[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR17.202]

[Page 323-324]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 17_SPECIAL CONTRACTING METHODS--Table of Contents
 
                          Subpart 17.2_Options
 
Sec.  17.202  Use of options.

    (a) Subject to the limitations of paragraphs (b) and (c) of this 
section, for both sealed bidding and contracting by negotiation, the 
contracting officer may include options in contracts when it is in the 
Government's interest. When using sealed bidding, the contracting 
officer shall make a written determination that there is a reasonable 
likelihood that the options will be exercised before including the 
provision at 52.217-5, Evaluation of Options, in the solicitation. (See 
17.207(f) with regard to the exercise of options.)
    (b) Inclusion of an option is normally not in the Government's 
interest when, in the judgment of the contracting officer--
    (1) The foreseeable requirements involve--
    (i) Minimum economic quantities (i.e., quantities large enough to 
permit the recovery of startup costs and production of the required 
supplies at a reasonable price); and
    (ii) Delivery requirements far enough into the future to permit 
competitive acquisition, production, and delivery.
    (2) An indefinite quantity or requirements contract would be more 
appropriate than a contract with options. However, this does not 
preclude the use of an indefinite quantity contract or requirements 
contract with options.
    (c) The contracting officer shall not employ options if--
    (1) The contractor will incur undue risks; e.g., the price or 
availability of necessary materials or labor is not reasonably 
foreseeable;

[[Page 324]]

    (2) Market prices for the supplies or services involved are likely 
to change substantially; or
    (3) The option represents known firm requirements for which funds 
are available unless (i) the basic quantity is a learning or testing 
quantity and (ii) competition for the option is impracticable once the 
initial contract is awarded.
    (d) In recognition of (1) the Government's need in certain service 
contracts for continuity of operations and (2) the potential cost of 
disrupted support, options may be included in service contracts if there 
is an anticipated need for a similar service beyond the first contract 
period.

[48 FR 42231, Sept. 19, 1983, as amended at 53 FR 17858, May 18, 1988; 
56 FR 15150, Apr. 15, 1991; 60 FR 42656, Aug. 16, 1995]