On August 31, 2021, the General Services Administration (GSA) issued a proposed rule to amend the GSA Acquisition Regulation (GSAR) to incorporate an internal GSA policy of extending Federal Supply Schedule (FSS) orders for five years beyond the term of an FSS contract. Comments on the proposed rule are due by November 1, 2021. The rule should address a growing issue where FSS contractors find themselves excluded from competing on large orders that would extend beyond the explicit term of their FSS contract.
Since 2000, the GSA FSS program has utilized internal GSA policy—in the form of FSS clause I-FSS-163, Option to Extend the Term of the Contract (Evergreen)—to extend performance of FSS contracts beyond their term. Specifically, FSS clause I-FSS-163 states that "[t]he Government may require continued performance of this contract for an additional 5 year period when it is determined that exercising the option is advantageous to the Government considering price and other factors." Under the FSS clause, the contracting officer could exercise the option by providing written notice to the contractor within 30 days prior to the expiration of the contract or option, and prices in effect at the time of the exercise of the option would remain in effect during the option period (unless an adjustment was made). This clause has been incorporated into FSS solicitations and contracts.
GSA's proposed rule incorporates and replaces FSS clause I-FSS-163 through the addition of new GSAR clause 552.238-116 (48 C.F.R. § 552.238-116), Option to Extend the Term of the FSS Contract, which will state:
- The Government may require continued performance of this contract for an additional 5 year period. This option may be exercised up to three times.
- The Contracting Officer may exercise the option by providing written notice to the Contractor 30 days before the contract expires.
Notably, the new GSAR clause does not mention any determination about exercising an option being advantageous to the government or whether the price in effect at the time of exercise of the option would remain in effect, as were included in the internal FSS clause.
Additionally, the proposed rule adds a provision to GSAR 538.273 (48 C.F.R. § 538.273) that prescribes language for the government to insert into the fill-in information in FAR clause 52.216-22, Indefinite Quantity. Paragraph (d) of FAR clause 52.216-22 states the following:
Any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order. The contract shall govern the Contractor's and Government's rights and obligations with respect to that order to the same extent as if the order were completed during the contract's effective period; provided, that the Contractor shall not be required to make any deliveries under this contract after ___ [insert date].
The proposed rule adds new Subsection (e) to § 538.273, which requires that the following language be included in the blank in Paragraph (d) of FAR 52.216-22(d): "the completion of customer order, including options, 60 months following the expiration of the FSS contract ordering period." This addition of GSAR 538.273(e) incorporates internal GSA policy that has been in use and incorporated into FSS solicitations and contracts since 2006.
Accordingly, under this proposed rule, GSA will finally memorialize in the GSAR the agency's policy of extending FSS contracts for five years beyond their term. While this policy had previously been included in FSS solicitations and contracts, once the final rule has taken effect, contractors holding FSS contracts or submitting proposals under an FSS solicitation can expect to see the phasing out of the use of FSS clause I-FSS-163 and the inclusion of new GSAR clause 552.238-116 in solicitations and contracts. More importantly, however, the memorialization of this policy will allow contractors to utilize the FSS contract on orders that exceed the expiration of their FSS contract for up to five years and essentially eliminate the fact that many FSS contractors found themselves excluded from competing on large, five-year orders that exceeded the explicit term of their FSS contract.