The Department of Defense is facing a situation where industrial capacity is limiting DOD’s ability to support both the needs of US military services and those of our allies who use the same equipment. The Government has a clause at its disposal as one tool to respond to these growing demands. Its DFARS Clause 252.217-7001 Surge Option. The use of this clause is to support domestic requirements. Its primary goal is to allow for ordering additional supplies without going through the whole acquisition process.
SURGE OPTION (DEC 2018)
(a) General. The Government has the option to—
(1) Increase the quantity of supplies or services called for under this contract by no more than ___ percent or _______________ [insert quantity and description of services or supplies to be increased]; and/or
(2) Accelerate the rate of delivery called for under this contract, at a price or cost established before contract award or to be established by negotiation as provided in this clause.
This clause works because the additional quantities are part of the original proposal, and the price is established at the time of contract award. This clause allows the agency to exercise this option before the completion of the base contract. This allows the ordering agency to meet possible surges in the consumption of supplies or services due to various factors.
This is not a replacement for poor planning on the part of the requirements folks but a tool to respond to what may be perceived as a potential demand surge. I used this clause for long lead-time items where the current funding level precluded ordering enough of a part to meet demand. If additional funding became available, the contract could quickly order more items.
It is a tricky clause to use due to how the company’s production planning works. To be genuinely effective, the company would have to flow down a similar surge provision in their subcontracts. As a result, services would function the same way, allowing agencies to add additional personnel to perform support services.
With the increased pressure on the industrial base because of our commitments to our allies, the use of this clause could see more frequent use.
