ANNUAL-BUY

MULTI-YEAR

Initial Contract

One contract for the FY 1 requirement of 20 flying saucers

One multi-year contract for all 100 flying saucers

Congressional Commitment

To FY 1 buy of 20 flying saucers

To total buy of 100 flying saucers from FY 1 through FY 5

Treatment of out- year requirements in the initial contract

Option for each fiscal year's requirements

Separate line item for each fiscal year's requirements

Required to "activate" contract commitment to buy the next year's requirements*

1) Same quantity authorization as was provided for in FY 2 option

2) Annual appropriation by Congress adequate to fund FY 2 of the option

3) Contracting Officer determines that exercising the option is the best method of fulfilling the Government's need, price and other factors considered

Annual appropriation by Congress adequate to fund FY 2 of the multi-year contract

Contractual action required to "activate" commitment to buy the next year's requirements*

Contract modification to exercise FY 2 option

Contract modification obligating funds for FY 2 requirements

* Note that these differences are relevant to each of the out-years: FY 2, FY 3, FY 4, and FY 5

Figure 2