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• 3/9/2009 6:48 AM Contracting Officer wrote:
  I am in total agreement with this blog as it relates to the ability to exercise options on T/O's from GSA contracts that no longer exist. A T/O with options is still a T/O is it Not?
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• 3/9/2009 8:19 AM Dave Clemens wrote:
  Yes, Contracting Officer. It's tough to imagine even folks within GSA sticking to a contrary interpretation after GSA's own FAR Supplement re-write states that order options can still be exercised even where the Schedule contract no longer exists. Thanks for your supporting comment.
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• 3/9/2009 12:13 PM PCO wrote:
  Wow, I wish GSA Acquisition Policy would make your post above into an acquisition letter!!!
  As a user of the schedules program I often include options in my task orders. If I wasn't comfortable in the belief that a task order which incorporates the terms and conditions of the contract wasn't a stand alone contract I would never use the schedules. The schedules have an unique cancellation clause that allows either party, the government or contractor, to cancel the schedule contract with 30 days notice. I once had a contractor cancel their schedule contract because the option pricing was too low on the task order I awarded them. The contractor thought by canceling their schedule contract it was a way out of performing the options on the task order. The contractor told me that one of the GSA acquisition centers told him that. If this had been true I would have really been in a bind, however, legal supported me and now the contractor has to continue performing on the task order and they no longer have a schedule contract.
  
  So again thank's for the excellent information you have provided on options and the schedules program.
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• 4/20/2009 6:14 AM Chris Blumberg wrote:
  Dave,
  
  Thank you for taking the time to post this Blog. It has been very informative. However, I did want to try to obtain a clarification on the "inclusion of options." According to GSA “Options on Orders” web page, options may be included in an order as long as those order options “do not extend beyond the maximum period of the Schedule contract, including option year periods.” I believe you were answering my question in your "Question A" section. However, I think it is beneficial to bring the issue/question up again...
  Based on the way the GSA page/guidance is written, I believe the below is a proper interpretation:
  If a schedule contract has 3 years left in its current period of performance and 1 more potential option period of 5 years, then the maximum period of performance on this specific schedule contract is 8 years. A contracting officer would have no problem issuing an order with a base + 4 option periods. However, if the schedule contract only had 3 years left in its maximum performance period, then the contracting officer would have to reduce the number of option periods so that the last option period on the order may be exercised prior to the expiration of the schedule contract so that the services on the order would not extend "too far beyond the expiration of the schedule contract."
  However, with the proposed GSAR 538 rewrite, my interpretation is changed completely. The rewrite contains language stating "no orders may extend more than five (5) years after the expiration of the basic contract." I interpret this to mean that a contracting officer may include options in a task order regardless of the amount of time left on its maximum performance period as long as the order (inclusive of options) does not extend more than 5 years after the expiration of the schedule contract.
  
  I write this question/comment because I believe that some may continue to have questions regarding the inclusion of options based on the fourth bullet from the GSA Options on Orders web page.
  
  Thank you again for this blog and I would appreciate if you had the time to provide a response to this "lengthy" comment.
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  1. 4/20/2009 7:55 AM Dave Clemens wrote:
     Hi Chris -
     
     Thanks for the comment. Your interpretations certainly seem reasonable to me. GSA has done a lousy job in writing that fourth bullet on its "Options on Orders" web page. In fact, some people interpret "inclusive of options" there as refering to options on the Schedule contract. Others believe the options referred to in that fourth bullet actually mean options on the orders. The fourth bullet can be read in two contradictory ways, depending on what the reader believes the words "inclusive of options" are actually modifying there.
     
     I don't think this long-standing dispute will be resolved without the GSAR 538 re-write. And remember that the GSAR change is still only proposed as of the date I'm writing this comment. I've recently heard that some people within GSA are actually lobbying against the GSAR re-write on this issue: they firmly believe that ordering agencies have no authority to exercise a previously-included and evaluated task order option if the Schedule contract no longer exists at the time of task order option exercise. When I ask them to cite a reference for such a prohibition (and you really need something solid if you ever start a sentence with "Ordering officers shall not..."), I don't get anything meaningful. And some of those dissenters would say that ordering officers can INCLUDE task order options in accordance with that fourth bullet but just could not later EXERCISE those same options if something happens to the Schedule contract. (I don't buy that restrictive reading either.)
     
     I am reading the proposed GSAR 538 re-write (which is not a model of clarity either, and to which I have submitted comments) the same way you are, assuming you are using "expiration of the schedule contract" to mean the "maximum 20-year-expiration date" (that is, the full period of performance inclusive of Schedule contract options) and not simply the next "five-year-expiration date" of the Schedule contract.
     
     If the GSAM change is adopted in a form similar to the proposed rule I've commented on, I think GSA will need to then revise the "Options on Orders" page (and the MAS Desk Reference, Page 22).
     
     But, who am I? Not a GSA policy maker, certainly. Just an 1102 with an opinion. And we've got plenty of those running around. Which is to be expected in a policy vacuum.
     
     At least the GSAR re-write is a step in the right direction on this issue, so I am thankful for that. But it will require some implementing guidance on the scenario you raise and a clarification at the "Options on Orders" web page. (But I won't be holding my breath for either, I'm afraid.)
     
     I agree with you that the fourth bullet on the "Options of Orders" pages gives a different implementation than the one in the proposed GSAR re-write, which adds a five-year-beyond limitation.
     
     Thanks again.
     Dave
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• 7/10/2009 8:18 AM Steve Leonard wrote:
  I awarded a task order with a Base Period of 12 months and 4 option periods of 12 months each. The BPA expired two years later. Why can't I exercise the two remaining option periods under this task order.
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  1. 7/10/2009 12:06 PM Dave Clemens wrote:
     Hi Steve -
     
     Thanks for the comment.
     
     There's no authority to place orders against a Schedule BPA when the Schedule contract expires. That position is based on GAO and court cases. One GAO case for those particular facts is
     B-311254.2, Canon USA, Inc., June 10, 2008. In that decision, GAO said:
     
     "Consistent with the position taken by the Army, GSA’s view is that, when a BPA holder’s FSS contract expires, the BPA is no longer viable as there is no longer an active contract against which orders may be placed. Thus, in this case, when Canon’s FSS contract expired, its BPA, established pursuant to that FSS contract, also expired as a valid ordering vehicle for new photocopier service leases."
     ...
     "We agree with Canon that an FSS BPA is a separate agreement from its associated FSS contract. Nevertheless, we conclude that when Canon’s FSS contract expired, Canon’s BPA ceased to be a valid procurement vehicle for the placement of new orders because, as explained below, an FSS BPA is in effect solely a pass-through to the BPA holder’s FSS contract and does not provide an independent foundation for issuing orders."
     
     But the facts you describe are distinguishable from GAO's holding in Canon and from the blog's Q&A.
     
     A Schedule BPA, which is not a contract, depends for its continued existence on its Schedule contract. But, as the original blog post points out, a Schedule order, which is itself a contract action, does not depend on its Schedule contract for its continued existence.
     
     There is no authority to issue any new orders against an expired Schedule BPA. You don't need the Schedule BPA to place a Schedule order anyway, as you can always issue new orders directly against the Schedule contract. (I'm assuming the Schedule contract is still in effect when I make that last statement.)
     
     I know of no reason why you could not exercise an option on a Schedule order placed against a Schedule BPA when the Schedule BPA has expired. In an expired-BPA situation, you cannot issue new orders against it. And, as the Canon decision points out, a BPA dies when its Schedule contract dies.
     
     But Canon was (a) about new orders and not options on existing orders, and (b) about a canceled Schedule contract rather than an expired Schedule BPA.  I don't know of any GAO or court case specifically adressing your facts.
     
     For cases on the distinction between BPAs and contracts see:
     
     http://schedulesolutions.net/2009/01/22/is-a-bpa-a-contract.aspx
     
     Note that the original blog post said that options on Schedule orders could still be exercised even if that Schedule contract no longer exists but that options on Schedule BPAs could not be exercised if that Schedule contract no longer exists. That is how the option exercise authority varies from BPA to order in the face of an expired Schedule contract. But what is discussed in the blog Q&A is different than your particular set of facts.
     
     Thanks again,
     Dave
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