Pricing optional tender items means giving each permitted additional purchase a complete scope, price basis and activation rule while preserving the mandatory base offer. The review record separates whether a price must be submitted, how it enters evaluation and what event commits the work. It then tests the no-option case and allowed combinations for dependencies, shared cost, timing and margin. A requested price is not, by itself, a purchase commitment.
The base offer looks inexpensive because necessary setup was moved into an option. Two separately selectable extras each assume the other pays for mobilisation. A price fixed today must remain available long after a subcontractor quote expires. The scoring sheet includes an extension, so the forecast treats it as secured revenue. These mistakes survive a simple base-plus-options total because the buyer may choose a different combination or activate it much later.
The base must deliver the mandatory result without a hidden purchase. Each allowed option selection must have a workable commercial explanation. If the prescribed structure creates an exposure, quantify and approve it or clarify it; do not conceal a condition in a footnote. This guide is a pricing review method. Legal classification, contract interpretation and any proposed change require the appropriate qualified review.
Classification
Optional to buy does not mean optional to price
Read the pricing instructions before interpreting the word “optional”. The buyer may require a binding price for an extra year while reserving the decision to use it. The response obligation and purchase decision are different. Record both next to the buyer’s item identifier. A blank field, zero, “included” and “not offered” communicate different things; choose the representation permitted by the instructions rather than treating them as interchangeable ways to avoid a price.
Also identify whether the item adds to the base or replaces part of it. An additional site differs from an alternative technical solution. In German procurements governed by VgV §35, the buyer specifies the treatment and minimum requirements for Nebenangebote. Do not import the permissions for an alternative offer into an optional-quantity row. Similar everyday labels can describe different legal mechanisms.
Keep the tender’s original terminology in the record. Terms such as option, variant, renewal and conditional phase are not universal synonyms across jurisdictions. The French rules on marchés à tranches provide a specific framework for firm and optional phases with defined scope and pricing. Use that framework only where applicable, not as a label for every commercial add-on. If classification changes what may be submitted, seek qualified review before completing the row.
An unsolicited enhancement needs permission too. It may be useful but have no allowed place in the evaluated offer. Do not add a price column, qualify the mandatory response or assume extra features earn points. Where the tender provides a permitted alternative or supplementary submission route, use it with clear boundaries. Otherwise keep the idea out of the formal offer or ask whether it may be considered through the stated clarification process.
| Item | Question to resolve | Do not assume |
|---|---|---|
| Required base work | Where is the cost of the mandatory result covered? | The buyer will buy an extra to make the base function |
| Additional scope | Is a price required and can it be selected independently? | Optional purchase permits an empty price cell |
| Extension period | What continues, for how long, and after which notice? | Evaluation creates guaranteed renewal revenue |
| Additional quantity | What unit and permitted quantity range apply? | All quantities have the same marginal cost |
| Alternative solution | Is an alternative allowed and what does it replace? | It can be added on top of the base without adjustment |
| New later requirement | Is it covered by an existing contractual mechanism? | Calling it an option authorises extra work |
Three separate rules
Keep submission, scoring and purchase in separate fields
For each option, capture the required answer, the evaluation treatment and the exercise conditions. A single yes/no “included” flag cannot represent all three. The answer might be mandatory, the evaluated quantity might be synthetic, and exercise might remain at the buyer’s discretion. Link the fields to the actual schedule, instructions and contract references. If two documents disagree, retain the discrepancy and resolve it rather than selecting the interpretation that produces the lowest scoreable price.
FAR 52.217-5 is a useful scoped example: where that provision applies, evaluation generally adds option prices to the base, subject to its stated exception, without obliging the US Government to exercise them. Read the provision actually included in the solicitation and any applicable deviation. Its distinction is important; its particular evaluation formula must not be assumed for a different buyer.
The UK guidance on assessing competitive tenders requires assessment against the published methodology. For the bidder, this means reproducing the stated basket, weights and periods rather than substituting a preferred forecast. A 50% evaluation weight is not evidence of a 50% probability of purchase. It may simply be how the buyer compares prices. Keep internal demand scenarios outside the submitted evaluation formula.
Write one short explanation of what becomes committed when the base contract is awarded and what remains conditional. Check whether an option selection occurs at award or later, and whether it can be partial. Do not derive this from a spreadsheet total alone. The option register should tell the commercial reviewer what the customer is allowed to buy, not merely how much every visible cell adds up to.
| Field | Required detail | Source to inspect |
|---|---|---|
| Response obligation | Required price, permitted blank treatment and technical response | Submission instructions |
| Evaluation | Included amount, quantity, weight, period and rounding | Published scoring method and schedule |
| Scope | Added or replaced work, unit, limits and acceptance | Specification and option description |
| Dependencies | Prerequisites, exclusions and shared resources | Contract and feasible delivery design |
| Exercise | Authorised decision, notice form, window and lead time | Applicable option clause |
| Price exposure | Validity, recurring period, allowed adjustment and unrecovered cost | Commercial terms and supporting quotations |
Base integrity
Test the offer with every uncommitted extra removed
Walk through the mandatory service with all options switched off. Can the buyer receive the promised result, meet the stated acceptance criteria and use the service for the base term? Check integration, required training, access, reporting, transition and exit where relevant to this tender. If an “enhanced” component is the only way to meet a mandatory requirement, its function is not optional in your proposed solution. Resolve the scope and price before release.
This does not mean every useful feature must be included. An extra workshop can be a genuine option when the base training already meets the specified requirement. A second location can be additional when the base explicitly covers one. The distinction comes from the buyer’s requirement and the delivery design, not from the salesperson’s preferred packaging. State what changes when the option is selected and what remains fully usable without it.
Run the same test on costs. Initial setup required for the base cannot disappear from the no-option case because finance hopes to recover it in future extras. A deliberate low-margin or loss-making base decision may be commercially approved, but it must be visible and compliant. Do not disguise that decision by presenting uncertain option revenue as if it had already been secured. The approver needs the base economics on their own.
Keep readiness separate from activation. The base might require interfaces or capacity to permit later expansion even if the additional operational service is optional. Price that required readiness in the base model, then identify the additional work caused by exercise. If readiness is not required, do not silently promise it. The record should prevent both missing a mandatory prerequisite and adding an unnecessary base cost through an assumption.
Dependencies and cost
Price the combinations the buyer can actually select
Mark each relationship explicitly: independently selectable, dependent on an earlier item, mutually exclusive, or sharing a resource. Dependencies can be technical, contractual or economic, and they need different treatment. A technical prerequisite missing from the buyer’s permitted combination is a clarification issue, not permission to add an undisclosed purchase condition. Where the buyer requires independent selection, the proposed configuration must work that way or the incompatibility must be resolved.
Build material selection cases from those relationships. For two independent options, test neither, each alone and both together. For a longer list, examine the allowed dependencies, cost thresholds and capacity limits rather than pretending every row can be added freely. Include a case where the cheapest option is selected without the profitable companion. A base total plus the sum of every option can miss precisely the selection that loses money.
In the fictional Fenmere offer, the base price is 120,000 currency units and its complete modelled cost is 102,000. Option A costs 16,000 to deliver and is priced at 24,000; option B costs 11,000 and is priced at 18,000. Either option requires a shared setup costing 4,000, absent from the base because it is unnecessary there. The stipulated schedule permits either option alone or both, with additive prices and no bundle discount. All figures exclude tax and any cost outside this deliberately defined example.
When A alone is selected, its full incremental cost is 20,000, not 18,000. B alone costs 15,000, not 13,000. Splitting shared setup equally across two rows would understate both standalone cases. When both are selected, their combined additional cost is 31,000 because the same setup happens once. Summing the two standalone costs would instead overstate it by 4,000. Keep the shared-cost trigger in the model and do not confuse cost reuse with a contractual discount.
| Selection | Total price | Total modelled cost | Price less cost | Margin on price |
|---|---|---|---|---|
| Base only | 120,000 | 102,000 | 18,000 | 15.00% |
| Base and A | 144,000 | 122,000 | 22,000 | 15.28% |
| Base and B | 138,000 | 117,000 | 21,000 | 15.22% |
| Base, A and B | 162,000 | 133,000 | 29,000 | 17.90% |
| Base and A, with 6,000 additional late remobilisation cost | 144,000 | 128,000 | 16,000 | 11.11% |
Evaluation arithmetic
The evaluated total is a comparison, not the delivery forecast
Suppose the fictional Fenmere buyer explicitly evaluates the base plus all of A’s price and half of B’s price. The evaluated amount is 120,000 + 24,000 + 0.5 × 18,000 = 153,000. The submitted A and B prices remain 24,000 and 18,000. Do not halve the B price cell itself if the scoring formula applies the weight separately, or the weight will be counted twice.
That 153,000 is neither the base commitment nor the total for purchasing both options, which is 162,000 under the stipulated additive rules. It also does not predict cash receipts. Present the evaluation calculation and the selection scenarios as different views of the same submitted rates. If the buyer instead evaluates all options, selected baskets or multiple combinations, reproduce that actual method rather than reusing this illustrative weighting.
Check whether an amount is additional or replaces an existing charge. An alternative support package may replace base support rather than supplement it. Without an explicit replacement treatment, adding both can overstate the price; subtracting the base can understate it. Map the exact instruction to the calculation. An ambiguous formula belongs in a targeted clarification, not in an undocumented adjustment to protected cells.
Follow the published treatment of quantities, recurring periods, one-time fees, taxes and permitted discounts. Do not move unavoidable costs into an unevaluated option to make the core bid appear cheaper. Price the actual work and retain a defensible commercial explanation for differences between items. Whether an allocation creates a compliance or unbalanced-pricing concern depends on the applicable rules and merits qualified review, not an improvised universal threshold.
Activation timing
A later purchase can cost more even when its price stays fixed
Compare the buyer’s latest exercise date with the supporting supplier quote, staff availability and mobilisation lead time. A subcontractor’s short offer validity does not shorten the option period granted to the customer. If the option price must remain fixed, model the exposure after that quote expires. Do not add “subject to requote” unless that condition is permitted. Resolve an unworkable gap before committing the price.
In Fenmere, suppose late selection of A causes an additional 6,000 remobilisation cost and the contract allows no extra charge for it. A’s incremental cost becomes 26,000 against its price of 24,000. It therefore reduces the base contribution by 2,000, even though the total base-plus-A margin remains positive. A profitable combined contract can conceal a loss-making option exercise. Show both the incremental effect and the whole-selection result.
Check the event that makes exercise effective. The US FAR 17.207 rule includes written notice within the contractual period and conditions for exercise. French article R2113-6 links an optional phase to a notified buyer decision and makes specified delay or non-exercise compensation conditional on the contract. These are jurisdiction-specific examples. Use the actual applicable clause; an informal request or a favourable budget discussion is not enough evidence on its own.
For recurring options, define when charging starts and ends. An annual service activated with four months left in the base term may be coterminous, separately annual or treated another way under the contract. Do not assume four-twelfths pricing or a fresh twelve-month obligation. Check partial quantities, notice deadlines, acceptance and any period following base expiry. Record the permitted charge and the corresponding cost, including readiness or standby costs that remain when nothing is activated.
Approval and handover
Approve the selection rules with the prices
Reconcile option identifiers across the technical answer, cost model, buyer schedule and proposed contract. Confirm that each required row is completed and that the response describes the same addition or substitution being priced. Recheck the base after any scope revision. Removing an option from the commercial schedule must not leave its benefits in the mandatory solution narrative. Adding a dependency must not silently change the buyer’s right to choose.
Ask delivery to confirm feasible combinations, mobilisation and recurring obligations. Ask the commercial approver to accept the no-option case, shared-cost treatment, incremental downside and period of price exposure. Keep private supplier economics in the restricted review record. The buyer-facing explanation should give the requested scope, price and permitted conditions, not disclose internal salaries, negotiation positions or unrelated company information.
Close discrepancies with the resulting evidence: a corrected row, an amended requirement, a formal clarification or an explicitly approved compliant treatment. A note saying “commercial to resolve” is still open. If a required option cannot be priced or delivered within the rules, escalate that decision before submission. Do not invent a missing price, rely on future negotiation or treat an internal sign-off as permission to alter procurement terms.
At handover, retain the submitted option register, current prices, exercise windows and any authorised later amendments. Contract management needs to identify the selection, verify the decision and check the remaining conditions before work is started or invoiced. The pricing review does not itself exercise an option. Its purpose is to leave a usable account of what was offered and what must happen before each conditional service becomes a real commitment.
| Check | Evidence of closure | Unresolved consequence |
|---|---|---|
| Base works without extras | Requirements and complete base-cost review | Hidden mandatory purchase |
| Required prices are supplied | Completed rows matching instructions | Incomplete response |
| Permitted combinations work | Dependencies and selection-cost cases | Missing prerequisite or unrecovered setup |
| Scoring is reproduced | Independent calculation using published treatment | Misstated evaluated price |
| Timing exposure is accepted | Exercise dates, quote coverage and downside approval | Loss or delay on a valid exercise |
| Delivery can identify an exercise | Applicable clause and handover record | Work starts without a verified commitment |
What good looks like
Useful outcomes from price optional tender items
- Mandatory work stays visible in the base offer.
- Each option has separate submission, evaluation and activation treatment.
- Allowed combinations include the resources and prerequisites they need.
- Shared costs are recovered consistently without counting them twice.
- The commercial approver sees no-option and late-activation exposure.
Operating model
How to run the work
- 01
Classify the extra
Use the buyer’s actual label and instructions. Distinguish additional work, an extension, extra quantity, an alternative solution and a later change request. Identify whether the bidder may offer it at all.
- 02
Separate the three decisions
Record whether pricing is required, how the item is scored, and who can commit the work under which conditions. Keep unknown treatment visible instead of converting optional purchase into optional response.
- 03
Check the base without extras
Remove all unexercised options from the service configuration and revenue forecast. Confirm that every mandatory result still has its necessary work and cost, including setup and acceptance.
- 04
Price the allowed selections
Map prerequisites, alternatives and shared resources. Calculate each material permitted combination, counting common setup once and preserving any buyer-required standalone prices.
- 05
Test exercise timing
Compare notice windows, supplier-price validity, mobilisation lead time and recurring-charge periods. Calculate delayed or partial activation without inventing compensation, proration or a right to reprice.
- 06
Release an approved option schedule
Reproduce the published evaluation calculation and reconcile it with the submitted files. Obtain delivery and commercial approval, retain unresolved decisions and transfer the option rules to contract management.
Evaluation
Questions that change the decision
- Is the item genuinely additional, or necessary to satisfy the base requirement?
- Must every bidder submit a price even if the buyer may decline the work?
- Which quantities, weights and periods enter the evaluated amount?
- Can the buyer choose this item alone, together with another, or only after a prerequisite?
- What cost remains if the option is never activated or is activated late?
- What contract evidence establishes the right to start and charge?
Failure modes
Where teams lose control
An optional label is used to omit a required price.
A necessary base-service component is sold only as an extra.
Two options each depend on the other’s setup allowance.
An evaluation weight becomes an invented order probability.
Incompatible alternatives are added together as forecast revenue.
Later delivery costs exceed the price held for the buyer.
An informal request is treated as a valid option exercise.
Measurement
Measure the finished job
Measure the completed workflow, including review effort and exceptions. Output volume on its own is not evidence of a better process.
- Options with explicit submission, evaluation and exercise rules
- Mandatory requirements dependent on an unselected extra
- Unpriced prerequisites in permitted option combinations
- Contribution under no-option, individual-option and combined selections
- Exposure between the latest exercise date and supporting supplier commitments
Questions
Common questions
Can I leave an optional item unpriced?
Only if the submission instructions allow it. The buyer may retain a choice about purchase while requiring every bidder to price the item. Check the prescribed treatment of blanks, zero, included charges and unavailable items. Do not infer a response exemption from the word optional.
Can the base offer depend on buying an extra?
Not where the mandatory result must be delivered without that purchase. Test the proposed base configuration against the requirements. If an additional purchase is necessary, resolve the scope and price rather than hiding the dependency. Genuine enhancements may remain optional when the base already meets the requirement.
Does an option’s scoring weight predict whether it will be ordered?
No such probability should be inferred. A weight can be a comparison device. Use it only as instructed in evaluation and retain separate, supported demand scenarios for internal planning. Neither a weighted amount nor the sum of all option prices proves committed revenue.
How should two options share one setup cost?
Test each permitted standalone and combined selection. If either option triggers the whole setup, each standalone cost case needs it. If both use the same setup, count it once in the combined case. Preserve the required customer prices; shared cost does not automatically create a bundle discount.
Can a fixed-price option be repriced when a subcontractor quote expires?
Not merely because the supporting quote expires. The customer’s option terms determine the price obligation. Check the allowed mechanism and seek a permitted clarification or change where needed. Otherwise quantify the uncovered period and obtain a commercial decision before committing the offer.
Should a late-start annual option be charged proportionally?
Only if the applicable charging rule provides that treatment. Check whether the service ends with the base contract, runs for its own year or follows another stated period. Align cost and price dates, and do not invent either proration or a full additional year of customer commitment.
What is the finished output of an option-pricing review?
A reconciled base-and-option record with response requirements, scoring treatment, scope, prerequisites, allowed selections, exercise conditions and prices. It includes internal cost cases and approvals, with a buyer-facing schedule limited to the requested information and a handover explaining how later selections are verified.
Sources
Primary references
- FAR 52.217-5: evaluation of options U.S. Federal Acquisition Regulation
- FAR 17.207: exercise of options U.S. Federal Acquisition Regulation
- Assessing competitive tenders under the Procurement Act UK Cabinet Office
- VgV section 35: alternative offers German Federal Ministry of Justice and Federal Office of Justice
- French procurement code R2113-4 to R2113-6: firm and optional phases Légifrance
About the author
Tony Kim
Tony writes about applied AI, dependable product engineering and the systems that turn complex response work into controlled delivery.
Zelius
Managed tender intelligence and bid execution for teams that want the commercial outcome.
Suppliers, founders and commercial teams pursuing public or private opportunities. Start with the workflow, constraints and evidence you already have.