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    What is the FAR or Statute which will allow a KO to solicit for supplies or services for a contract duration greater than 5 years but less than 10?


    Answer

    The following guidance is provided to KO's who are considering contracts where desired performance exceeds 5 years in duration.

    FAR provides the following guidance in FAR 17.204: (a) The contract shall specify limits on the purchase of additional supplies or services, or the overall duration of the term of the contract, including any extension.
    (b) The contract shall state the period within which the option may be exercised.
    (c) The period shall be set so as to provide the contractor adequate lead time to ensure continuous production.
    (d) The period may extend beyond the contract completion date for service contracts. This is necessary for situations when exercise of the option would result in the obligation of funds that are not available in the fiscal year in which the contract would otherwise be completed.
    (e) Unless otherwise approved in accordance with agency procedures, the total of the basic and option periods shall not exceed 5 years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for 5 years in the case of supplies. These limitations do not apply to information technology contracts. However, statutes applicable to various classes of contracts, for example, the Contract Labor Standards statute (see 22.1002-1), may place additional restrictions on the length of contracts.
    (f) Contracts may express options for increased quantities of supplies or services in terms of --
      (1) Percentage of specific line items,
      (2) Increase in specific line items; or
      (3) Additional numbered line items identified as the option.
    (g) Contracts may express extensions of the term of the contract as an amended completion date or as additional time for performance; e.g., days, weeks, or months.
    Further, in DFARS 217.171 the following is provided:
    Multiyear contracts for services.
      (a) The head of the agency may enter into a multiyear contract for a period of not more than 5 years for the following types of services (and items of supply relating to such services), even though funds are limited by statute to obligation only during the fiscal year for which they were appropriated (10 U.S.C. 2306c(a)). Covered services are—
        (1) Operation, maintenance, and support of facilities and installations;
        (2) Maintenance or modification of aircraft, ships, vehicles, and other highly complex military equipment;
        (3) Specialized training requiring high quality instructor skills (e.g., training for pilots and aircrew members or foreign language training);
        (4) Base services (e.g., ground maintenance, in-plane refueling, bus transportation, and refuse collection and disposal); and
        (5) Environmental remediation services for—
          (i) An active military installation;
          (ii) A military installation being closed or realigned under a base closure law as defined in 10 U.S.C. 2667(h)(2); or
          (iii) A site formerly used by DoD (10 U.S.C. 2306c(b)).
      (b) The head of the agency must be guided by the following principles when entering into a multiyear contract for services:
        (1) The portion of the cost of any plant or equipment amortized as a cost of contract performance should not exceed the ratio between the period of contract performance and the anticipated useful commercial life of the plant or equipment. As used in this section, "useful commercial life" means the commercial utility of the facilities rather than the physical life, with due consideration given to such factors as the location, specialized nature, and obsolescence of the facilities.
        (2) Consider the desirability of obtaining an option to extend the term of the contract for a reasonable period not to exceed 3 years at prices that do not include charges for plant, equipment, or other nonrecurring costs already amortized.
        (3) Consider the desirability of reserving the right to take title, under the appropriate circumstances, to the plant or equipment upon payment of the unamortized portion of the cost (10 U.S.C. 2306c(c)).
      (c) Before entering into a multiyear contract for services, the head of the agency must make a written determination that
        (1) There will be a continuing requirement for the services consistent with current plans for the proposed contract period;
        (2) Furnishing the services will require
          (i) A substantial initial investment in plant or equipment; or
          (ii) The incurrence of substantial contingent liabilities for the assembly, training, or transportation of a specialized work force; and
        (3) Using a multiyear contract will promote the best interests of the United States by encouraging effective competition and promoting economies in operations
    (10 U.S.C. 2306c(a)).
      (d) The head of an agency may not initiate a multiyear contract for services if the value of the multiyear contract exceeds $678.5 million unless a law specifically provides authority for the contract (10 U.S.C. 2306c(d)(2)).
      AFFARS provides the additional guidance in 5317.171:
       Multiyear Contracts for Services
      (c) The contracting officer must provide the determination described in DFARS 217.171(c) through the MAJCOM/DRU/AFRCO SCO (or for AFLCMC and SMC, the SCCO) to SAF/AQC for approval processing.



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