I am questioning whether or not this is a violation of the Competition in Contracting Act because we are essentially exercising off of an expired contract, however since this method was part of the solicitation and the interested parties knew our intent and the period's of performance, could we proceed with this plan?
CICA doesn't apply to the use of simplified acquisition procedures. See FAR 6.001(a). In short, you need to determine whether or not your effort is SAT, if you are using simplified acquisition procedures, or if you are awarding a FAR 15 negotiated contract.
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Option periods are allowed by FAR/DFARS and are covered in parts 17 and 217. Multiyear contracts are a valid method of acquiring the government’s needs for supplies and services. Options and their use are covered in FAR Subpart 17.2. When you are working with options, you must ensure your solicitation and resulting contract meet the requirements of FAR and DFARS. The contracting officer will need to ensure that they consult with legal prior to awarding the contract to determine the legalities of the contract terms and conditions.