FAR 2.101 defines “Option” as "a unilateral right...to purchase additional supplies or services...or...extend the term of the contract." It defines "Warranty" as "...a promise or affirmation given by a contractor to the Government regarding the nature, usefulness, or condition of the supplies or performance of services furnished under the contract." Given these definitions, I can understand wanting clarification on this issue, as "a promise or affirmation" (i.e., warranty) is not a supply or service or an item listed in the definition of what on an option is used to purchase. However, if including warranty coverage as an option is in the Government's interest and the contractor agrees to it, then I'm hard-pressed to assert it cannot be done. I urge you to discuss this with your activity's legal counsel before proceeding. If it's decided to move forward and include warranty coverage as an option, a custom clause would be needed in lieu of the standard options clauses, which cover "supplies" or "services."