Question 1: When creating this CLIN through a modification, does this modification needs to be bilateral or (unilateral within the time limitations in the clause). My understanding is that it would be unilateral since this would be an extension of Services.
Question 2: Its appropriate to create the CLIN for extension of services (if unilateral) and exercise that option to extend services in the same modification. Or would it be better to create an additional modification to exercise that option to extend services, afterwards? . Please advice. I highly appreciate your time and attention.
Question 1) your understanding is correct, FAR 52.217-8 gives the contracting officer the unilateral right to exercise the option as long as you are still within the notification period identified in the last sentence. See the clause below (with bold, italics, and underline added by me for emphasis):
52.217-8 Option to Extend Services.
As prescribed in 17.208(f), insert a clause substantially the same as the following:
Option to Extend Services (Nov 1999)
The Government may require continued performance of any services within the limits and at the rates specified in the contract. 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 hereunder shall not exceed 6 months. The Contracting Officer may exercise the option by written notice to the Contractor within _____ [insert the period of time within which the Contracting Officer may exercise the option]. (End of clause)
See also FAR 43.103(b)(3).
Question 2) if a new CLIN is needed to provide the funding for the additional performance that the clause authorizes; then it can also be part of unilateral modification which exercises the option. It does not have to be a separate and distinct modification.
Reminder: Make sure to follow all of the requirements at FAR 17.207, DFARS 217.207, and your Agency’s (USAF) supplement prior to exercising the option.