Option year: the extra contract years an agency may buy from a ride company, and how they are priced

What an option year is

An option is a unilateral right of the buyer: for a stated time, it may choose to buy more service or extend the contract (FAR 2.101). An option year is the usual form, a 12-month period added after the base period. The right belongs to the buyer. You cannot make it use an option, and you cannot refuse one you agreed to when you bid. How a ride company asks for a rate increase outside a contract is covered in NEMT price increase, and how public buyers award ride work in the first place is in government NEMT contracts.

How ride contracts write options

Each contract below prices every period on its own line, and the lengths differ. The first two are VA solicitations of the kind described in VA transportation contracts.

• VA Spokane, September 2026. A single-award IDIQ for wheelchair rides: a base year from October 1, 2026 to September 30, 2027, then four option years through September 30, 2031. The price schedule has separate lines for the base year and each option.
• VA North Texas, 2026. A 54-month ordering period priced in five parts, the first six months and then four 12-month periods. The buyer adds up every period when it compares prices, and its option provision says an offer may be unacceptable if the option prices are significantly unbalanced.
• Maple Grove, Minnesota. The city’s My Ride agreement lists prices for 2025, 2026 and 2027 and an optional 2028. The optional year carries a stated hourly rate of $56.00, against $54.37 in 2027.
• Raleigh and Wake County, 2022. A joint transit RFP set a five-year initial term with two one-year city options. Its sample contract lists a not-to-exceed amount for each base year and each option year.

What price does an option year carry?

The price is fixed in the contract, so you set every year’s price when you bid. Federal rules require an option to have been evaluated in the original competition and to be exercisable at an amount the contract states or makes determinable (FAR 17.207(f)). That can be:

• a specific dollar amount;
• a formula in the contract, but not a renegotiation of a fixed price;
• a specific price subject to an economic price adjustment clause; or
• a price that changes with the prevailing wage rates the Secretary of Labor sets, which matters on contracts covered by the Service Contract Act.

If the contract has an economic price adjustment clause and you ask for a revision, the contracting officer must work out its effect on option prices before exercising the option.

Who decides, and what must the buyer confirm first?

The buyer decides, and it must give written notice within the time the contract states. Before exercising, the contracting officer has to determine that funds are available, the need still exists, and exercising the option is the most advantageous way to meet it. The option must have been announced as required. You must not have an active exclusion in SAM.gov. Your past performance must have been considered, and your performance on this contract must be acceptable, for example with satisfactory ratings (FAR 17.207(c)).

The standard clause for extending the term asks for a preliminary written notice at least 60 days before the contract ends, unless another number is inserted, and the notice does not commit the government (FAR 52.217-9).

How many option years can a contract have?

For federal services, the total of the base and option periods should not exceed five years unless agency procedures approve more (FAR 17.204(e)). The statute behind it for Service Contract Act contracts, 41 U.S.C. 6707(d), allows terms of up to five years if wages and fringe benefits are adjusted at least every two years. The Revolutionary FAR Overhaul text of subpart 17.2 no longer states that sentence, and its Part 22 text repeats the statute’s five-year ceiling.

A contract of more than five years including options is a long-term contract for size purposes. In the clause VA used in its North Texas solicitation, a small business must restate its size 60 to 120 days before the end of year five and before each later option.

What is the six-month extension?

Most federal service contracts also carry an extension clause. FAR 52.217-8 lets the government require continued performance for up to six months in total, at the contract’s rates, adjusted only for revisions to Labor Department wage rates. The contract sets the window for written notice: 30 days in the Spokane and Jackson, Mississippi, VA solicitations, and 21 days in North Texas.

Buyers price it into the comparison. Jackson’s solicitation evaluates an extension that can happen at any time, in steps of one to six months, at the rates in effect. North Texas evaluates it at half of the last year’s price. Build your final year’s price knowing the extension keeps those rates.

What if the buyer lets an option lapse?

The contract ends when its current period ends. Nothing makes the buyer exercise an option, and weak performance is a reason not to. The buyer may re-compete, extend under the six-month clause, or cover a gap with a short bridge contract, which VA transportation contracts describes. Because acceptable performance is the first test, keep your own record of on-time pickups and incidents for each contract year. HealthRide’s on-time report and exportable trip logs give you that record. See reports.