ARMED SERVICES BOARD OF CONTRACT APPEALS 
 
OPINION BY ADMINISTRATIVE JUDGE WITWER ON THE PARTIES’  
CROSS-MOTIONS FOR SUMMARY JUDGMENT 
 
 This appeal involves a dispute regarding the validity of the government’s 
extension of services under Federal Acquisition Regulation (FAR) 52.217-8, 
OPTION TO EXTEND SERVICES (NOV 1999).  The government unilaterally 
extended appellant’s services under this clause while appellant was performing the 
final option year of the contract under protest—an option year that the Board later 
adjudicated to be unenforceable.  Fluor Fed. Sols., LLC, ASBCA No. 61353,  
19-1 BCA ¶ 37,237.  The narrow question before the Board in this appeal is whether 
the government can extend a contractor’s performance under FAR 52.217-8 after an 
ineffective attempt to exercise an option year.  Both parties seek summary judgment 
on this question.  As detailed below, we grant summary judgment in favor of appellant 
and sustain the appeal.  The government’s motion is denied. 
Appeal of - )  
 )  
Fluor Federal Solutions, Inc. ) ASBCA No. 62343 
 )  
Under Contract No. N69450-12-D-7582 )  
   
APPEARANCES FOR THE APPELLANT: John S. Pachter, Esq. 
Jennifer A. Mahar, Esq. 
Kathryn T. Muldoon Griffin, Esq.  
  Smith Pachter McWhorter PLC 
  Tysons Corner, VA 
  
APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq. 
    Navy Chief Trial Attorney 
 Russell A. Shultis, Esq. 
Patricia Walter, Esq. 
Julie Ruggieri, Esq. 
Jerry Kim, Esq. 
  Trial Attorneys 

2 
 
 STATEMENT OF FACTS FOR PURPOSES OF THE MOTIONS 
 
The following facts are undisputed or uncontroverted. 
 
The Contract 
 
In December 2011, the Naval Facilities Command Southeast (the Navy or 
government) awarded Flour Federal Solutions, Inc. (Fluor or appellant) contract 
No. N69450-12-D-7582 to provide regional base operations support at four Navy 
installations in the Jacksonville, Florida area (R4, tab 17 at GOV12440, 12443, 
12459).  The contract contemplated a period of performance of a base year, 
four option years, and three award option years, for a period of performance not 
to exceed a total of 96 months (id. at GOV12450).  
 
 Central to the dispute here,  the contract incorporated FAR 52.217-8, OPTION 
TO EXTEND SERVICES (NOV 1999) (R4, tab 17 at GOV12472).  This clause 
allows the government to extend a contractor’s services for a period up to six months.  
The full text of the clause incorporated in the contract at issue in this appeal provides, 
as follows: 
 
The Government may require continued performance of any 
services within the limits and at the rates specified in the 
contract.  These rates may be adjusted only as a result of 
revisions to prevailing labor rates provided by the Secretary 
of Labor.  The option provision may be exercised more than 
once, but the total extension of performance hereunder shall 
not exceed 6 months.  The Contracting Officer may exercise 
the option by written notice to the Contractor within 
30 Calendar days. 
 
(Id.) 
 
 The contract also incorporated, by reference, the standard disputes clause, 
FAR 52.233-1, DISPUTES (JUL 2002), as well as FAR 52.233-1, DISPUTES 
(JUL 2002)—ALTERNATE 1 (DEC 1991) (R4, tab 17 at GOV12468).  Relevant 
here, the alternate disputes clause provides that, in the event of a contractual dispute, 
“[t]he Contractor shall proceed diligently with performance of this contract, 
pending final resolution of any request for relief, claim, appeal, or action arising 
under or relating to the contract, and comply with any decision of the Contracting 
Officer.”  FAR 52.233-1(i). 
 
 Performance of the contract began on July 1, 2012, and the Navy exercised all 
four of its non-award options.  Fluor Fed. Sols., LLC, 19-1 BCA ¶ 37,237 at 181,249.  

3 
 
Option year 4 ran from July 1, 2016 to June 30, 2017.  Id.  The Navy did not exercise 
award option years 1 or 2, and deleted them from the contract in accordance with the 
contract’s award option plan.  Id.   
 
The Navy’s Exercise of Award Option Year 3 and ASBCA No. 61353 
 
 On June 28 , 2017, mere days prior to the expiration of option year 4, 
the Navy issued a unilateral modification purporting to exercise award option year 3 
with a 12-month period of performance from July 1, 2017 through June 30, 2018 
(R4, tab 18.193).  Fluor objected to the modification, contending that the Navy’s 
exercise of award option year 3 was invalid and contrary to the terms of the contract.  
Fluor Fed. Sols., LLC, 19-1 BCA ¶ 37,237 at 181,249-50.  (See also ASUMF ¶ 4a; 
gov’t resp. to ASUMF at ¶ 4a; GSUMF ¶ 12)
1  Fluor informed the Navy that it would 
perform award option year 3 under protest.  (R4, tab 22; ASUMF ¶ 4a; gov’t resp. to 
ASUMF ¶ 4a; GSUMF ¶ 13) 
 
 In July 2017, Fluor submitted a cla im to the contracting officer for its allowable 
costs, plus a reasonable profit, for the work performed or anticipated to be performed 
under award option year 3 (R4, tab 23).  Fluor appealed the deemed denial of its claim 
to the Board, which was docketed as ASBCA No. 61353.  In January 2019, the Board 
granted summary judgment in Fluor’s favor, holding that the Navy’s exercise of award 
option year 3 was unenforceable.  Fluor Fed. Sols., LLC, 19-1 BCA ¶ 37,237 
at 181,253.  Familiarity with our prior decision is presumed. 
 
The Navy’s Exercise of the Option to Extend Services Under FAR 52.217-8 
 
 In April 2018, while Fluor was performing award option year 3 under protest 
and subject to a complete reservation of rights, the Navy informed Fluor of its intent to 
extend Fluor’s services by six months under FAR 52.217-8 (R4, tab 30).  On June 6, 
2018, the Navy issued unilateral Modification No. P00211, which purported to extend 
Fluor’s performance under FAR 52.217-8 for an additional six months through 
December 31, 2018 (R4, tab 18.211 at GOV00025651).  Fluor objected to the Navy’s 
unilateral modification and represented that Fluor’s continued performance of the 
contract was subject to protest (R4, tab 35).   
 
 In October 2019, Fluor submitted a claim to the contracting officer for its 
allowable costs, plus a reasonable profit, for the work performed during the six-month 
extension.  (R4, tab 19 at GOV00025820-23).  Fluor’s October 2019 claim is the 
 
1 “ASUMF” refers to the Appellant’s Statement of Undisputed Material Facts.  
“Gov’t resp. to ASUMF” refers to the Government’s Response to Appellant’s 
Statement of Material Facts.  “GSUMF” refers to the Government’s Statement 
of Undisputed Material Facts. 

4 
 
subject of the dispute here.  In its claim, Fluor contended that the Navy’s unilateral 
extension of Fluor’s services was invalid because the Navy had failed to properly 
exercise award option year 3.  Fluor asserted that the Navy’s failure to properly 
exercise the option year resulted in the expiration of the contract on June 30, 2017.  
 
 In January 2020, Fluor appealed the deemed denial of its claim to the Board, 
which was docketed as ASBCA No. 62343.  In its complaint, Fluor advances three 
theories, in the alternative, to support its claim (compl. at 8-9).  In Count I, Fluor 
alleges that the Navy materially breached the contract in extending the contract.  
In Count II, Fluor alleges that the Navy breached its implied duty of good faith and 
fair dealing in extending the contract.  In Count III, Fluor alleges that the Navy 
constructively changed the contract in extending the contract.  Fluor moves for 
summary judgment on Count I, or in the alternative, Count III (app. memo. at 6).  
The Navy cross-moves for summary judgment.  The matter before us has been fully 
briefed, with both parties submitting opening motions, opposition briefs, replies in 
support of their motions, and sur-replies.
2 
 
DECISION 
 
I. Standards for Summary Judgment 
 
As both parties state in their respective motions, summary judgment is proper 
when there is no genuine dispute as to any material fact, and the moving party is 
entitled to judgment as a matter of law.  Celotex Corp. v. Catrett, 477 U.S. 317,  
322-23 (1986).  Here, the parties have asked us to determine whether or not the 
government’s extension of Fluor’s services under FAR 52.217-8 was effective.  
We have not found any facts material to the resolution of this question to be in 
genuine dispute.  Moreover, the parties assert that the question presented involves a 
matter of contract interpretation.  (App. memo. at 4; gov’t cross-mot. and opp’n at 7).  
Contract interpretation is a matter of law, readily resolved by summary judgment.  
Kellogg Brown & Root Servs., Inc. v. Sec’y of the Army, 973 F.3d 1366, 1370 (Fed. 
 
2 There were six dispositive filings:  (1) Fluor’s Motion for Partial Summary Judgment 
dated April 17, 2020, which included a memorandum in support of the motion 
(“app. memo.”); (2) the Navy’s Cross-Motion and Opposition dated May 18, 
2020 (“gov’t cross-mot. and opp’n”); (3) Fluor’s Reply and Opposition dated 
June 3, 2020 (“app. reply and opp’n”); (4) the Navy’s Reply dated July 2, 2020 
(“gov’t reply”); (5) Fluor’s Sur-reply dated July 13, 2020 (“app. sur-reply”); 
and (6) the Navy’s Sur-reply dated July 27, 2020 (“gov’t sur-reply”).  
With respect to the parties’ sur-replies, the Board grants Fluor’s Motion for 
Leave to File a Sur-reply dated July 13, 2020, and denies the Navy’s Motion to 
Strike Sur-reply filed July 14, 2020.  In reaching the conclusions set forth in our 
decision here, we have considered the sur-replies filed by both parties. 

5 
 
Cir. 2020); Gen. Dynamics – Nat’l Steel and Shipbuilding Co., ASBCA No. 61854, 
21-1 BCA ¶ 37,793 at 183,477.  Because the Navy seeks to enforce the terms of the 
option, the Navy has the burden of proving that the option was properly exercised.  
Griffin Servs., Inc., ASBCA Nos. 52280, 52281, 02-2 BCA ¶ 31,943 at 157,803.   
 
II. Contentions of the Parties 
 
 Fluor argues that, because the Board found the Navy’s exercise of award option 
year 3 to be unenforceable, the contract expired by operation of law on June 30, 2017 
(app. memo. at 5).  Once the contract ended, Fluor maintains that the Navy no longer 
had an option under FAR 52.217-8 to require Flour to continue to provide services 
(id. at 4-5).  Accordingly, the Navy’s subsequent issuance of Modification No. P00211 
on June 6, 2018—nearly 12 months after the contract ended—purporting to extend 
Fluor’s services for an additional six months was invalid and unenforceable (id. at 5). 
 
 The Navy responds that, notwithstanding its invalid exercise of the award 
option year, it retained the right to extend Fluor’s performance under FAR 52.217-8.  
Citing the decisions of the United States Court of Appeals for the Federal Circuit in 
Arko Executive Services, Inc. v. United States, 553 F.3d 1375 (Fed. Cir. 2009), and 
Alliant Techsystems, Inc. v. United States, 178 F.3d 1260 (Fed. Cir. 1999), the Navy 
claims that the government may extend a contractor’s performance beyond the 
expiration of the contract provided it does so while the contractor’s performance is 
continuing.  The Navy reasons that, because Fluor was performing at the time the 
Navy issued the modification (albeit under protest and pursuant to an award option 
that the Board determined to be unenforceable), the Navy possessed the authority to 
extend Fluor’s services under FAR 52.217-8.  As an additional matter, the Navy also 
argues that, not only did it possess the authority to extend Fluor’s performance under 
FAR 52.217-8, it exercised that authority properly by providing timely notice to Fluor 
and exercising the option in accordance with the terms of the clause.  For the reasons 
below, we grant Fluor’s motion and deny the Navy’s motion. 
 
III. The Navy’s Extension of Services Under FAR 52.217-8 Was Invalid 
 
The question presented by the parties is straightforward:  Whether the 
government can extend a contractor’s performance under FAR 52.217-8 after an 
ineffective attempt to exercise an option year.  The answer is also straightforward:  No.  
As a result of the government’s failure to properly exercise the option year, the contract 
expired.  The language of FAR 52.217-8 incorporated here does not provide a 
mechanism to resurrect the parties’ obligations under an expired contract. 
 
 In Fluor Federal Solutions, LLC , 19-1 BCA ¶ 37,237, we held that the Navy’s 
exercise of the award option year was unenforceable.  Id. at 181,253.  The effect of the 
Board’s decision is that the contract expired by operation of law on June 30, 2017, 

6 
 
i.e., the date before the invalid option period began.  See e.g., White Sands Constr., 
Inc., ASBCA Nos. 51875, 54029, 04-1 BCA ¶ 32,598 at 161,308 (holding that, when 
the government fails to properly exercise an option, the contract comes to an end the 
day prior to the start of the invalid option period); Grumman Technical Servs., Inc., 
ASBCA No. 46040, 95-2 BCA ¶ 27,918 at 139,317 (same); Lear Siegler Inc., Mgmt. 
Servs. Div., ASBCA No. 30224, 86-3 BCA ¶ 19,155 at 96,795 (same).  See also 
Alliant Techsystems, Inc. v. United States, 178 F.3d 1260, 1275 (Fed. Cir. 1999) 
(“As a result of the [government’s] failure to exercise the option in accordance with 
its terms[,] no bilateral contract for the purchase of property came into existence”) 
(quoting United States v. T.W. Corder, Inc., 208 F.2d 411, 413 (9th Cir. 1953)); 
id. (citing Uniq Computer Corp. ex rel. United States Leasing Corp. v. United States,  
20 Cl. Ct. 222, 231-32 (1990); 3 E
RIC MILLS HOLMES, CORBIN ON CONTRACTS § 11.8 
(1996)).  Accordingly, contrary to the Navy’s assertion that its invalid exercise of 
the award option year “did not sever the parties’ contractual relationship” (gov’t  
cross-mot. and opp’n at 18), that is exactly the result.  Once the contract expired, 
any subsequent attempt by the Navy to extend Fluor’s services under FAR 52.217-8 
was legally ineffective.3   
 
We faced a similar situation in Griffin Servs., Inc., 02-2 BCA ¶ 31,943.  
In Griffin, the government extended the contract three times under FAR 52.217-8, 
for a total of six months.  The contractor received notice of the first two extensions 
before the pertinent performance period expired.  With respect to the third extension, 
however, the government failed to show that the contractor was timely notified of the 
extension.  Rather, notice of the third option was received after the contract expired.  
The contractor performed the third option and filed a claim for constructive change.  
In our decision, the Board concluded that the government properly exercised the first 
two options.  Regarding the third option, the Board found that the option was not 
validly exercised because it was received by the contractor after the contract expired.  
Griffin Servs., Inc., 02-2 BCA ¶ 31,943 at 157,805.  We held that the government must 
“deliver the written exercise of the option to the appellant before expiration of the 
option period, in order for the option to be timely exercised.”  Id. (emphasis added).  
Like the government in Griffin, the Navy did not exercise the option to extend Fluor’s 
services before the expiration of the contract period.  Accordingly, like in Griffin, we 
conclude that the government’s failure to exercise the option to extend services under 
FAR 52.217-8 prior to the expiration of the contract renders the option ineffective.   
 
 
3 Although the Navy disagrees with the contention that the contract expired on 
June 30, 2017, contending instead that the contract did not expire until a year 
later on June 30, 2018 (gov’t resp. to ASUMF ¶¶ 5-6; gov’t cross-mot. and 
opp’n at 11), the Navy’s disagreement does not establish the existence of 
disputed facts.  Rather, the effect of the government’s failure to properly 
exercise an option is a question of law, not a triable issue of fact. 

7 
 
The Board’s decisions in White Sands Constr., Inc., 04-1 BCA ¶ 32,598, 
and Grumman Technical Servs., Inc., 95-2 BCA ¶ 27,918, are also instructive.  
In White Sands, the contract contemplated a base year and four option years.  
The government exercised all four option years under FAR 52.217-9, OPTION TO 
EXTEND THE TERM OF THE CONTRACT (MAR 1989).  The contractor alleged 
that the government improperly exercised the second option year resulting in the 
expiration of the contract and the invalidation of all subsequent option years.  
The Board agreed, holding that the “exercise of Option II was therefore ineffective, 
the contract came to an end . . . and there were no options to exercise in [subsequent 
years].”  White Sands Constr., Inc., 04-1 BCA ¶ 32,598 at 161,308.  The Board 
concluded that the contractor was entitled to an equitable adjustment for the invalid 
option years.   
 
Likewise, in Grumman, the contract contemplated a base year and four options 
years.  The government exercised the first two option years under FAR 52.217-9.  
The contractor alleged that the government improperly exercised the first option year.  
The Board agreed and summarized the impact of such a finding, as follows:  “Since 
the [first] option exercise was invalid, the contract came to an end . . . and there 
remained no option to exercise[.]”  Grumman Technical Servs., Inc., 95-2 BCA 
¶ 27,918 at 139,317.  The Board further explained that the government’s “purported 
exercise of [the second option year] was, therefore, of no effect.”  Id.  The Board’s 
decisions in White Sands and Grumman clearly articulate the legal result of an 
invalidly exercised option, namely that the contract expires and that any subsequently 
exercised options are of “no effect.”
4   
 
In sum, when the contract here expired, the Navy’s right to exercise the option 
to extend services under FAR 52.217-8 expired with it.  Consequently, the Navy’s 
issuance of Modification No. P00211, nearly 12 months after the expiration of the 
contract, is invalid and Fluor is entitled to an equitable adjustment for the six-month 
extension of its services under a theory of constructive change.
5  For the above 
reasons, we grant summary judgment in Fluor’s favor on Count III of the complaint. 
 
4 The Navy seeks to distinguish Grumman (and presumably White Sands too) by 
noting that it involved the exercise of successive option years under 
FAR 52.217-9, not the exercise of the option to extend services under 
FAR 52.217-8.  (Gov’t cross-mot. and opp’n at 9-10, 15; gov’t reply at 7-8)  
We do not find the distinction to be relevant under the circumstances presented 
here and the Navy offers no rationale for us to treat the two FAR clauses 
differently.  Once a contract expires, the government’s ability to extend the 
contractor’s performance—through either FAR clause—expires as well. 
5 Where a contractor continues performance of a contract at the direction of the 
government following the government’s improper exercise of an option, 
the contractor is entitled to reimbursement of its costs and reasonable profit 

8 
 
IV. The Federal Circuit’s Decisions Cited by The Navy Do Not Support the Navy’s 
Position. 
 
In an attempt to bolster its position that it retained the right to extend Fluor’s 
services after the expiration of the contract, the Navy cites the Federal Circuit’s 
decisions in Arko Executive Services, Inc., 553 F.3d 1375, and Alliant Techsystems, 
Inc., 178 F.3d 1260.  The Navy’s reliance on these decisions is misplaced. 
 
A. The Federal Circuit’s Decision in Arko Addresses Legal Issues Not 
Germane to This Appeal. 
 
The Federal Circuit’s decision in Arko involved the interplay between 
FAR 52.217-8 and FAR 52.217-9.  The Federal Circuit held that the government may 
properly invoke FAR 52.217-8 to extend services beyond the maximum contract term 
contemplated in FAR 52.217-9.  Arko, 553 F.3d at 1381.   
 
The contract in Arko contemplated a base year and four option years, 
which Arko fully performed.  Id. at 1376-77.  Before the end of the last option year, 
the government extended Arko’s performance under FAR 52.217-8.  Id. at 1377, 1379.  
After completing the contract under protest, Arko submitted a claim and later sued in 
the United States Court of Federal Claims, asserting that the government could not use 
FAR 52.217-8 to extend performance beyond the maximum contract term specified in 
FAR 52.217-9, which in this case was five years.  Id.   
 
On appeal, the Federal Circuit affirmed the trial court’s grant of summary 
judgment for the government.  The Court rejected Arko’s argument that FAR 52.217-8 
is limited by the language in FAR 52.217-9 identifying the maximum length of the 
contract.  Id. at 1381 (“We hold that the limitation of the contract duration to five years 
by [FAR 52.217-9] does not preclude extensions beyond five years pursuant to FAR 
52.217-8”).  Instead, the contract duration established in FAR 52.217-9 applies only to 
extensions of the base period by options exercised under that clause.  Id. at 1380.  
In short, the Court held that the government may use FAR 52.217-8 to extend 
performance beyond the term of the contract. 
 
 
under a theory of constructive change.  See e.g., Lockheed Martin IR Imaging 
Sys. Inc. v. West, 108 F.3d 319, 320 (Fed. Cir. 1997); Varo, Inc., ASBCA 
No. 47945, 96-1 BCA ¶ 28,161; United Food Servs., Inc., ASBCA No. 43711, 
93-1 BCA ¶ 25,462; Holly Corp., ASBCA No. 24975, 83-1 BCA ¶ 16,327; 
Gen. Dynamics Corp., ASBCA No. 20882, 77-1 BCA ¶ 12,504; TECOM, Inc., 
IBCA No. 2970 a-1, 95-2 BCA ¶ 27,607.  But see White Sands Constr., Inc., 
04-1 BCA ¶ 32,598 (sustaining claim for breach of contract where government 
invalidly exercised option). 

9 
 
Relying upon Arko, the Navy argues, in the matter pending before us, that “had 
the Navy properly exercised each option and extended the contract term for the full 
96 months [permitted under the contract], the Navy could have extended Fluor’s 
performance [through FAR 52.217-8] for an additional 6 months and received Fluor’s 
services for 102 months, notwithstanding the undisputed 96-month limitation option 
years” (gov’t cross-mot. and opp’n at 13).  The hypothetical situation laid out by the 
Navy, however, is not what we are presented with here.   
 
Clearly, as the Federal Circuit established in Arko, the government, under 
FAR 52.217-8, may extend performance beyond the contract term.  That, however, is 
not the question presented here.
6  Fluor does not argue that the Navy’s use of FAR 
52.217-8 was improper because it extended performance beyond the originally 
contemplated contract term (i.e., 96 months) or beyond the expiration of the contract 
(i.e., June 30, 2017) (app. reply and opp’n at 14).
7  Had Fluor raised such an argument, 
the Federal Circuit’s decision in Arko would be relevant.   
 
Instead, as explained above, Fluor contends (and we agree) that the government 
may not invoke FAR 52.217-8 after the contract has expired.  The Federal Circuit in 
Arko did not address this question (and did not need to) because the Court determined 
that the government timely exercised its contractual right before the expiration of the 
contract.  Arko, 553 F.3d at 1377-79.  Thus, contrary to the Navy’s contention (gov’t 
cross-mot. and opp’n at 15), the Federal Circuit’s decision in Arko does not support the 
premise that the government may exercise the option to extend after the expiration of 
the contract.  
 
In this regard, the Navy seems to conflate two concepts:  (1) the contractor’s 
performance of the option and (2) the government’s exercise of option.  Although the 
government may require the contractor to continue to perform after the expiration of 
the contract term, the government may not invoke that right after the expiration of the 
contract term.  Put another way, the performance itself may (and often does) occur 
after the expiration of the contract; the government’s exercise of its contractual right to 
require continued performance, however, may not occur after the expiration of the 
contract.  Here, the Navy’s exercise of the option to extend Fluor’s services was 
ineffective because it occurred nearly 12 months after the expiration of the contract. 
 
6 As an aside, we also note that the facts in the Navy’s hypothetical differ from those 
presented in this case, i.e., the Navy’s hypothetical presumes that the Navy 
properly exercised each option. 
7 Indeed, Fluor acknowledges that the Navy could have extended Fluor’s services 
beyond the contract term had it elected to do so before the expiration of contract 
on June 30, 2017 (app. reply and opp’n at 14).  We agree, provided, of course, 
that the Navy exercised its authority in strict compliance with the option 
provision. 

10 
 
B. The Federal Circuit’s Decision in Alliant Does Not Support the Navy’s 
Theory That Continued Performance Under Protest Preserves the 
Government’s Right to Extend Services. 
 
The Navy’s reliance on the Federal Circuit’s decision in Alliant Techsystems, 
Inc., 178 F.3d 1260, is equally unavailing.  According to the Navy, the Alliant decision 
“teaches that the contract in this case continued in force notwithstanding the Navy’s 
unenforceable exercise of the Award Option” (gov’t cross-mot. and opp’n at 11).  
The Navy’s theory is that the government may extend a contractor’s services under 
FAR 52.217-8 “provided it does while the contractor’s performance is continuing,” 
even if such performance is under protest and pursuant to the disputes clause of the 
contract (id. at 1).  Per the Navy, the only relevant inquiry is whether the contractor is 
performing at the time the government exercises the option (id. at 11).   
 
 Applying this theory to the subject appeal, the Navy contends that, as  a result of 
Fluor’s continued performance of the award option year (which the Navy concedes 
was required pursuant to the disputes clause), the Navy retained the authority to extend 
such performance under FAR 52.217-8.  (Id. 11-12, 18-19; gov’t reply at 5-6)  In other 
words, it was Fluor’s performance under protest that preserved the Navy’s ability to 
exercise the option to extend under FAR 52.217-8.  Nothing in the Federal Circuit’s 
decision in Alliant supports this theory.   
 
The contract in Alliant involved the demilitarization of bombs, and included 
an option clause that permitted the government to increase the quantity of bombs 
per month to be demilitarized.  Alliant Techsystems, Inc., 178 F.3d at 1263.  
The government attempted to exercise the option to increase the quantity of bombs, 
but did so at a different rate than specified in the contract.  Id. at 1264.  Alliant took 
the position that it was not required to perform because (a) the attempted exercise was 
untimely and (b) the attempted exercise was at a quantity not contemplated by the 
option clause.  Id.  Alliant sought relief from the Court of Federal Claims, which held 
that the government’s exercise of the option was valid and that Aliant was required to 
perform, albeit at a lower rate per month than ordered by the government.  Id.  Alliant 
refused to perform the option quantities as revised by the trial court, and the 
government terminated Alliant’s contract for default.  Id. at 1263.   
 
On appeal, the Federal Circuit reversed the Court of Federal Claims’ finding 
that the exercise of the option had been valid, but held that Alliant was, nevertheless, 
obliged to continue performing under the disputes clause of the contract until the 
dispute was resolved.  Id. at 1277.  Although the Court agreed with the government 
that the option was timely exercised, it agreed with Alliant that the delivery rate was 
inconsistent with the option’s stated terms, thus rendering the attempted exercise of the 
option invalid.  Id. at 1263, 1275.  The Federal Circuit explained that the “consequences 
of such a deviation from the proper terms of the option exercise are that the option 

11 
 
clause imposed no obligations on Alliant and that its refusal to perform the option did 
not constitute a breach of the option clause.”  Id. at 1275.  
 
Although the Federal Circuit found the government’s exercise of the option to 
be invalid, the Court held that Alliant was obligated to perform under the disputes 
clause of the contract.  Id. at 1263.  In this regard, the Court stated that a contractor’s 
“obligations under the disputes clause are independent of its obligations under the 
option clause.”  Id. at 1277.  The court concluded that the increased quantity of bombs 
requested by the government was not a “drastic modification” such that it would be 
construed as a cardinal change.  Id.  Thus, Alliant was not excused from performance.  
The Federal Circuit explained, however, that, “[i]f the [trial] court had accepted 
Alliant’s argument on the merits [i.e., found the option exercise invalid], it would have 
held that Alliant had no obligation to perform under the option clause.”  Id. at 1271.  
“That ruling, unless stayed, would also have preempted any disputes clause 
performance obligations.”  Id. 
 
In sum, Alliant stands for two well-established principles.  First, where the 
government fails to properly exercise an option, the contractor has no contractual 
obligations under the option clause beyond those of the original contract.  Id. at 1275.  
Second, where the government fails to properly exercise an option, the disputes clause 
may obligate a contractor to continue performance “until and unless it obtain[s] a court 
[or Board] order excusing it from its performance obligation.”  Id. at 1277.  The 
Federal Circuit’s decision in Alliant, therefore, provides ample validation for our 
decisions in White Sands and Grumman (discussed above), in which we concluded that 
the government’s failure to properly exercise an option results in the expiration of the 
contract as a matter of law and renders any subsequently exercised options invalid 
notwithstanding the contractor’s continued performance under protest.   
 
Contrary to the Navy’s allegations, a contractor’s continued performance under 
protest and pursuant to the disputes clause does not give the government carte blanche 
to extend such performance.  In fact, if we were to adopt the theory advanced by the 
Navy, i.e., that a contractor’s performance under protest preserves the government’s 
right to extend such performance, it would defeat the salutary purpose of the disputes 
clause.  As has been long-recognized, the disputes clause “protects an important 
interest of the Government by permitting it to continue to receive needed supplies on 
schedule, despite disputes which might arise during performance.”  Dynamics Corp. of 
Am. v. United States, 389 F.2d 424, 432-33 (1968) (footnote omitted).  This important 
governmental interest would be thwarted were we to rule that a contractor must refuse 
to perform an option year it believes to be invalid in order to prevent the government 
from further extending such performance under FAR 52.217-8. 
 
In conclusion, neither Arko nor Alliant supports the Navy’s arguments in this 
matter. 

12 
 
V. A Final Matter:  The Strict Compliance Rule 
 
 To properly exercise an option, the government’s acceptance of that offer must 
be unconditional and in exact accord with the terms of the contract being renewed. 
New Eng. Tank Indus. of N.H., Inc. v. United States, 861 F.2d 685, 687 (Fed. Cir. 
1988); 4737 Conner Co. v. United States, 65 F.App’x 274, 277 (Fed. Cir. 2003); 
Griffin Servs., Inc., 02-2 BCA ¶ 31,943 at 157,803; Contel Page Servs., Inc., ASBCA 
No. 32100, 87-1 BCA ¶ 19,540 at 98,734; Holly Corp., 83-1 BCA ¶ 16,327 at 81,164.  
See also Civic Plaza Nat’l Bank v. First Nat’l Bank in Dallas, 401 F.2d 193,  
198 (8th Cir. 1968).  This requirement is strictly construed.  Gen. Dynamics Corp., 
ASBCA No. 20881, 77-1 BCA ¶ 12,504 at 60,622 (citations omitted).  Any attempt by 
the government offeree to alter the conditions of the option will render the exercise 
ineffective.  Griffin Servs., Inc., 02-2 BCA ¶ 31,943 at 157,803 (citing Alliant 
Techsystems, Inc., 178 F.3d at 1275); Grumman Technical Servs., Inc., 95-2 BCA 
¶ 27,918 at 139,316 (citing Chem. Tech. Inc., 80-2 BCA ¶ 14,728); Contel Page Servs., 
Inc., 87-1 BCA ¶ 19,540 at 98,734.  As the Navy recognizes (gov’t cross-mot. and 
opp’n at 16), the government has the burden to prove that it exercised the option in 
strict compliance with the option provision.  Griffin Servs., Inc., 02-2 BCA ¶ 31,943 
at 157,803. 
 
 The Navy argues in its cross-motion for summary judgment that, not only did it 
retain the authority to extend Fluor’s performance under FAR 52.217-8 after the 
contract expired, but also that it exercised that authority in strict compliance with the 
terms of the option clause (gov’t cross-mot. and opp’n at 15-18).  Fluor counters that, 
even assuming for the sake of argument that the Navy’s rights under FAR 52.217-8 
did not cease when the contract expired, the Navy’s purported extension of services 
was not timely exercised and was not within the limits and rates specified in the 
contract (app. reply and opp’n at 2).  The parties devoted a significant amount of their 
briefing to these issues.  In view of our disposition above, however, we need not 
address these arguments. 

13 
 
CONCLUSION 
 
 Appellant’s motion for partial summary judgment as to Count III of the 
complaint is granted.  The government’s cross-motion for summary judgment is  
denied.  The appeal is sustained and remanded to the parties to negotiate quantum in 
accordance with this decision. 
 
 Dated:  August 8, 2022 
 
 
 
 
 
 
 
 
 
 
 
ELIZABETH WITWER 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
 
 
 
RICHARD SHACKLEFORD 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
 I concur 
 
 
 
 J. REID PROUTY 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
 
 
 I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA No. 62343,
 Appeal of Fluor 
Federal Solutions, Inc., rendered in conformance with the Board’s Charter. 
 
 Dated:  August 9, 2022 
 
 
 
 
 
 
 
 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals