(a) The option clause shall require that the contractor be given adequate notice (see FAR 17.207(a)) of the requirement to perform under the option (as a general rule, at least 14 days prior to the last scheduled delivery date).
(c)(90) In addition to those considerations set forth in the FAR, exercise options only if it is determined that:
(1) There is no cardinal change in the requirement; and,
(2) The contractor's performance is satisfactory. A record of demonstrated superior performance may warrant additional consideration under buying best value guidelines. (See 17.207(e)(90).) Satisfactory performance includes successful implementation of any support to socioeconomic programs which was evaluated as part of source selection as well as any Mentoring Business Agreements which were proposed and evaluated during source selection. For contracts that effected a Shift to Commercial Practices or change in method of customer support, see 42.1103(90).
(d)(1) A new solicitation should not normally be used as a means to determine reasonableness of option prices. Tests of the reasonableness of the option price should generally be made by one of the methods identified in FAR 17.207(d)(2) or (3). Whenever a contracting officer determines that it is necessary to test the reasonableness of the option price by use of a formal solicitation, the contract file must contain a memorandum which briefly explains the reasons for the decision.
(2) The following are examples of factors which may be considered in the informal test of the market and evaluation of the option price(s):
(i) The fact that the option price was evaluated for price reasonableness prior to initial award.
(ii) The relationship of the option price to the price for the initial contract quantity.
(iii) The adequacy of competition at time of initial award and the length of time since the award.
(iv) Changes in the general economy that could affect the contractor's costs.
(v) The results of any market research and analysis efforts (see Part 10).
(2)(90) After conducting an informal analysis of prices or an examination of the market, in accordance with FAR 17.207(d)(2), the contracting officer may determine it is more advantageous to exercise the option and also become aware that another source (such as a surplus dealer) has favorable pricing and/or availability for one or more items on the contract. If so, the contracting officer shall forward the information to the item manager (supply planner). The item manager (supply planner) shall take appropriate action in the best interest of the Government, based on the item manager’s (supply planner’s) judgment; such as initiating a separate, fixed-quantity purchase request, if warranted by the agency’s supply position.
(e)(90) An additional factor to be considered is the desirability of continuing a successful contractual relationship with a vendor that has demonstrated superior quality and delivery performance. Where the market analysis or survey shows that the item may be available at lower cost, this need not preclude the exercise of the option given a history of superior performance by the contractor. Performance criteria, may be used in determining superior performance and evaluating its importance relative to market price considerations and other factors.
(f) Prior to exercising an option, the contracting officer shall consider the factors at FAR 9.104-1 particularly the contractor's performance under the base contract period and any previous options. A decision not to exercise the option after considering responsibility-type factors is not a determination of contractor responsibility, and is not subject to referral to the SBA if the contractor is a small business. The written documentation shall address the basis for the contracting officer’s determination (see FAR 17.207(d)).
