2-19 Consider Use of Options

The purchase/SCM team should consider the inclusion of option periods for additional performance for the following reasons:

• Preservation of operational continuity.
• Supplier will have already developed knowledge of the product or service.
• Realization of time efficiency from the Postal Service‘s perspective, because the activities associated with the Perform Solicitation-Related Activities and Evaluate Proposals tasks of USPS Supplying Practices Process Step 2: Evaluate Sources will be avoided.
• Realization of time efficiency for the supplier because learning curve inefficiencies will be reduced or may be avoided.
• Switching costs and performance risks may be avoided.
• Successful contract performance will be more stable.
• To incentivize the supplier’s delivery of successful, high-quality performance levels.
• Technical support capabilities will have already been established.

Selecting the optimum contract length and the need for option periods for any given requirement are important elements of purchase planning and must be considered along with price, risk, market conditions, and industry norms in finalizing a period of performance for solicitation. (See Section 2-18, Select Contract Type and Period of Performance). Contracting officers should consider the inclusion of options within solicitations and resulting contracts as a means of continuing to fulfill the needs of the Postal Service. The exercise of options to extend a contract’s period of performance beyond what was initially contemplated should be assessed to determine whether it is more advantageous to obtain best value through option exercise or through re-competition. (See Section 5-8.7, Exercising Options.)

Portfolio manager approval is required where a contract’s period of performance, including options, will exceed or be extended beyond a total of eight years. (See Section 2-41.3.2, Reviews and Approvals of Contract Awards, Modifications, and Ordering Agreements.)