What Is an Option Year?
An option year is an extra year of work the government can add to a contract at its choice. Many service contracts have a base year plus option years.
Option year in plain English
An option is the government's one-sided right to extend the contract or buy more. The agency decides each time whether to exercise the next option, so that revenue isn't guaranteed.
Price each option year separately when the solicitation asks you to, and account for rising costs.
A reported award amount can include options that haven't been exercised yet, so the yearly revenue may be lower than the total suggests.
Related terms
- Period of performance: The period of performance is the time during which a contractor must do the work under a contract, often a base period plus option periods.
- Recompete: A recompete is a new competition for work already under contract, held as the current contract ends. It's your chance to take work from the incumbent.
- IDIQ contract: An IDIQ (indefinite delivery, indefinite quantity) contract sets a minimum and maximum, and the government places orders as needs arise in a set period.
Put it to work
Looking for another term? Browse the full glossary or the government contracting glossary guide.