops!"

  35. j

    ji20874

    Jan 24, 2019 · 7y ago

    I don't think an imperfect (such as merely late because of a funding lapse) option exercise is a violation of CICA.

    Some posters here insist that it is, and raise the CICA protest boogeyman cry.  They have not persuaded me (and a few others also remain unpersuaded).  I believe that the GAO and COFC would also not be persuaded.  If there was such a protest, the agency or the interventor (the contractor who accepted the option) could make a very strong case and would likely prevail, in my opinion.

    For those raising the CICA protest boogeyman cry, please be prepared to order your still-working contractors (whose contract periods ended during the shutdown) off the premises and to stop the work because the contracts are dead IMMEDIATELY when you return to work, even though the contracts may be important for agency mission success, because you have concluded that you have no authority to allow them to continue work while you draft and route your J&As to award sole-source replacement contracts.  In a few weeks, after your J&A processes are complete, you can allow them to return to work so that your agency can again meet its mission.

  36. j

    ji20874

    Jan 24, 2019 · 7y ago

    Pepe, 

    Vern addressed the issue of a late option exercise back in 2013--

    "I could not find any GAO or Court of Federal Claims protest decision that addresses this issue. So why not go ahead and bilaterally extend the contract through May 6 of next year, as originally intended, document the file to explain what happened and why you decided to extend the contract through bilateral modification, and wait to see what, if anything, happens? That's what I would do. If I got a protest, how I would handle it would depend upon the protester's argument.

    Wouldn't that be better than letting yourself be frozen into inaction by speculation about how a protest might be decided?"

  37. J

    Jamaal Valentine

    Jan 24, 2019 · 7y ago

    ji20874 said:

    A contracting officer who exercises an option as we are discussing acts honorably and within the law, provided he or she does what the FAR and agency regulations require for an option exercise.

    ji20874 said:

    A contracting officer must follow his or her agency's rules, whether reasonable or not.

  38. j

    ji20874

    Jan 24, 2019 · 7y ago

    Jamaal,

    Right.  If the decision-maker according to agency rules or culture is someone other than the contracting officer, then so be it.  But if the contracting officer has some decision-making space (I realize that very few do), he or she will find good counsel here for his or her consideration.

  39. J

    Jamaal Valentine

    Jan 24, 2019 · 7y ago

    A defective extension is nothing more than an improper sole source contract (see Vern's sixth post here). GAO will consider protests alleging that an agency's determination to exercise an option in an existing contract, rather than conduct a new procurement, is unreasonable or violates law or regulation. (Test Sys. Assocs., Inc., B‑244007.6, Mar. 29, 1993, 93-1 CPD para. 274 at 4-5.)

    The Agency Head, Senior Procurement Executive and their delegates know of the shutdown and can provide agency guidance, class deviations, and pretty much any other approval required in this scenario (for expiring contracts).

    However, in the absence of guidance, contracting officers who are left to make their own way should simply 1) communicate their defective option plan and associated risks with their leadership; 2) execute accordingly.

    Nonetheless, always try to leverage the tools to do things right (waivers, deviations, and approvals in advance)...but remember, the doctrine of implied ratification is still at work everyday...make a decision, document the reasoning, get supervisor buy-in, and execute accordingly.

    (I know there is a lack of awareness regarding the number of defective 52.217-8 & -9 options)

  40. C

    C Culham

    Jan 24, 2019 · 7y ago

    Brought to light in another on line discussion forum....see top of page 4 of the attachment to the memo.

    https://www.whitehouse.gov/wp-content/uploads/2017/11/m-18-05-Final.pdf

  41. G

    Guest PepeTheFrog

    Jan 25, 2019 · 7y ago

    ji20874 said:

    Wouldn't that be better than letting yourself be frozen into inaction by speculation about how a protest might be decided?"

    Yes. That's practical advice.

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