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FAR Overhaul Series: Understanding the Significant Changes to Part 17 on Special Contracting Methods
The Federal Acquisition Regulation (FAR) Overhaul Series has brought significant updates to government procurement, and FAR Part 17, which governs Special Contracting Methods, is no exception. While many revisions focus on streamlining language, one key change fundamentally shifts how contracting officers approach the total duration of federal contracts.
What Does FAR Part 17 Cover?
FAR Part 17 covers the special methods that contracting officers can leverage during a procurement. This section encompasses regulations governing the procurement of multi-year contracts, the use of option periods in contracts, interagency acquisitions, leader company contracting, and the use of reverse auctions.
The Biggest Takeaway: Lifting the Five-Year Cap on Option Periods
The most notable revision in FAR Part 17 is the removal of the limitation in FAR 17.204(e). Previously, the total duration of the basic contract and all option periods could not exceed five years unless agency procedures explicitly approved an exception.
Now, that mandatory FAR default five-year limitation for option periods is no longer applicable. Contracting officers have been granted the discretion to award contracts with periods of performance that exceed five years, meaning contracts can now include option years six, seven, or beyond. This is permitted even if agency regulations do not expressly authorize it, so long as agency rules do not otherwise prohibit the longer duration. This change is considered the biggest takeaway for contractors.
Key Changes Focused on Efficiency and Compliance
While the rule regarding option periods represents a substantial policy change, most other changes to FAR Part 17 are aimed at simplifying language and streamlining processes.
- Structural Reorganization: The subparts related to options, multi-year contracting, management and operating contracts, and reverse options are being reorganized. This structure is intended to better align with the acquisition life cycle stages, including the purchase requisition (PR) solicitation, evaluation, award, and post-award phases.
- DOD Multi-Year Contract Requirements: Specific statutory requirements have been added for the U.S. Department of Defense (DOD) component when using a multi-year contract. These requirements mandate that the contract must promote the national security of the United States. Furthermore, for contracts valued at $500 million or more, the Secretary of Defense must now certify that specific conditions outlined in 10 U.S.C. 3501 will be met.
- Best Practices Moved to the Companion: Several sections detailing best practices have been moved to the FAR Companion, rather than remaining in the core regulation. This includes procedures and best practices on leader company contracting, best practices for reverse auctions, and details on the objectives and benefits of multi-year contracting.
Distinguishing Multi-Year vs. Option Periods
It is crucial for contractors to note the distinction between the changes to option periods and the rules governing multi-year contracts. The duration for a multi-year contract remains limited to five years.
A “multi-year contract” is distinct because it calls for more than one year of performance without requiring the exercise of an option for every year after the first performance year. In contrast, the new discretion applies to contracts that utilize option periods to extend the term beyond five years.
The Continuing Approach
Despite these significant revisions, the substance of FAR Part 17 remains largely the same. Most alterations were designed to streamline and simplify the language without fundamentally altering the underlying material. Contractors should therefore anticipate that the government’s approach to interagency acquisitions, multi-year contracting, and reverse auctions will generally follow the same course of action as before the overhaul.
It is important to remember that these revisions are currently part of an informal process where agencies are issuing class deviations. The overhauled FAR will eventually be subjected to formal notice and comment rulemaking by the FAR Council to be fully promulgated as law.
Tags: FAR Part 17, Government Contracts, Special Contracting Methods, Option Periods, Federal Acquisition Regulation, Multi-year Contracts, Government Procurement, DOD Contracting, Contract Overhaul, marketus