[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR17.202]



[Page 334]

 

            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;

    (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]