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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.

Proceed to Options

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