HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance
Option(s) – After Initial Requirement for Non-Severable Services
During acquisition planning, the project team determined that the initial requirement for non-severable services would be followed by one or more options to acquire related services.
Option means a unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract within the existing term of the contract, or may elect to extend the term of the contract. This definition expands on the definition in FAR 2.101. Please also see FAR Subpart 17.2.
- Use of options as a unilateral right of the Government requires their identification in the solicitation, evaluation of their terms and pricing as part of the award determination, and their inclusion in the contract award.
- Options cannot be used to continue the performance of the original requirement for non-severable services.
- Use of option(s) in a contract for non-severable services is permissible only after structuring the initial requirement as a fully funded base period or a multi-year contract. Either choice must result in completed product(s)/outcome(s) that will provide independent value/merit regardless of whether any established options are exercised.
While phases may be used to segment the work effort under a contract for non-severable services, they do not provide a means to separately fund the work involved.