Evaluation of Options Exercised at Time of Contract Award
When options are exercised at contract award, their prices are evaluated together with the base requirement unless the Government determines otherwise for its best interest.
Overview
FAR 52.217-4 outlines how the Government evaluates contract options that are exercised at the time of contract award. This provision requires that, unless it is determined not to be in the Government’s best interests (per FAR 17.206(b)), the total price for the basic contract requirement and any options exercised at award will be considered together during evaluation. This ensures transparency and fairness in the evaluation process, as all costs associated with the contract—including those for options exercised immediately—are factored into the award decision. Contractors should be aware that their pricing for both the base requirement and any options exercised at award will be scrutinized as a combined total, impacting their competitiveness and compliance.
Key Rules
- Evaluation of Options at Award
- The Government will evaluate the total price for the base requirement plus any options exercised at the time of award, unless an exception applies.
- Exception for Government’s Best Interest
- If it is determined under FAR 17.206(b) that evaluating options is not in the Government’s best interest, this provision does not apply.
Responsibilities
- Contracting Officers: Must include this provision when required and ensure total evaluated price includes exercised options unless an exception is documented.
- Contractors: Must price options realistically and understand that exercised options at award will be included in the total evaluated price.
- Agencies: Must document any determination not to evaluate options per FAR 17.206(b).
Practical Implications
- Ensures all costs are considered in award decisions, promoting fair competition.
- Contractors should avoid underpricing base requirements with the expectation of recovering costs through options.
- Failure to account for this evaluation method can lead to noncompetitive offers or compliance issues.