B-215350, JUN 27, 1984, OFFICE OF GENERAL COUNSEL
Highlights
BADHAM: THIS IS IN RESPONSE TO YOUR LETTER OF MAY 21. OAO'S ELIGIBILITY AS AN 8(A) FIRM WAS DUE TO EXPIRE SHORTLY AFTER THE AWARD. THAT DECISION STATES THAT AN 8(A) CONTRACT WITH OPTIONS CANNOT BE AWARDED TO A CONTRACTOR WHOSE 8(A) ELIGIBILITY IS ABOUT TO EXPIRE UNLESS THAT ELIGIBILITY IS EXTENDED. THE DECISION INDICATES THAT WHERE AN 8(A) CONTRACT IS AWARDED TO A FIRM WHOSE 8(A) ELIGIBILITY WILL EXPIRE DURING THE FIRST YEAR OF CONTRACT PERFORMANCE. THE AIR FORCE HAS ADVISED US THAT CONTRACT AWARD WAS MADE TO OAO ON APRIL 21. WILL EXTEND THE CONTRACT PERIOD FOR TWO ADDITIONAL YEARS. THE REGULATIONS THAT GOVERN OPTION EXERCISES ARE AT SECTION 17.207 OF THE FEDERAL ACQUISITION REGULATION.
B-215350, JUN 27, 1984, OFFICE OF GENERAL COUNSEL
PRECIS-UNAVAILABLE
THE HONORABLE ROBERT E. BADHAM, MEMBER, UNITED STATES HOUSE OF REPRESENTATIVES:
DEAR MR. BADHAM:
THIS IS IN RESPONSE TO YOUR LETTER OF MAY 21, 1984. YOU REQUEST THAT WE REVIEW A MATTER BROUGHT TO YOUR ATTENTION BY A CONSTITUENT, MR. M. S. SANDHU.
MR. SANDHU EXPRESSES CONCERN ABOUT THE AIR FORCE'S PROPOSED AWARD OF A CONTRACT TO OAO CORPORATION UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT, 15 U.S.C. SEC. 637(A) (1982). OAO'S ELIGIBILITY AS AN 8(A) FIRM WAS DUE TO EXPIRE SHORTLY AFTER THE AWARD, AND MR. SANDHU ASSERTS THAT AWARDING A CONTRACT WITH OPTIONS TO SUCH A FIRM WOULD BE IMPROPER UNDER OUR DECISION IN GALLEGOS RESEARCH CORPORATION - RECONSIDERATION, B-209992.2, B-209992.3, NOV. 21, 1983, 83-2 CPD PARA. 597. ACCORDING TO MR. SANDHU, THAT DECISION STATES THAT AN 8(A) CONTRACT WITH OPTIONS CANNOT BE AWARDED TO A CONTRACTOR WHOSE 8(A) ELIGIBILITY IS ABOUT TO EXPIRE UNLESS THAT ELIGIBILITY IS EXTENDED.
MR. SANDHU HAS MISINTERPRETED OUR DECISION. IN FACT, THE DECISION INDICATES THAT WHERE AN 8(A) CONTRACT IS AWARDED TO A FIRM WHOSE 8(A) ELIGIBILITY WILL EXPIRE DURING THE FIRST YEAR OF CONTRACT PERFORMANCE, CONTRACT OPTIONS STILL MAY BE EXERCISED SO LONG AS THE AGENCY COMPLIES WITH THE APPLICABLE REGULATIONS GOVERNING THE EXERCISE OF OPTIONS IN GENERAL. THE DECISION THUS DOES NOT REQUIRE THAT THE FIRM'S 8(A) ELIGIBILITY BE EXTENDED EITHER PRIOR TO CONTRACT AWARD OR PRIOR TO THE EXERCISE OF AN OPTION, ALTHOUGH IT DOES STATE THAT THE CONTRACT MAY NOT BE EXTENDED AS AN 8(A) CONTRACT AFTER THE CONTRACTOR'S ELIGIBILITY HAS EXPIRED.
THE AIR FORCE HAS ADVISED US THAT CONTRACT AWARD WAS MADE TO OAO ON APRIL 21, 1984, PRIOR TO THE EXPIRATION OF OAO'S ELIGIBILITY AS AN 8(A) FIRM. THE CONTRACT CONTAINS OPTIONS WHICH, IF EXERCISED, WILL EXTEND THE CONTRACT PERIOD FOR TWO ADDITIONAL YEARS. THE REGULATIONS THAT GOVERN OPTION EXERCISES ARE AT SECTION 17.207 OF THE FEDERAL ACQUISITION REGULATION, AND REQUIRE GENERALLY THAT THE EXERCISE OF AN OPTION BE THE MOST ADVANTAGEOUS METHOD OF FULFILLING THE GOVERNMENT'S NEED.
FOR YOUR INFORMATION, WE ARE ENCLOSING A COPY OF THE GALLEGOS DECISION AND OF THE CITED REGULATION.