Is it correct to say the government cannot add existing funds for the 1st option period by 30 September since it is projected that the 1st option period will not be exercised until January 2015? What are some alternatives?
Assuming that Option 1 should have been exercised in Feb 2014 but was not, one needs to look at whether a valid option still exists. Were the terms of the option adjusted when the period of performance for the Base period extended? If not, then you may not have a valid option to exercise if you desire to exercise it. One also needs to consider the funding - you may be putting yourself into an anitdeficiency situation if you are using FY14, and maybe FY15 funds if you extend again, to support what appears to be an FY13 requirement. At this point when a contractor has requested nearly an extra year of time plus more funds to complete the Government requirement, it sounds like a performance issue and you may want to explore remedies provided under FAR part 49. Unless the Government has contributed to these delays, a serious discussion and plan for correction should be occurring before considering adding more time and money. A final thought is what kind of consideration have you, or will you negotiate with the contractor since it appears you are relaxing the contract requirements through these extensions and increased funding. Recommend that you engage your program attorney to develop a plan to resolve what appears to be significant performance issues, not just funding concerns.
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