HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance
Fully Funded Initial Requirement (Followed by Options)
It is possible to award a contract where the initial requirement for non-severable services is structured as a fully funded base period, followed by option(s) for related services, either severable or non-severable in nature. Consider, for example, a contract for a 24-month clinical drug trial, resulting in a final report (a non-severable service). The contract contains an option to acquire the services of the key researchers to participate in HHS-sponsored conferences during the subsequent 12-month period; dates and sites will be determined by the Department. Here, the option will acquire severable services.
It is also possible to follow a contract with a base period for non-severable services with an option for related non-severable services. Returning to the previous example, this time, the option will require the contractor to conduct a second clinical drug trial, administering the same drug to a different test population, followed by a final report.
In both of the above examples, because the base period will acquire non-severable services, it must be funded in full at contract award and result in completed product(s)/ outcome(s) which provide independent value/merit. While the use of options is permissible to acquire related services, they CANNOT be used to continue the performance of the initial requirement (base period) for non-severable services. MORE...
The options portion of this tool should be reviewed to determine compliant approaches based on the nature of the services being acquired and the type of appropriation.