Exercise Option Year Clause in Contracts

a. The Office of Contracts shall notify the COTR of contract expiration dates. Within the time specified by the Office of Contracts, the COTR shall submit a D&F to the Office of Contracts supporting the recommendation to exercise or not exercise the option.

b. The Office of Contracts, after consultation with the COTR and review of any contractor performance reports, shall recommend a renewal of the contract if renewal is in the best interest of the OCFO, all other requirements of this section have been met, and when the following conditions are met:

i. The Office of Contracts determines in writing that the renewal of the contract is in the best interest of the OCFO;

ii. The CFO verifies the availability of funds; and

iii. The contract contains a clause that allows for modifications and/or the exercise of options.

c. If the recommendation to exercise the option is approved, a contract modification will be issued. . The contract modification will allow the contract to continue to be effective for the duration of the option period. However, if the contract is not executed prior to midnight of the expiration date of the contract, the contract expires. If the contract expires, renewal of the contract is not possible.

F. PERFORMANCE MONITORING AND ACCEPTANCE. A fundamental goal of the acquisition process is to obtain goods and services that meet the quality standards set forth in the contract. In

furtherance of this goal, the buyer must inspect tendered supplies or services to insure that they conform with contract requirements.

1. Overview While the right to inspect and test is very broad, it is not without limits. Occasionally, government inspectors perform unreasonable inspections, rendering the government liable to the contractor for additional costs. As a result, the COTR must balance the need to ensure that the deliverables meet contract requirements with the need to avoid unduly interfering with the contractor’s performance.

2. Purpose. Proper inspections are critical, because once the government accepts a product or service, it cannot revoke its acceptance except in narrowly defined circumstances. The method of performance monitoring used will depend on the service of supply being procured, and may involve a combination of procedures, including regular and unscheduled inspections, complaints brought to management's attention, reports, or surveys of consumers of the service. 27 DCMR § 4004.1. The scope and complexity of the monitoring process depends on several factors, including the importance of the service to the public good, the ability and size of available staff, the quality of the working relationship between the Contractor and the OCFO’s COTR, and the importance of the contract to the OCFO’s core mission areas.

3. Government vs. Contractor Inspection.

a. When small purchase procedures are used to award the contract, the OCFO will generally rely on the contractor to accomplish all inspection and testing needed to ensure compliance with contract quality requirements before the supplies, services, or construction are

tendered to the OCFO. 27 DCMR § 4004.5.

b. The OCFO shall not rely on inspection by the contractor, even in small purchases, if the Contracting Officer determines that the OCFO must test the supplies, services, or

construction in advance of their tender for acceptance, or determines that there is a need to review the adequacy of the contractor's internal work processes. In making the

determination, the Contracting Officer must consider the following:

i. The nature of the supplies, services, or construction being procured and their intended use;

ii. The potential losses in the event of defects;

iii. The likelihood of uncontested replacements or correction of defective work; and iv. The cost of a detailed inspection by the OCFO.

4. Inspection Techniques. Inspections, when called for by the contract, should be both reasonably frequent and random. Randomness helps ensure that the observed performance is typical and not something prepared specifically for the inspection. At a minimum, the following steps must be taken to monitor contractor performance:

a. Inspect goods or services either at the contractor’s facility or at the delivery point, as deemed appropriate by the COTR. 27 DCMR § 4004.4. If the contract requires the contractor to prepare and maintain inspection records, the COTR should ensure that the records are complete and accurate.

b. Ensure contractor compliance with quality assurance requirements, specifically quality assurance plans identified for Performance-based Contracts.

c. Communicate with suppliers/contractors to assure understanding of the requirements within the boundaries of the contract documents.

d. Evaluate contractor performance against all contract requirements (report submittals, certifications, notifications, etc.).

e. Review reports of completed work and ensure that work was actually completed.

f. Monitor contractor progress, watching for the need for any extension of time and ensure timely notification of anticipated overrun.

g. Monitor financial status and advise the Contracting Officer if contract performance is jeopardized.

h. Receive, inspect, and accept or reject partial deliveries and final deliveries of all contract deliverables as documented in the contract.