Extension of services
FAR 37.111 allows service contracts to be extended for up to six months to prevent service interruptions, but only at contract rates unless labor rates change by law.
Overview
FAR 37.111 addresses the need for continuity in recurring and continuing service contracts when award of follow-on contracts is delayed due to unforeseen circumstances, such as bid protests or mistakes in bids. To prevent service interruptions and avoid negotiating short-term extensions, contracting officers are permitted to include an option clause in solicitations and contracts. This clause allows the government to require continued performance of services, within specified limits and at the contract rates, for up to six additional months. The only permissible rate adjustments during this extension period are those resulting from changes to prevailing labor rates as determined by the Secretary of Labor. The extension option can be exercised multiple times, but the total extension period cannot exceed six months in aggregate.
Key Rules
- Option Clause for Service Extensions
- Contracting officers may include an option clause to extend services in solicitations and contracts for recurring services.
- Extension Limitations
- The total extension period under this clause cannot exceed six months, even if exercised multiple times.
- Rate Adjustments
- Contract rates during the extension may only be adjusted due to changes in prevailing labor rates as provided by the Secretary of Labor.
Responsibilities
- Contracting Officers: Must ensure the option clause is included when appropriate, and that any extensions do not exceed six months in total. They must also ensure rate adjustments are only made for changes in prevailing labor rates.
- Contractors: Must continue providing services if the extension option is exercised, and comply with any labor rate adjustments as specified.
- Agencies: Should monitor contract extensions and ensure compliance with FAR and labor rate provisions.
Practical Implications
- This section helps prevent service gaps due to procurement delays, ensuring continuity of critical services.
- Contractors should be aware that extensions may be required and plan resources accordingly.
- Common pitfalls include exceeding the six-month extension limit or making unauthorized rate adjustments.