The agency extended the terms of a contact for six months under the FAR’s extension of services provision. The contractor alleged this extension was improper because the contract had expired before the government exercised its right to extend. The ASBCA sided with the contractor. The contract had expired by its own terms before the agency decided to extend. The agency could not use the FAR’s extension clause to revise a dead contract. Once the contract expired, the government’s right to extend evanesced.
Appeal of Fluor Federal Solutions, Inc., ASBCA NO. 62343
Background
Fluor Federal Solutions had a contract with the Navy for base operations support. The contract one base year, four option years, and three award option years. The contract also incorporated FAR 52.217-8, which allows the government to extend performance at stated contract rates for an additional six months.
Performance of the contract began in 2012. The Navy exercised all four non-award options. Option year four was set to expire in June 2017. The Navy did not exercise award option years 1 or 2. But shortly before the contract was set to expire, the Navy exercised award option year 3.
Fluor submitted a claim alleging that exercise of award option year 3 was improper. The Navy denied the claim. Fluor appealed to the ASBCA. The board agreed with Fluor and found that the Navy’s exercise of the award option year was unenforceable.
But in 2018, while the appeal was pending, the Navy had informed Fluor of its intent to extend Fluor’s services by six months under FAR 52.217-8. Fluor submitted another claim objecting to the extension of services. The Navy denied that claim. Fluor appealed again.
Analysis
Fluor alleged that because the exercise of award option 3 was unenforceable, the contract expired in June 2017. Thus, the Navy could no longer extend services under that contract a year later in 2018. The government argued that because Fluor was performing—albeit under protest—at the time the government extended services, the Navy had the authority to extend the services under FAR 52.217-8.
The board sided with Fluor. The board had previously decided that exercise of award option year 3 was unenforceable. That meant the contract had expired by its own terms in 2017. Any right the Navy had to extend services expired at the same time.
Fluor is represented by John S. Pachter, Jennifer A. Mahar, and Kathryn Muldoon Griffin of Smith Pachter McWhorter PLC. The government is represented by Craig D. Jensen, Russell A. Shultis, Patricia Wlater, Julie Ruggieri, and Jerry Kim of the Navy.
