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    Can we exercise the extension of services clause early (prior to the end of the option period) thereby raising the ceiling capacity. The extension of services clause was evaluated at the time of award.


    Answer

    There is limited background information provided in the AAP question other than this appears to be an IDIQ contract for construction services with a base period and some number of option periods.  Also, FAR 52.217-8 and -9 were both included in the RFP as well as the subsequent contract that was awarded. 

    FAR 37.111 -- Extension of Services -- provides some insight into the purpose of the FAR 52.217-8 clause.  It reads as follows:

                   Award of contracts for recurring and continuing service requirements are                     often delayed due to circumstances beyond the control of contracting                           offices. Examples of circumstances causing such delays are bid protests                     and alleged mistakes in bid. In order to avoid negotiation of short                                 extensions to existing contracts, the contracting officer may include an                         option clause (see 17.208(f)) in solicitations and contracts which will                           enable the Government to require continued performance of any services                   within the limits and at the rates specified in the contract. However, these                   rates may be adjusted only as a result of revisions to prevailing labor rates                 provided by the Secretary of Labor. The option provision may be exercised                 more than once, but the total extension of performance thereunder shall                     not exceed 6 months.

    The language in FAR 52.217-8 itself does not appear to limit the use of the clause to any specific purpose, but it seems pretty clear, from reading FAR 37.111, the intent of the clause is for the purpose of extending services beyond the END of the contract's period of performance when award of a follow-on contract is delayed for reasons beyond the control of the contracting officer.  In my research, I was able to find three cases related to this topic, and in each case the clause was interpreted similarly.  In B-244386, Akal Security Inc. (1991), the GAO stated the following: "FAR § 52.217-8 merely provides the agency with a right to seek up to an additional 6 months of contract performance BEYOND THE 36-MONTH PERIOD where exigent circumstances (such as delay in award of a follow-on contract) create the need for continued performance."   In B-401472.2, Department of the Army--Reconsideration (2009), the GAO stated: "FAR 52.217-8 is merely to reserve for the agency a right to seek from the contractor--without further negotiation--AN ADDITIONAL PERIOD OF PERFORMANCE BEYOND THE END OF A CONTRACT PERIOD where exigent circumstances create the need for continued performance."  Finally, in Arco Executive Services, Inc. v. U.S., 78 Fed. Cl. 420 (2007), the court stated:

                   "48 CFR § 37.111. Section 17.208(f) of the same title in turn allows                             government contracting officers to insert clauses “substantially the same as                  the clause at 52.217-8, Options to Extend Services.”  Id. FAR 52.217-8                     allows the government to extend services without negotiating short                              extensions to existing contracts in circumstances, such as those here,                        where the award of a successor contract is delayed.  In this case, the                          government exercised all of its renewal options and, several months                            before the end of the last renewal period, the government requested offers                  for a successor contract;  Arko did not submit an offer.  This appears to be                  exactly the situation FAR 52.217-8 was written to address; it would be an                    odd result if FAR 52.217-8 did not allow the government to require Arko                      to continue its services here."

    Therefore, exercising the extension of services clause early (prior to the end of the option period), would not be using the extension clause as intended, so it should not be exercised in this manner.  However, given the limited information provided in the AAP submission, there may be other relevant factors which need to be considered.  DAU strongly recommends consulting with your contracting officer and attorney to look for feasible alternatives consistent with applicable FAR requirements. 

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