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    Ongoing debates are as to if the remaining option periods are forfeited on an early option exercise or if the remaining option periods can be modified with new option period start dates. Please provide guidance and FAR reference if available. Thanks


    Answer

    You must look at the type of funds involved.  If you only have FY12 funds, you cannot use them until then.  Assuming that you have no funding issues and you are using the appropriate type of funds, then the early exercise of the option alone does not allow you to burn more of the hours (assuming this is a labor hour or T&M type contract as you mention " a high burn rate"). 

    You would have to change the period of performance of the current year as well as the option periods if you intend to exercise the option in order to use the hours associated with the option (again, assuming this is a labor hour or T&M type contract as you mention " a high burn rate").  Remaining option periods are not forfeited,  you must modify them accordingly with the contractor. 

    The best route for you to take may be to modify the contract to increase the hours and ceiling amount in the the current period using current year funds and leave the options as is.  You may have to do a sole source statement or J&A depending on the dollar value of the modification. 


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