2005 USE OF OPTIONS

2005.1 Except as provided in §§2005.2 and 2005.3, a contracting officer may include an option in a contract when the option is in the best interests of the District.

2005.2 A contracting officer shall not use an option (unless compelling factors favoring the use of an option exist) when, in the judgment of the contracting officer, the foreseeable requirements involve the following:

(a) Quantities large enough to permit the recovery of start-up costs and the production of required goods at a reasonable price; and

(b) Delivery requirements far enough into the future to permit competitive procurement, production, and delivery.

2005.3 A contracting officer shall not use an option in any of the following circumstances:

(a) If the contractor would incur undue risks, such as when the price or availability of necessary materials or labor is not reasonably foreseeable;

(b) If an indefinite quantity or requirements term contract would be more appropriate, provided that a contracting officer may use an option to extend the term of these types of contracts;

(c) If market prices for the goods or services involved are likely to change substantially; or

(d) If the option represents known firm requirements for which funds are available, unless the basic quantity is a learning or testing quantity and competition for the option would be impractical after the initial contract is awarded.

2005.4 A contracting officer may include options in a contract for services if there is an anticipated need for similar services beyond the first contract period.

2005.5 The period within which an option may be exercised may extend beyond the date specified for completion of the services in a contract for services, but in no event shall the option be exercised after the contract term has expired.

2005.6 The base period in a contract for services or goods shall not exceed one (1) year, unless the contract is funded from an appropriation that is available for more than one (1) year or is a multiyear contract for which funds would otherwise be available for obligation only within the fiscal year for which appropriated pursuant to District law codified at D.C. Official Code § 1-204.51(c). The total of the base and option periods in a contract for services or goods shall not exceed five (5) years unless:

(a) prior to solicitation, the Chief Procurement Officer or designee determines in writing that it is in the best interest of the District and the solicitation for the contract specifies the total of the base and option periods of the contract; or

(b) prior to the expiration of a contract, the Chief Procurement Officer or designee determines in writing that it is in the best interest of the District to extend the term beyond the total term specified in the contract and the contracting officer provides justification for using a sole source modification in accordance with chapter 17 of this title.

2005.7 The total of the basic and option quantities in a contract for goods shall not exceed the requirement for the basic and option periods, unless otherwise authorized by law.

2005.8 The contracting officer shall justify in writing the quantities or the term under option, the notification period for exercising the option, and any limitation on the option price. The contracting officer shall include the justification document in the contract file.

2005.9 Any written determination and findings required for a contract entered into by negotiations shall specify both the basic requirement and the increase permitted by an option.

2005.10 The cost of each option shall be readily discernible from the contract provisions that set forth the option.

2005.11 Contract provisions, approved by the Director, setting forth the cost of the option may include, but are not limited to, the following:

(a) A specific dollar amount;

(b) An amount to be determined by applying provisions (or a formula) provided in the basic contract, but not including renegotiation of the price for work in a fixed-price type contract;

(c) In a cost-type contract, a stated fixed or maximum fee, or a fixed or maximum fee amount determined by applying a formula contained in the basic contract;

(d) A specific price that is subject to an economic price adjustment provision; or

(e) A specific price that is subject to change as a result of changes to the prevailing labor rates provided by the U.S. Department of Labor.

SOURCE: Final Rulemaking published at 35 DCR 1510 (February 26, 1988); as Final Rulemaking published at 41 DCR 398a (January 28, 1994); as Emergency Rulemaking published at 52DCR 4236(a) (April 29, 2005); as Emergency Rulemaking published at 52DCR 5313 (June 3, 2005); as Emergency Rulemaking published at 52DCR 8847 (September 30, 2005); as Emergency Rulemaking published at 52DCR 11301 (December 30, 2005); as Emergency Rulemaking published at 53DCR 3140 (April 14, 2006); as Emergency Rulemaking published at 53DCR 5283 (June 30, 2006); as Final Rulemaking published at 54 DCR 005828(June 15, 2007); as Emergency Rulemaking published at 54 DCR 006108 (June 22, 2007).