Glossary / Contracts
Option periodOption year
An option is a right written into a contract that lets the government extend its term or buy more quantity at prices set at award, without a new competition. A typical services contract has a one-year base and four one-year options. The government is never obliged to exercise an option, and it must decide to do so before the current period ends, usually with a notice to the contractor some weeks in advance. Options are evaluated as part of the price at award, so an offeror's option-year pricing counts in the competition.
Why it matters to your pipeline
Options are where the revenue is: a five-year services contract is worth five times its base year only if the buyer keeps exercising. Good performance, a clean invoicing record and a program office that sees the contractor as low effort are what earn an option. The option schedule is also the recompete clock for everyone else, since the contract reaches the market when the last option ends.
When this term shows up in an opening GovSmith finds for you, your vCM explains what it means for that pursuit and does whatever it calls for. You decide; we do the work.
Example
A contract has a $900K base year and four $920K option years. The contracting officer exercises Option 1 in a modification issued thirty days before the base period ends, so the work continues without a gap.
Find out what applies to you
Some terms will matter to your business right away and some won’t for years. A vCM can tell you which are which.