diff --git a/sdk_container/src/third_party/coreos-overlay/app-admin/flannel/files/flanneld.service b/sdk_container/src/third_party/coreos-overlay/app-admin/flannel/files/flanneld.service
index 0b0cb4d4e1..0e1dabd6eb 100644
--- a/sdk_container/src/third_party/coreos-overlay/app-admin/flannel/files/flanneld.service
+++ b/sdk_container/src/third_party/coreos-overlay/app-admin/flannel/files/flanneld.service
@@ -25,11 +25,6 @@ ExecStart=/usr/libexec/sdnotify-proxy /run/flannel/sd.sock \
   quay.io/coreos/flannel:${FLANNEL_VER} /opt/bin/flanneld --ip-masq=true
 
 # Update docker options
-ExecStartPost=/bin/bash -c '    \
-	touch /run/docker_opts.env;     \
-	source /run/docker_opts.env;    \
-	source /run/flannel/subnet.env; \
-	DOCKER_OPTS+="--ip-masq=false " \
-	DOCKER_OPTS+=$(test -n "$FLANNEL_SUBNET" && echo "--bip=$FLANNEL_SUBNET "); \
-	DOCKER_OPTS+=$(test -n "$FLANNEL_MTU" && echo "--mtu=$FLANNEL_MTU ");       \
-	echo "DOCKER_OPTS=\\"$DOCKER_OPTS\\"" >/run/docker_opts.env'
+ExecStartPost=/usr/bin/docker run --net=host --rm -v /run:/run \
+  quay.io/coreos/flannel:${FLANNEL_VER} \
+  /opt/bin/mk-docker-opts.sh -d /run/flannel_docker_opts.env -i
diff --git a/sdk_container/src/third_party/coreos-overlay/app-admin/flannel/flannel-0.2.0-r1.ebuild b/sdk_container/src/third_party/coreos-overlay/app-admin/flannel/flannel-0.2.1.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/app-admin/flannel/flannel-0.2.0-r1.ebuild
rename to sdk_container/src/third_party/coreos-overlay/app-admin/flannel/flannel-0.2.1.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/app-emulation/docker/files/docker.service b/sdk_container/src/third_party/coreos-overlay/app-emulation/docker/files/docker.service
index 3cd3201763..f6e233ebbb 100644
--- a/sdk_container/src/third_party/coreos-overlay/app-emulation/docker/files/docker.service
+++ b/sdk_container/src/third_party/coreos-overlay/app-emulation/docker/files/docker.service
@@ -6,10 +6,10 @@ Requires=docker.socket early-docker.target
 
 [Service]
 Environment=TMPDIR=/var/tmp
-EnvironmentFile=-/run/docker_opts.env
+EnvironmentFile=-/run/flannel_docker_opts.env
 LimitNOFILE=1048576
 LimitNPROC=1048576
-ExecStart=/usr/lib/coreos/dockerd --daemon --host=fd:// $DOCKER_OPTS
+ExecStart=/usr/lib/coreos/dockerd --daemon --host=fd:// $DOCKER_OPTS $DOCKER_OPT_BIP $DOCKER_OPT_MTU $DOCKER_OPT_IPMASQ
 
 [Install]
 WantedBy=multi-user.target