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Under the proposed revisions to Federal Acquisition Regulation (FAR) Part 17, contracting officers will have the discretion to award contracts with periods of performance that exceed five years, even if agency regulations do not expressly authorize it. That is, contracts can have option years six, seven or beyond, unless otherwise prohibited by agency rules. Aside from this change, much of FAR Part 17 remains the same.
What Is FAR Part 17?
FAR Part 17 covers special methods that contracting officers can leverage in a procurement. Included within this section are the regulations that govern the procurement of multi-year contracts, the use of option periods in contracts, interagency acquisitions, leader company contracting and the use of reverse auctions.
What Has Changed?
Most changes to FAR Part 17 are aimed at streamlining, combining subparts and simplifying language. The most notable changes are as follows:
- Removal of the limitation in FAR 17.204(e) that the total duration of the basic contract and option periods shall not exceed five years, unless otherwise approved in accordance with agency procedures. Previously, a contracting officer could not award a contract with a total period of performance (options included) that exceeded five years unless agency regulations authorized it. Now, individual contracting officers can award a contract with a total period of performance that exceeds five years even without specific agency rules authorizing it, so long as agency rules do not otherwise prohibit it.
- The addition of the following two statutory requirements to FAR
17.103-1(b) for a U.S. Department of Defense (DOD) component may
use a multi-year contract:
- The contract must promote national security of the United States.
- For contracts valued at $500 million or more, the Secretary of Defense must certify that specific conditions outlined in 10 U.S.C. 3501 will be met.
- Subparts related to multi-year contracting, options, management and operating contracts, and reverse options are reorganized to align with the acquisition life cycle stages: purchase requisition (PR) solicitation, evaluation, award and post-award.
- The following sections, which largely discuss best practices,
have been moved to the FAR Companion:
- FAR 17.105-2, which detailed the objectives and benefits of multi-year contracting.
- FAR 17.203 and 17.204, which detailed best practices for options in solicitations and contracts.
- FAR 17.4, which detailed the procedures and best practices on leader company contracting.
- FAR 17.802(c), which detailed the best practices for reverse auctions.
What Is the Potential Impact?
The biggest takeaways for contractors on the changes to FAR Part 17 are as follows:
- The FAR's prohibition of options after five years of contract performance is no longer applicable. There is no longer a FAR default five-year limitation for the exercise of option periods that agencies must explicitly take exception to. Now, contracting officers have the discretion to set option periods extending past five years, unless the agency has specifically prohibited it.
- The substance of FAR Part 17 remains largely the same. Most changes to FAR Part 17 were the result of efforts to streamline and simplify the language without altering the substance. Accordingly, contractors should expect the government's approach to multi-year contracting, options, interagency acquisitions and reverse auctions to follow the same course of action as before the FAR Overhaul.
- The duration for a multi-year contract is still limited to five years. In contrast to the update to the rule on option periods, the duration for a multi-year contract cannot exceed five years. Notably a "multi-year" contract is distinguishable from a "multiple year" contract. A "multi-year contract" is distinct in that it calls for more than one year of performance without having to exercise an option for every year after the first performance year.
It is important to note that these revisions to FAR Part 17 are part of an informal process, whereby agencies issue class deviations updating the FAR on an individual basis. Once the RFO is complete, the FAR Council will subject the overhauled FAR to formal notice and comment rulemaking so that it can be promulgated as law.
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