FAR 52.217-5—Evaluation of Options.
Plain-English Summary
FAR 52.217-5, Evaluation of Options, is a solicitation provision used when the Government wants to consider option prices in source selection. It tells offerors that, unless the contracting officer determines under FAR 17.206(b) that doing so is not in the Government’s best interests, the Government will evaluate offers by adding the total price of all option periods or option quantities to the price of the basic requirement. The provision also makes clear that this evaluation method is for award evaluation only and does not create any obligation for the Government to exercise an option later. In practice, this clause affects how contractors price their offers, how evaluators compare competing proposals, and how the contracting officer documents the evaluation approach. It is closely tied to the broader FAR Part 17 rules on options, especially the requirement to decide whether options will be evaluated and whether exercising them is likely to be in the Government’s interest. The provision helps the Government compare the full potential cost of competing offers on a more equal basis, while preserving discretion not to order the option work after award.
Key Rules
Evaluate basic plus options
Unless an exception applies, the Government must evaluate offers by adding the price of the basic requirement and the total price of all options. This means option prices are part of the award comparison, not just the base contract price.
Best-interest exception applies
The Government may decide under FAR 17.206(b) that evaluating options is not in its best interests. If that determination is made, the solicitation does not have to use this evaluation method.
Evaluation is not a commitment
Including option prices in the evaluation does not obligate the Government to exercise any option after award. The clause preserves the Government’s discretion to decide later whether to use the option.
Applies at solicitation stage
This is a solicitation provision, not a contract clause governing performance. It informs offerors up front how their prices will be evaluated for award purposes.
Option pricing affects competition
Because option prices are included in the evaluated total, contractors should expect that high option pricing can affect competitiveness even if the option may never be exercised.
Responsibilities
Contracting Officer
Decide whether evaluating options is in the Government’s best interests under FAR 17.206(b); include this provision when appropriate; evaluate offers by adding the basic price and all option prices when required; and ensure the solicitation clearly states the evaluation method.
Source Selection/Evaluation Team
Use the stated evaluation formula consistently across all offers and compare proposals on the basis required by the solicitation, including option prices when applicable.
Contractor/Offeror
Price the basic requirement and all options with the understanding that option prices may be included in the evaluated total; structure pricing competitively because option pricing can affect award even if the option is never exercised.
Agency
Support acquisition planning and option strategy decisions, including whether evaluating options aligns with the Government’s best interests and overall procurement objectives.
Practical Implications
Offerors should treat option pricing as part of the competition, not as a separate afterthought, because it can materially change the evaluated price.
Contracting officers need to make and document the FAR 17.206(b) best-interest determination if they choose not to evaluate options.
A common pitfall is confusing evaluation of options with a promise to buy them; the provision does not create an obligation to exercise options later.
Another pitfall is inconsistent evaluation if the solicitation’s pricing instructions do not clearly identify which option periods or quantities are included in the total evaluated price.
This provision is especially important in long-term or multi-year buys, where low base pricing paired with high option pricing can distort the apparent value of an offer if options are not evaluated.
Official Regulatory Text
As prescribed in 17.208 (c) , insert a provision substantially the same as the following: Evaluation of Options (July 1990) 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 offers for award purposes by adding the total price for all options to the total price for the basic requirement. Evaluation of options will not obligate the Government to exercise the option(s). (End of provision)