Running the Option
Let's see how many federal contracting football fans are out there! If you are a fan you may recognize 'the option' as it relates to that sport, but I want to clue you in on the version used in the world of federal contracting. Whether it makes you jump for joy or pout, all depends on what side of the contract fence you happen to be sitting.
Recently, I shared with you to Focus on work, not contracts, and discussed Filling your bucket. I also threw in Single and available (not me!) and some other less formal contributions that received good attention from the community. Now I want to do a reveal about options and their impact on multiple-award contract obligations. In federal contracting, an option is defined in the FAR as "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, or may elect to extend the terms of the contract."
That's a mouthful. In short, if you have a contract established with a base period and option periods, anything beyond the base period is, well, optional for the Government. Now, I am certain some of my smart friends from the legal and contract management sides can offer all sorts of great information about options beyond what I am covering, but I am going in a specific direction, so next time.
In several of my recent articles, I shared only 22 percent of fiscal obligations in FY 2022 were awarded to multiple-award contracts or MACs. That comes out to $155B of the $694B obligated. Let's talk about how much of that 22 percent was actually addressable by anyone other than companies with a contract that had options t be exercised.
Last fiscal year, when using full-time or part-time MACs, federal agencies obligated:
$15B to Basic Ordering Agreements (BOA) of which $13B was single award. Of the $2B in MAC obligations, only $162M was the result of options.
$21.3B to Blanket Purchase Agreements (BPA) of which $15B was single award. $2B of the remaining $6B was from options.
Of the $21B in GSA Schedule (FSS/MAS) obligations reported to FPDS, $8.4B resulted from options. (Note: The other $21B in FSS/MAS spending was via agencies not required to report to FPDS. You can see those dollars in SSQ+.)
Government-Wide Acquisition Contracts or GWACs saw $24.4B in obligations last fiscal year, and $8.5B of those dollars were from options.
The king, Indefinite Delivery Contracts (IDC) accounted for $304B last fiscal year, with $99B of it as multiple-award. Of that amount, $17.5B was obligated to exercised options.
What's this all mean? It means the actual addressable dollars via multiple-award contracts in FY 2022 was only 17 percent of the total fiscal spend. If you conduct this exercise on the specific Contracting or Funding Departments, Agencies and Offices relevant to you, along with the pertinent PSC Codes representing what they purchased from you, you get a very tactical view of the opportunity landscape.
I wonder if the addressable number stays above 10 percent if we subtract the dollars awarded through other than full and open competition procedures?
Peace, Health, and Success,
P.S. The impact of MAC option dollars to small business was $15B, slightly less than half of what it was for Other Than Small Businesses.