TASK ORDER OPTIONS Distinct Actions

The True Excellence Group submitted a claim for unpaid work during a task order option period under a FEMA contract for disaster relief tents in Puerto Rico. The board rejected the claim, stating that exercising the options of the base IDIQ contract did not automatically exercise the task order options. The board did not clarify whether the work was done during a suspension period or whether it was within the scope of the task orders. The decision yields a straightforward rule but does not resolve the contractor's problem, leaving the authors puzzled.

37 Nash & Cibinic Rep. NL ¶ 35

Nash & Cibinic Report | May 2023

The Nash & Cibinic Report

Contractor Claims

Ralph C. Nash

¶ 35. TASK ORDER OPTIONS: Distinct Actions

In True Excellence Group, LLC v. Department of Homeland Security, CBCA 7385, 23-1 BCA ¶ ___, 2023 WL 2446651 (Mar. 7, 2023), a strange procedure led to a strange claim. The Federal Emergency Management Agency issued a single award indefinite-delivery, indefinite-quantity contract for a six-month base period with three one-month options for providing tents for disaster relief in Puerto Rico. Beginning two days after award, the agency issued nine task orders with base periods of three months and three one-month options. Two months later, FEMA “suspended” performance of the task orders, but as the base period for the IDIQ contract was about to run out, the agency exercised its first one-month option and subsequently exercised the other two one-month options.

The board does not tell us whether or when the suspension was lifted, but apparently the contractor continued to work during the task order option periods because it submitted a claim for $2,264,757.30 for work during this period. The only hint in the decision as to what this work constituted is that it “derives from unpaid expenses associated with the alleged task order options.”

The Board’s Rule

The board rejected the company’s argument that the exercise of the IDIQ contract options automatically exercised the task order options, stating:

The law is clear that in exercising an option, the Government must strictly comply with the terms of the contract. Freightliner Corp. v. Caldera, 225 F.3d 1361, 1366 (Fed. Cir. 2000); see [Federal Acquisition Regulation] 17.207(a) (“When exercising an option, the contracting officer shall provide written notice to the contractor within the time period specified in the contract.”). Therefore, the exercise of the options of the base IDIQ contract is not an exercise of options of the task orders issued under that contract unless the option clearly indicated it was.

The relevant options here all indicated that they were solely being exercised under the base contract. While the task orders did contain option periods themselves, appellant can point to no document in which FEMA expressly exercised the task order options. Instead, appellant relies solely on the argument that exercise of the IDIQ’s options trickled down to the task order options. Taking appellant’s factual assertions as true, FEMA, as a matter of law, did not exercise the option periods of the task orders.

This is not a surprising result but rather would seem to be a normal interpretation of option law.

The Puzzle

What puzzles us is why the agency exercised the IDIQ options. The base period of the nine task orders ended on May 27, 2020, while the base period of the IDIQ contract ended on July 26, 2020. Yet the agency exercised the options on the IDIQ contract for three more months without issuing any additional task orders. This apparently lured the contractor into continuing to perform work after May 27 and perhaps after July 26, but the board doesn’t tell us.

If this work was done after the suspension on March 26, that raises an entirely different issue than the issue that was litigated. So maybe the suspension was lifted to allow work on the task orders to continue. Again the board doesn’t tell us.

If the work was within the scope of the nine task orders, when it was done should not matter because the task order time periods would normally deal with when the work is ordered not when it is performed. In that case the contractor would be entitled to be paid for the work even if was done after the base periods of the task orders had expired. Again the board doesn’t tell us or address this issue.

If the work was outside of the scope of the nine task orders, it would have been work performed voluntarily—with no right of compensation. But again the board doesn’t mention this possibility.

All in all, we are totally puzzled by this decision. It yields a rather straightforward rule but it doesn’t resolve the contractor’s problem. Perhaps the case was pleaded incorrectly, perhaps the decision is incomprehensible, or perhaps we just don’t understand what happened. As the King said—“it’s a puzzlement.” RCN

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