52.217-5
Evaluation of Options
The Government evaluates offers by adding the total price of all options to the basic requirement, but is not obligated to exercise those options after award.
Overview
FAR 52.217-5, "Evaluation of Options," requires that when evaluating offers for contract award, the Government must add the total price of all options to the price of the basic requirement, unless it is determined not to be in the Government’s best interest (per FAR 17.206(b)). This provision ensures that the full potential cost of a contract, including any optional periods or quantities, is considered during the source selection process. However, the evaluation of options does not obligate the Government to actually exercise those options after award.
Key Rules
- Evaluation of Options
- The Government will include the total price of all options in the evaluation of offers for award purposes.
- No Obligation to Exercise Options
- Evaluating options does not require the Government to exercise them after contract award.
- Exception
- If determined not to be in the Government’s best interest (per FAR 17.206(b)), options may be excluded from evaluation.
Responsibilities
- Contracting Officers: Must ensure this provision is included in solicitations with options and evaluate offers accordingly, unless an exception is justified.
- Contractors: Should price options realistically and understand that their total evaluated price includes all options, even if not exercised.
- Agencies: Must document any decision to exclude options from evaluation per FAR 17.206(b).
Practical Implications
- This provision ensures fair and transparent evaluation by considering the full potential contract value.
- Contractors should be aware that their competitiveness is based on the total price, including options.
- Common pitfalls include underpricing options or misunderstanding that evaluation does not guarantee option exercise.