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  • Question

    Is it appropriate to exercise options prior to the required specified timeframe?


    Answer

    The following answer is based solely on the background question provided.  As we do not have all the facts pertaining to your situation, we highly recommend you consult your service/local agency guides, the Contracting Officer as well as the Legal Office.  

    Pursuant to the authority of Federal Acquisition Regulation (
    FAR) 17.207, the contracting officer shall make a written determination (D&F) for the contract file that exercise of the option is in accordance with the terms of the option, the requirements of this section, and FAR Part 6.  Specifically, the contracting officer may only exercise the option after determining, among other factors, that funds are available; the requirement covered by the option fulfills an existing Government need; and takes into account the Government’s need for continuity of operations and potential costs of disrupting operations. 

    The bona fide needs statute, 31 U.S.C. 1502, requires that a fiscal year appropriation may only be obligated to meet a legitimate, or “bona fide” need arising in or in some cases arising prior to but continuing to exist in the fiscal year for which the appropriation was made.  To truly be a bona fide need, work efforts should begin shortly after the contract has been awarded or the activity has accepted the funds for the work.  Here, based on the dates presented in your question, the option exercise appears to be for a bona fide need in FY 2016 that, consistent with 31 U.S.C §§ 1501(a)(1) and 1502(a), obligates FY 2016 funds.


    The Antideficiency Act, restricts agencies from incurring obligations or making expenditures in excess of the appropriation/apportionment or from obligating the government for payment of money for any purpose in advance of appropriations made for such purpose.  The take away here is that you can’t spend more than you have and you can’t spend in advance of having it.  If sufficient funds are not available in the properly chargeable appropriation for the purpose of exercising the option, then a potential Antideficiency Act violation would exist that must be officially investigated. 



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