AMCCOM Management Study of Contract Option Quantities
Abstract
The use of options provides the Government with a contracting flexibility it would not otherwise have. Long term needs, being difficult to predict, can be contractually provided for by options. The Government can obtain a position in the market against rising prices by prudent use of the contract option. The purpose of this study was to determine whether this Command (AMCCOM) is making optimum use of option quantity clauses in contracting procedures or if improvements could be made to enhance the process. Conclusions drawn from this study may have applications in other procuring organizations and include: Guidance on the policies and procedures relating to the use of options should be consolidated and up-to-date; Item production managers should recommend the option percent which should be added to supply control studies along with the expiration date of the option; A report should be established that alerts item/ production managers that an option is close to expiring; i.e., 90 days; Option clauses that are more aggressive or creative would make options more competitive and/or realistic. For example, prices could be tried to specific dates and/or quantities; The Varian Decision has resulted in a 'gun-shy' attitude toward the exercise of options; The concept of 'testing the market' should be consistent and the in-house cost of resolicitation vs. exercising an option should be taken into account; and Contractors need to be alerted as to the affect of the Varian Decision on the exercise of options. Contractors who desire additional work via the option clause must realize that they need to submit realistic, competitive option process or they may not get the award. Keywords: Government procurement.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 1984
- Accession Number
- ADA199011
Entities
People
- Harry Lyons
- Harry Rubin