FAR 52.217-4—Evaluation of Options Exercised at Time of Contract Award.
Plain-English Summary
FAR 52.217-4 is a solicitation provision used when the Government may choose to exercise one or more options at the time of contract award. It addresses how the Government will evaluate price for award purposes, specifically whether the total price for the basic requirement plus any option quantities or periods exercised at award will be considered in the source selection or award decision. The provision also incorporates the exception in FAR 17.206(b), which allows the contracting officer to decide not to evaluate exercised options at award when doing so is not in the Government’s best interests. In practice, this clause tells offerors that the Government may compare offers on a combined basis that includes the base requirement and selected options, rather than evaluating only the base period or base quantity. Its purpose is to support sound pricing decisions, improve comparability among offers, and give the Government flexibility to structure awards that include immediate option exercise when that is advantageous. For contractors, it signals that option pricing can affect award competitiveness right away, not just later if the Government decides to exercise options after award.
Key Rules
Evaluate base plus exercised options
Unless the contracting officer determines otherwise under FAR 17.206(b), the Government will evaluate the total price for the basic requirement together with any option(s) exercised at the time of award. Offerors should expect the award evaluation to include both the base and the exercised option amounts.
Best-interest exception applies
The Government is not required to evaluate exercised options at award if the contracting officer determines that doing so is not in the Government’s best interests. This gives the Government discretion to exclude exercised options from the evaluation when a different approach better serves the acquisition.
Applies when options are exercised at award
This provision is relevant only when the solicitation contemplates that one or more options may be exercised at the time of contract award. It does not itself require option exercise; it governs how price will be evaluated if the Government chooses to exercise options at award.
Price evaluation focus
The rule is specifically about total price evaluation, not technical evaluation or contract administration. Its effect is to define the price basis used for comparing offers when award includes the base requirement and selected options.
Inserted when prescribed
The provision is included in solicitations when required by FAR 17.208(b). Contracting officers must use the prescribed language, or language substantially the same, when the acquisition strategy calls for this evaluation approach.
Responsibilities
Contracting Officer
Decide whether it is in the Government’s best interests to evaluate exercised options at award under FAR 17.206(b), include the provision when prescribed by FAR 17.208(b), and clearly communicate the price evaluation basis to offerors.
Government/Agency
Use the evaluation method that best supports the acquisition objective and ensures fair, consistent comparison of offers when options are exercised at award.
Offeror/Contractor
Submit pricing with the understanding that the Government may evaluate the base requirement plus any options exercised at award, and price both base and option items competitively because they may affect award selection immediately.
Practical Implications
Contractors should treat option pricing as part of the initial competition if the solicitation allows options to be exercised at award; a weak option price can hurt award chances even if the base price is attractive.
Contracting officers need to be explicit in the solicitation and evaluation plan about whether exercised options will be included in the evaluated price, because ambiguity can lead to protests or evaluation errors.
The FAR 17.206(b) exception is important: if the Government decides not to evaluate exercised options, that decision should be documented and tied to the Government’s best-interest rationale.
This provision affects pricing strategy, especially for multi-year or quantity-option buys, because offerors may need to balance base and option pricing to remain competitive on the total evaluated amount.
A common pitfall is assuming options are always evaluated later at exercise; under this provision, exercised options can be part of the award decision itself, so both sides must pay attention to the solicitation terms and evaluation method.
Official Regulatory Text
As prescribed in 17.208 (b) , insert a provision substantially the same as the following: Evaluation of Options Exercised at Time of Contract Award (June 1988) Except when it is determined in accordance with FAR 17.206 (b) not to be in the Government’s best interests, the Government will evaluate the total price for the basic requirement together with any option(s) exercised at the time of award. (End of provision)