Can the extension of services clasue be used legally to extend a basy plus 4 year contract at the last option? I believe yes...however some folks claim the contract CANNOT go past 5 years.
My understanding is the extension is for contigencies such as protests that allow the goverment to keep services up to 6 additional months. Therefore a contract could go up to 5 years and 6 months if 52.217-8 was exercised at the end of the 4th option year.
What GAO/FAR or legal decision support or refute this?
Yes you can legally extend the contract after 5 years using the 52.217-8 clause in the contract. FAR 37.111 states,
37.111 -- Extension of Services.
Award of contracts for recurring and continuing service requirements are often delayed due to circumstances beyond the control of contracting offices. Examples of circumstances causing such delays are bid protests and alleged mistakes in bid. In order to avoid negotiation of short extensions to existing contracts, the contracting officer may include an option clause (see 17.208
(f)) in solicitations and contracts which will enable the Government to require continued performance of any services within the limits and at the rates specified in the contract. However, these rates may be adjusted only as a result of revisions to prevailing labor rates provided by the Secretary of Labor. The option provision may be exercised more than once, but the total extension of performance thereunder shall not exceed 6 months.
Also see AAP question 25331
https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=30&cgiQuestionID=25331 and 25609
https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=42&cgiQuestionID=25609, that are similar questions to yours.
ARKO Executive Service, Inc. -vs- US, No 2008-5011, Jan 21, 2009, http://caselaw.findlaw.com/us-federal-circuit/1015904.html, states, "We hold that the limitation of the contract duration to five years by FAR 52.217-(c) does not preclude extensions beyond five years pursuant to FAR 52.217-8."