by: Jane Ann Magness, Contracts Manager
Every contract has a beginning, middle, and an end. In the middle, there usually are Option Year Renewal opportunities, the point at which the contract is “renewed” for another year of performance.
The year mark of a contract or task order can be a good opportunity to nurture relationships with the client organization or Prime contractor (if your company is the subcontractor). In addition, it is an opportunity to increase team loyalty within these relationships, collect feedback regarding delivery, and empower project teams to directly address the ongoing and emergent challenges of the customer.
The Option Period Renewal Phase allows a company to review what’s occurred over the history of the contract. As well as ensure both parties are satisfied with the relationship and the services being provided.
While there is generally a high level of certainty that contracts will be renewed through the option periods, oftentimes clients recognize Option Renewal Periods as an opportunity to adjust the scope, schedule, resourcing requirements, security requirements, etc. Option Renewal Periods are a critical time of information and expectation exchanges between companies and their clients.
Approximately one month prior to the renewal execution date is a good time for an internal collaboration between the Contracts Manager, Program Manager, Task Lead, Accounting, and IT departments to evaluate and assess the contract from each perspective. Once that takes place, typically the contractor’s manager will reach out to reassure the client of their full cooperation and commitment to working together towards a smooth transition into the next option period. This is also a good opportunity to request a meeting in person or on the phone to visit with the client and ensure support is tracking according to expectations and that there are “No Surprises” as the next option period begins.
It is important to look ahead and be prepared by asking the client key questions during this planning period. Some general questions to consider are:
- Do you anticipate any difficulties or delays executing the upcoming Option Year?
- Should we expect any changes in the upcoming Option Year contract? If so, what are they?
- If entering the final contract year, discuss plans for eventual contract recompete.
- Are invoices timely and accurate?
- Is our company responsibly controlling costs on this contract?
- Are there any concerns about upcoming funding?
- Are deliverables of high quality, are we exceeding your expectations?
- Do we appropriately manage change on this contract?
- Do we appropriately manage risk on this contract?
- Would you recommend our company as a support provider to your colleagues in other programs?
Renewals are all about perpetuating productive, profitable, and valuable relationships. It is crucial for both parties to be satisfied and interested in continuing a good relationship. The contract should be advantageous for all involved.
Taking advantage of Option Period Renewals is a key Best Practice, and one you really can’t afford not to pursue.