Contract Option
A contract option is a unilateral government right, priced and evaluated at award, to extend a contract's term or buy additional quantities without a new competition. FAR Subpart 17.2 governs when options may be used and the conditions for exercising them.
Options let an agency lock in future performance while the requirement is still competitive. FAR 17.202 permits them when exercise would serve the government's interest, and 17.204(e) normally caps the basic period plus options at five years for services unless agency procedures approve a longer term.
Exercise is conditional. Before exercising, the contracting officer gives written notice within the window the contract specifies and determines that funds are available, the need still exists, exercise beats the alternatives on price and other factors, and the contractor has no active SAM exclusion (FAR 17.207). The option must also have been evaluated in the initial competition at a price stated in or determinable from the contract (17.207(f)) — otherwise the exercise is a new procurement in disguise.
The recurring failure is the calendar. A notice sent outside the contract window kills the right, leaving the government negotiating a sole-source bridge instead. Clause 52.217-8 can extend services at existing rates, but only six months total across all uses.
Regulatory Reference
FAR Subpart 17.2; FAR 17.204(e); FAR 17.207; FAR 52.217-8
RFO Status
The Part 17 model deviation renumbers options coverage (exercise requirements move to 17.204-1, with skip-evaluation approvals one level above the contracting officer), so check the adopted deviation text before citing legacy 17.2 section numbers.
Category
Contract Types & Vehicles
How AcqBot Helps
AcqBot tracks option notice windows across a contract portfolio, drafts the 17.207 determination — funding, continuing need, price advantage, exclusion check — and warns when a period of performance will lapse before the exercise decision is due.
Related glossary entries
Other Transaction Authority (OTA)
Other Transaction Authority (OTA) lets certain agencies enter agreements for research, prototypes, and follow-on production that are not standard procurement contracts — largely exempt from the FAR — to attract nontraditional contractors and move faster than conventional acquisition allows.
Indefinite Delivery/Indefinite Quantity (IDIQ)
An Indefinite Delivery/Indefinite Quantity (IDIQ) contract buys an unspecified quantity of supplies or services, within stated minimum and maximum limits, over a fixed period. The government buys through task or delivery orders under FAR 16.504, with a preference for multiple awards.
Firm-Fixed-Price (FFP)
A firm-fixed-price (FFP) contract sets a price that is not subject to adjustment based on the contractor's cost experience in performance. FAR 16.202 places maximum cost risk on the contractor, who absorbs every overrun and keeps every underrun.
Cost-Plus-Fixed-Fee (CPFF)
A cost-plus-fixed-fee (CPFF) contract reimburses allowable costs and pays a fee negotiated and fixed at inception. The fee does not vary with actual cost, though it may adjust when the work changes. FAR 16.306 governs; statutory caps limit the fee.