The government made an oral request to ISI to continue performing certain work under its one year with a two year option contract.  Despite no written notice to extend the term of the contract, ISI asserted the oral requests meant the government “constructively exercised” its contract option and hence owned it $324,000, the sum of the amounts set out in the option.  The Board disagreed stating the contract clearly required the government to provide ISI with written notice to extend the term of the contract.  In rejecting the claim, the Board noted the option clause does not obligate the government to exercise an option but gives is “nearly complete” discretion to do so.  It emphasized that the government’s exercise of an option must be “unqualified, absolute, unconditional, unequivocal, unambiguous…and strictly according to the terms of the option.”  Here the terms of the contract unambiguously required the government to provide ISI with a written notice to extend the contract and the Board could find no legal authority to support ISI’s position that the government can exercise an option by doing something other than strictly complying with the terms of the contract (Integrated Systems, Inc. GSBCA No. 16321-COM).

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