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  • Question

    Is FAR 17.205b (Documentation) referring to ALWAYS placing a justification in the contract file, or only when it is deemed necessary for such instances like FAR 17.202a, when using sealed bidding, whereby the contracting officer shall make a written determination that there is a reasonable likelihood that the options will be exercised before including the provision at 52.217-5, Evaluation of Options, in the solicitation? In other words, are we documenting the file with a justification memo when it is not really necessary?


    Answer

    Since we do not have all of the facts pertaining to your requirement, solicitation/contract or contractor(s), the following answer is based solely on the background and question provided.  As we do not have access to the contract folder or particulars that apply to this situation, we highly recommend you consult the Contracting Officer and possibly the Legal Office.
     
    FAR 17.205(b) specifically concerns documentation on the basic requirement and the increase permitted by the option in order to specifically follow guidance in accordance with
    FAR Part 6.  The documentation required via FAR 17.205(b) ensures the Contracting Officer adheres to the policies and procedures to promote full and open competition provide for full and open completion, full and open competition after the exclusion of sources, other than full and open competition, and competition advocates.  FAR 17.205(b) does not make any inference that documentation is only deemed necessary for instances like FAR 17.202a, when using sealed bidding.
     
    Concerning the applicability of FAR Part 6, one of the exceptions as prescribed via 6.001(c) are contract modifications, including the exercise of priced options that were evaluated as part of the initial competition that are within the scope and under the terms of an existing contract. 
    FAR 6.001(c) also references FAR 17.207(f) when exercising priced options that were evaluated as part of the initial competition.  FAR 6.001(c) also does not make any inference concerning specific method of acquisition such as Invitation for Bid (IFB) or Request for Proposal (RFP).
     
    In accordance with FAR 17.207(f), the written determination for the contract file that is needed before exercising an option is required to document that exercising the option is in accordance with the terms of the option, the requirements of FAR 17.205 and FAR Part 6.  To satisfy requirements of FAR Part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the base contract. Notice that FAR 17.205(f) also does not make any reference to a specific contracting method such as Invitation for Bid (IFB).
     

    FAR 17.202(a) requires the contracting officer to make a written determination that there is a reasonable likelihood that the options will be exercised before including the provision at 52.217-5, Evaluation of Options in the solicitation.  Again, 52.217-5 is a Provision used for evaluation purposes and it is placed in Section M of the Uniform Contract Format (UCF). The prescribing directive for 52.217-5 is FAR 17.208(c).  In accordance with FAR 17.208(c), you should insert a provision substantially the same as the provision at 52.217-5, Evaluation of Options, in solicitations when the solicitation contains an option clause; an option is not to be exercised at the time of contract award;  a firm-fixed-price contract, a fixed-price contract with economic price adjustment, or other type of contract approved under agency procedures is contemplated; AND the contracting officer has determined that there is a reasonable likelihood that the option will be exercised.  The provision of 52.217-5 does not make any references to a specific contracting method such as sealed bidding or contract by negotiation.  However, when used for sealed bids, the determination to use the provision shall be in writing.
     
    We noticed that your organization is the U.S. Navy.  As such you also have the requirement to cite the justification for use of options in accordance with FAR 17.205 in Section III Pre-Solicitation Information in your business clearance, which are generally required for each negotiated contract action in accordance with the Navy Marine Corps Acquisition Regulation Supplement (NMCARS) 5215.406-90.  The format for your business clearance memoranda is located in NMCARS Annex 2, unless an alternative format has been approved by DASN(AP).
     
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    Concerning the additional comments from the AAP submitter...
     
    Again, there are two different documentation requirements:  one is before award of the contract for inclusion of FAR PROVISION 52.217-5 in Section M of the solicitation while the other is for the exercising of the option on a contract.
     
    Documentation before award of the contract for inclusion of FAR PROVISION 52.217-5 in Section M of the solicitation:  FAR 17.202(a) requires the contracting officer to make a written determination that there is a reasonable likelihood that the options will be exercised before including the provision at 52.217-5, Evaluation of Options in the solicitation.  Again, 52.217-5 is a Provision used for evaluation purposes and it is placed in Section M of the Uniform Contract Format (UCF).  The prescribing directive for 52.217-5 is FAR 17.208(c).  In accordance with FAR 17.208(c), you should insert a provision substantially the same as the provision at 52.217-5, Evaluation of Options, in solicitations when the solicitation contains an option clause; an option is not to be exercised at the time of contract award;  a firm-fixed-price contract, a fixed-price contract with economic price adjustment, or other type of contract approved under agency procedures is contemplated; AND the contracting officer has determined that there is a reasonable likelihood that the option will be exercised.  The provision of 52.217-5 does not make any references to a specific contracting method such as sealed bidding or contract by negotiation.  However, when used for sealed bids, the determination to use the provision shall be in writing.
     
    Documentation for exercising the option:  In accordance with FAR 17.207(f), the written determination for the contract file that is needed before exercising an option is required to document that exercising the option is in accordance with the terms of the option, the requirements of FAR 17.205 and FAR Part 6.  To satisfy requirements of FAR Part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the base contract.  Notice that FAR 17.207(f) also does not make any reference to a specific contracting method such as Invitation for Bid (IFB).
     
    In addition, there are other determination and findings (D&F) requirements when exercising an option, such as those required via FAR 17.207(c) and 17.207(d). 

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