Award Term Incentives

John,

I would be surprised if CBO even knows what award term is. My guess though they would consider them as options and assume they would be exercised for scoring purposes. That's probably safe that way because even if the contractor failed to earnm an award term, the agency likley needs the services for that unearned period and would acquire the services from another source.

John,

I would be surprised if CBO even knows what award term is. My guess though they would consider them as options and assume they would be exercised for scoring purposes. That's probably safe that way because even if the contractor failed to earnm an award term, the agency likley needs the services for that unearned period and would acquire the services from another source.

Formerfed

Thanks. In re-reading the question, I meant to inquire about OMB rather than CBO, but I suppose the answer would be the same.

Separate question. I've read about examples of contracts with embedded ATIs extending to a 20-year total potential performance period. Does anyone know of a statutory limitation regarding total potential term. Otherwise said, is there anything that would prohibit an agency from executing a contract with a 5-year base plus five ATIs, each being 5-years in length -- for a total potential term of 30-years?

John,

I assumed you meant OMB instead of CBO but didn't say anything.

There isn't a statutory limitation that I'm aware of on potential terms. I think the issue with a 30 year contract is how beneficial it is for the government. That's a long time to be with a single contractor and lots of things happen over that long a period. Remember, the earned award terms are an entitlement and not options. So if the contractor earns 25 years of performance during the initial 5-year base, you face a problem if their performance turns bad.

John,

I assumed you meant OMB instead of CBO but didn't say anything.

There isn't a statutory limitation that I'm aware of on potential terms. I think the issue with a 30 year contract is how beneficial it is for the government. That's a long time to be with a single contractor and lots of things happen over that long a period. Remember, the earned award terms are an entitlement and not options. So if the contractor earns 25 years of performance during the initial 5-year base, you face a problem if their performance turns bad.

Formerfed

Concur with your logic.

Separate question. If a contractor proposed such a contract (5-year base + multiple ATIs, each 5-years) in connection with the procurement of equipment combined with the long-term performance of the equipment, which statutes would the contractor cite? I'm thinking that 10 USC 2306b (Multiyear contracts: acquisition of property) and 10 USC 2304a (task and delivery order contracts: general authority) would be appropriate. Any input would be most welcome.