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  • Question

    When you process a -8 extension, do you create a new series of CLINS, or do you simply update the period of performance (POP) on the fourth option year CLINS to reflect your new POP?


    Answer

    Since the background of this question does not provide more specific details about the scenario, this answer is based on a number of assumptions that may, or may not, be accurate.

    The FAR/DFARS is silent regarding the CLIN structure to use when 52.217-8 Extension of Services is exercised. The intent was probably to give the Contracting Officer the flexibility to determine the most appropriate CLIN structure to use for the six month extension.  However, while extending the period of performance of the existing Option Period 4 CLINS, at first glance, may appear to be the most efficient approach, it does raise a couple of concerns.  First, the extension of services clause permits an extension for a period not to exceed a total of six months in circumstances beyond the control of the Contracting Officer such as delays caused by a bid protest or an alleged mistake in bid, etc.  What’s important here is to remember the additional six months does not increase the total term of the option but would be an additional six months separate from Option Period 4.  Therefore, creating separate CLINs for the six month extension would be cleaner by keeping the contract periods clear and distinct from each other and avoiding any confusion regarding the actual period of performance for Option Period 4.  

    Another consideration is the type of funding typically used for services contracts.  Multiple year service contracts are annually funded for the base period and each of the option periods.  For cost-reimbursement contracts, for example, the schedule typically has separate CLINs with their own estimated cost and fee.  You cannot combine the estimated costs of the separate CLINs of annually funded contracts because (1) they are funded by different appropriations, (2) the Bona Fide Need rule applies, and (3) you cannot mingle the funds of different fiscal years.  The fact that service CLINs are normally funded with annual funds is an important reason why the base period is usually only for one year and option years are used for multiple year service contracts.  I think the same would be true in the case of a firm-fixed price contract for services, in that the use of annual funds drives the use of separately priced, separately funded option year CLINs.  In other words, each CLIN describes a severable period of service, distinct from the periods of services under the other CLINs and are usually separately funded.

    In addition, the Contracting Officer has a responsibility to ensure the extension isn’t merely a means of circumventing the five-year restriction.  In other words, as discussed earlier in this response, the extension of services clause is intended for reasons that are beyond the control of the Contracting Officer.  Finally, it is recommended that you contact your local comptroller organization, and legal counsel for more information and their policy interpretation of this issue.

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