When exercising an option on a contract that includes the internal agency clause, is it correct to use the internal agency clause as one's authority to exercise the option? I have seen several documents using the FAR 52.217-9; however, that clause is not included in the referenced award document or modifications.
A contracting officer is correct when citing authority actually included in the instant contract for actions taken to change/modify said contract. Citing something not in the contract would be outside the contract and would not apply to the contract. The root of understanding required here is the contract is exactly what the contract has written in it; nothing more, and nothing less. To build this understanding we start with definitions:
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FAR 2.101 define contract as, “a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing.” FAR 2.101, “Contract modification” means any written change in the terms of a contract. And FAR2.101, “Contract clause” or “clause” means a term or condition used in contracts or in both solicitations and contracts, and applying after contract award or both before and after award.
The concept of the contract making up the entire agreement between the contracting parties is upheld in FAR 43.102(a)(1) which establishes only the contracting officer can modify a contract. FAR 43.103 is a broad net, defining by inclusion, all changes to a contract to be modifications, even other agreements of the parties modifying the terms of contracts (FAR43.103(a)(3)).
Given the above establishment of the contract as the entire documentation of the complete agreement between the parties, it is appropriate to cite authorities actually included in the contract as the basis for action on either parties part. Taking action in a particular contract based on authority not already agreed to by the contracting parities (i.e. the terms and conditions in the contract) would be an extraordinary contractual action covered by the policies and procedures presented in FAR subpart 50.1 – Extraordinary Contractual Actions.