Is it legal to extend an expired contract when all contractual services have been provided and accepted, and the extension is due to delays or oversight of the government to award a new contract? Are there exceptions?
Not without doing a Justification and Approval for other than full and open competition (J&A), probably citing FAR 6.302-2 Unusual and compelling urgency or FAR 6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements. Here’s why:
First, the contract has expired and you stated that "all contractual services have been provided and accepted". Now, if you had the clause FAR 52.217-8 Option to Extend Services and you were still within the number days to notify the contractor you would be ok. That clause has a “fill in” that identifies how many days before the period of performance expires you have to notify the contractor of the governments intent to exercise this option. But we’ll assume that option has expired.
Second, as a result, what you want to do is increase the scope of the contract to add an additional period of performance and this requires a modification to the contract. To do this you would need to have either 1) authority inside the contract itself to make the change, or 2) do a scope determination to see if you may. Because of what I wrote above, I will assume there is no other clause or language in the contract allowing for this extension. By default you would have to do the scope test.
See FAR 6.001(c) Contract modifications, that are within the scope of the contract, including the exercise of priced options that were evaluated as part of the original competition (see 17.207(f)). What this means is that your modification would have to be within the scope of your contract to execute it.
While it may be obviously clear for your scenario the answer is “no it is not”; the way to definitively determine that is through the scope test. You will not find this in the FAR or DFARS, it is a two part litmus test that Courts and Boards have used since CICA and the FAR were codified, enacted and published in 1984. It is a two part test that goes like this:
1) Was the change reasonably anticipated at the time of award? In other words, did contractors who submitted an offer know there was a good chance the period of performance would be modified to go longer? In my opinion the answer is “NO” especially since FAR 52.217-8 was not included and even more so if it is there but the government forgot/neglected to exercise it.
If you can answer “yes, it was reasonable…” to the first part, you can then move on to the second part.
2) If it was known the contract could be longer, would it have altered the field of original competition? Like step one, this is very subjective and really requires a full knowledge of all the facts and circumstances that existed at the time of award. It doesn’t just mean would some contractors chosen not to submit an offer and/or would some have chosen to submit an offer if they knew the period of performance would be longer. You also have to ask yourself “would offerors have altered their cost or pricing strategy, or their technical approach?”.
If you can answer “Yes” to step 1 and “No” to step 2, your modification would be “in scope” and as a result you could do a bilateral modification and extend the term of the contract.
Bottomline: Ask your contract legal official. But my guess is you can not answer yes to step one and therefore your modification is out-of-scope and would be a cardinal change to the contract. That would violate the Competition in Contracting Act as defined in 10 U.S.C. 2304 and implemented in FAR part 6. Therefore, the only way you could do it legally is with a J&A as I mentioned in the opening paragraph above.