What other coverage is there, if any, for multiple awards of indefinite quantity contracts for supplies besides FAR 16.504? Can a solicitation for supplies be structured for multiple awards without competing delivery orders? For example, could the requirements be divided 50-50 between two awardees, or say, 60% to the vendor offering the best value and 40% to the vendor offering the second best value, or something like that? Assume that the exceptions at 16.505(b)(2) do not apply. Full and open competition would apply.

By formerfed on Friday, April 26, 2002 - 02:39 pm:

That type of award occurs occassionnly. GSA used it for telecommunication awards where they didn't want to be at the mercy of a single vendor for a long time. The most favorable offer gets 60% of the business whele the second most favorable offer receives the reminder.

By Eric Ottinger on Friday, April 26, 2002 - 04:43 pm:

Anon,

We used to do "Mobilization Base" awards to two contractors at NAVAIR. These were not ID/IQ's.

Unlike the arrangement that Formerfed describes, various percentage splits are possible: 20/80, 30/70, 40/60 or points in-between calculated by interpolation.

Eric

By Vern Edwards on Saturday, April 27, 2002 - 10:35 am:

Anonymous:

You asked three questions:

1. What other coverage is there, if any, for multiple awards of indefinite quantity contracts for supplies besides FAR 16.504?

I do not know of any FAR coverage of multiple award IDIQ contracts for supplies other than what is in FAR Subpart 16.5.

2. Can a solicitation for supplies be structured for multiple awards without competing delivery orders?

FAR 16.505(b)(1) requires that each awardee be given a fair opportunity to be considered for each order, except as provided in FAR § 16.505((b)(2). I have found no other exception to that requirement.

3. For example, could the requirements be divided 50-50 between two awardees, or say, 60% to the vendor offering the best value and 40% to the vendor offering the second best value, or something like that?

I think that the division of requirements among awardees in the way that you have described is expressly prohibited by FAR § 16.505(b)(1)(B), which prohibits the "allocation" of orders among awardees, and I can find no exception to that prohibition. Although FAR does not define "allocation," I presume that it includes the predetermined distribution of requirements among awardees.

However, the prohibition against allocation does not appear to be statutory--at least, I could not find it in the statutes. If it's not statutory, then you might be able to obtain approval to deviate from that rule.

By joel hoffman on Saturday, April 27, 2002 - 12:27 pm:

My first impression of anon's proposed approach was - if one can justify a single award ID/IQ, what prohibits an award of two ID/IQ's with pre-determined share of total orders? I'm not sure that there is a prohibition, as much as it would be difficult to justify how that is most advantageous.

That made sense, until one reads the thrust of 16.504, which is that multiple awards, competing for tasks, are preferred over single awards. Apparently, it would be easier to justify a single award IDIQ than an award to two firms with pre-determined share of work. Directing work noncompetitively, to two firms would make less sense than to award to one or to compete the order. What advantage would there be to set up a scheme with two adwardees, but without competition for orders? Perhaps anonymous could explain why they would use such a scheme? happy sails! joel

By Vern Edwards on Monday, April 29, 2002 - 09:43 am:

Joel:

Keep in mind that Anonymous is buying supplies. One advantage of split IDIQ awards with predetermined allocation of the requirement might be to encourage two firms to set up and maintain production lines or to maintain inventories of supplies for which the government's requirements are indefinite.

A single award would leave the agency dependent upon one contractor, which might be a source of risk. The standard multiple award IDIQ contract with a fair opportunity to be considered might not provide sufficient guarantee of sales to encourage two firms to set up and maintain production lines or inventories.

By curious on Monday, April 29, 2002 - 10:09 am:

Vern, could not the same reasons apply to certain uncommon services? Are there any special issues for such application?

I am not thinking of the services most agencies would require. There are services in somewhat exotic fields of government requirement. One example, off the top of my head, might be neutralization of nerve agents. There are less specialized fields where the need to keep viable skills in business is real.

By joel hoffman on Monday, April 29, 2002 - 11:34 am:

Vern, are you saying that there may be valid reasons to award two contracts with pre-determined allocations (such as your example) but that you think it is "expressly prohibited" by FAR 16.505? Then, seeking approval for deviation would presumably be an option. I forgot to review the paragraph you cited as the obstacle, the other day, when I posted my thoughts. happy sails! joel

(On 27 April, Vern wrote, in part: "I think that the division of requirements among awardees in the way that you have described is expressly prohibited by FAR § 16.505(b)(1)(B), which prohibits the "allocation" of orders among awardees, and I can find no exception to that prohibition. Although FAR does not define "allocation," I presume that it includes the predetermined distribution of requirements among awardees.

However, the prohibition against allocation does not appear to be statutory--at least, I could not find it in the statutes. If it's not statutory, then you might be able to obtain approval to deviate from that rule.")

By Vern Edwards on Monday, April 29, 2002 - 11:43 am:

Joel:

Yes, I can think of valid reasons for doing so, but I also think that expressly prohibits it. I can't think of any other way to interpret the prohibition against "allocation."

curious:

I suppose that if a service required investment in special personnel and/or facilities, you could use the same argument. It seems to me that you would have to do enough market research to show that the standard multiple-award-fair-opportunity scheme would not be sufficient to motivate two responsible contractors to maintain the necessary capability, and that predetermined allocation of requirements is necessary.

By Eric. Ottinger on Monday, April 29, 2002 - 12:28 pm:

I didn’t see anything in the question which would indicate that multiple awards have to be ID/IQ’s.

The authority for “mobilization base” competitions is FAR 6.302-3.

FAR 6.302-3 Industrial mobilization; engineering, developmental, or research capability; or expert services.

…

“(2) Full and open competition need not to be provided for when it is necessary to award the contract to a particular source or sources in order--

(ii) To maintain a facility, producer, manufacturer, or other supplier available for furnishing supplies or services in case of a national emergency or to achieve industrial mobilization,”


In the ‘80s these dual source” arrangements were popular as a way of using competition to lower prices. With the end of the Cold War quantities dropped, and dual source fell out of favor. From what I read in the newspapers, the current administration would like to establish more of these mobilization base, dual-source arrangements.

From what I have observed, I would never award 50/50. To obtain the benefit of competition there should always be a winner and a loser. If I thought the two offers where dead equal, I would flip a coin.

Eric

By Vern Edwards on Monday, April 29, 2002 - 12:35 pm:

Eric:

No one has said that multiple awards have to be IDIQ contracts, but the question was, "What other coverage is there, if any, for multiple awards of indefinite quantity contracts for supplies besides FAR 16.504?"

If Anonymous can award definite-quantity contracts, then the problem goes away.

By Anon on Monday, April 29, 2002 - 12:55 pm:

Eric, good point, back in the mean old days of the cold war and the Soviet incursion into Afghanistan, there were two contractors for stinger SAMs. I forget the two contractors (I think they were Hughs and Raytheon) and the exact allocation of quantities to be ordered from each but were those definite quantity contracts? Seems to me that with the fickle demands on ordinance tied to the level of military activity that an indefinite contract type would have been more appropriate to maintain stockpiles and meet up tempo operations. Then again, the FAR was a different beast as compared to the current version.

By Eric Ottinger on Monday, April 29, 2002 - 01:07 pm:

Vern,

You are right.

Eric

By Anonymous on Monday, April 29, 2002 - 07:25 pm:

Our agency makes multiple IDIQ contracts because one of our customers got burned when a contractor went bankrupt and the customer could not order for almost a year (another management debacle). Now the customer insists that all their IDIQs have at least two contracts. Acquisitions Management has agreed it is OK citing the telecom contracts that have been mentioned. Usually the old incumbent wins along with a second firm.

We then award the larger DO's to the incumbent and the smaller orders to the new contractor in order to see if they can perform. The stated goal is to eventually split the work 50/50 but I do not forsee it really happening.

No split is specified in the contract because of the FAR 16.505 allocation restriction. Out of sight, out of mind is the theory I guess. Therefore I believe the contractors think the orders are to be split 50/50. However, it is usually more like 90/10 to the incumbent. Why the contractors agree to these contracts and don't protest amazes me. I guess we have just been lucky to this point.

By Vern Edwards on Monday, April 29, 2002 - 08:24 pm:

Anonymous:

They don't protest the issuance of orders because they can't. See FAR 16.505(a)(6). It may be that they agree to those contracts because they don't know that your agency is planning to violate FAR 16.505(b)(1).

Although it cannot protest, the new contractor could complain about the 90/10 split to your agency's Task and Delivery Order Ombudsman, or file a claim demanding that you comply with the FAR requirement to give all offerors a fair opportunity to be considered.

By Kennedy How on Tuesday, April 30, 2002 - 12:24 pm:

I've heard of a couple of multiple year contracts that were split between two contractors. I can't recall if they were IDIQ or Requirements-type contracts. I believe the original solicitation specified two awards, with the "winner" getting appx 60% of the quantity, and the other guy 40% of the quantity. The total quantity over the life of the contracts was estimated, based on normal usage levels. Because the were doing reduced stockage levels, a lot of the requirements were direct ship to the requisitioner. I think they wrote some kind of program to keep track of the quantities to each contractor, in order to maintain the 60-40 split.

I would presume that there is some sort of quantity variance so that the split isn't EXACTLY 60-40 (a few extra here or there won't cause a breach).

Kennedy

By joel hoffman on Tuesday, April 30, 2002 - 01:12 pm:

Kennedy, if they have been allocating orders (at least since 1 Jan 1996, my oldest FAR version handy at my desk), they either have a waiver to, or are in apparent violation of FAR § 16.505(b)(1)(B), which prohibits the "allocation" of orders among awardees and requires fair opportunities for each order, with certain limited exceptions. happy sails! joel