Does the contract have to be re-competed at any time of its life-cycle when adding the FSRs will result in exceeding the $25M threshold?
There potentially could be two issues here, and some assumptions that need to be made.
1) Limiting language associated with the appropriation you are using. Sometimes appropriations do have limitations regarding length of contract, contract type, new contract rules, etc. Because you mentioned FMS, this could be the case check with your budget or finance office. If it is not the case, then-
2) Scope issue. First, I’ll assume you are not exceeding the 5 year limit as outlined in FAR part 17. We will also assume the FSR clause makes no mention of the $25M limitation.
Unless you have guidance or a policy at your local level, MACOM level, or Army level. You will have to conduct a scope determination to see if the modification obligating additional monies above the $25M threshold is within the general scope of the contract. This is to be compliant with FAR part 6 and FAR part 43. The two pronged scope test used by courts and boards is subject and is highly dependent on all of the facts and circumstance regarding your acquisition. Assuming there is no other term and condition or clause in the contract stating the government has the authority It works like this:
1. You have to ask yourself "could this change be reasonably foreseen at time of contract award?" "Reasonable" is subjective.
If the answer is "no" then you are not within the general scope of the contract and it would be considered a cardinal change. You would have to recompete the additional effort or use an Other Than Full and Open Competition authority found at FAR 6.302 and get a J&A approved.
If the answer is "yes" it was reasonable to assume the governments requirement could change to require more FSR support, then you move onto part 2 of the scope test.
2. If the requirement was known at the time of award (as a firm requirement), would it have altered the field of original competition? This means, if potential offerors knew (different than reasonably assume it could happen) that you would exceed $25M. Would some offerors have decided not to bid? Would others have decided to bid? Would offerors have altered their pricing strategy? Etc.
If the answer is "yes", it would have altered the field of original competition, then you are not within the general scope of the contract and it would be considered a cardinal change. You would have to recompete the additional effort or use an Other Than Full and Open Competition authority found at FAR 6.302 and get a J&A approved.
If the answer is "no" it would not have altered the field of original competition, then you are within the general scope of the contract and can do the modification.
This answer also assumed the contract was a sole source 8(a), see FAR 19.808-1(a).