What are the advantages and disadvantages of a ID/IQ Contract.

By Eric Ottinger on Friday, February 09, 2001 - 06:04 pm:

Beverly,

Very short answer--

Advantage: You get all of that flexibility between the minimum and the maximum.

Disadvantage: Every Task Order is effectively a separate contract (although I am not sure we all agree on this point.) In any case, each Task Order must be separately priced and separately funded (separately closed out, etc., etc.).
Eric

By Anonymous on Friday, February 09, 2001 - 10:34 pm:

Most COs know that it is impossible to protest a delivery order under an ID/IQ so you can avoid those problems and award to who you want.

You can also avoid the CBD notices and publicity of separate contracts so it is very hard to track what a CO is doing against such a contract!

Thus ID/IQs provide a cover for getting away with things!

By bob antonio on Saturday, February 10, 2001 - 08:32 am:

Beverly:

Here is the citation in the Federal Acquisition Regulation that covers Indefinite Delivery, Indefinite Quantity contracts.

http://www.arnet.gov/far/current/html/16.html#16.504

Part 16.5 covers the various Indefinite-Delivery Contracts and 16.504 specifies the process for the Indefinite-quantity variety.

Here is a brief history of these contracts. Prior to 1994, agencies used these contracts on a fairly regular basis. However, in many cases, only one contractor would be selected from the initial contract competition and all orders were sole-source to the that contractor. On the other hand, quite a few agencies did qualify more than one source under the original procurement and did award their orders on a competitive basis.

In 1994, Congress believed that these contracts were being abused through a lack of competition for individual orders so it included changes in a major contracting law called the Federal Acquisition Streamlining Act of 1994. Here is that original law

http://thomas.loc.gov/cgi-bin/query/z?c103:S.1587.ENR: (To use this address, you need to highlight the full address including the colon and then copy and drop it into the address area of your browser. For some reason, this thing will not include colons.)

The law and its implementing regulation set a legal preference for multiple awards under the original competition to try to ensure competition for the orders; recognize the value of the administrative convenience of orders vs. new procurements and frees these orders from the view of external legal forums (bid protests); allow a streamlined ordering process.

The basic advantages I have found over the years include, (1) the administrative convenience of ordering vs. new procurements in the federal process, (2) an opportunity to pre-qualify sources and work with a limited number of offerors similar to the private world, and (3) developing a nice ordering process using current workload and past performance on the orders.

The things to remember which are not really disadvantages include the following:

1) The contracts to the qualified sources require a minimum quantity of items to be acquired. On numerous occasions, I have found agencies forcing work to a contractor to meet a poorly conceived minimum quantity. So it is necessary to identify a realistic minimum for the entire procurement and then allocating parts of it to the potential sources' contracts.

2) The potential sources selected need to be evaluated to ensure that there is truly more than one competitor available for the orders. Unless there is more than one potential supplier available for the various types of work, you will be in a sole-source position in the award of orders. Things to consider include the makeup of the original statement of work and lines of work to make sure that it is structured to result in competition. The evaluators who evaluate the potential sources and who develop the statements of work under the original procurement need to understand that the purpose of this effort is to qualify more than one potential supplier in the various areas of work.

3) An ordering process needs to be developed to take advantage of the administrative convenience this type of procurement provides. The ordering process should be streamlined and fair. Any burdensome evaluation process should be avoided.

By Kennedy How on Tuesday, February 13, 2001 - 12:21 pm:

Our activity does a lot of IDIQ contracts for hardware items. It was basically deemed an efficient way to buy things that we regularly buy anyway, and have a stable demand for. The downsizing of the Fed Acq force caused us to revisit having to spend an inordinate amount of time buying something every 6 months or so, and suffering the procurement lead times that go along with it.

What we've ended up doing is competetive RFPs for an IDIQ contract, up to 5 years. This also gives contractors a secure feeling for the next 5 years, but, on the flip side, the losers have a while to wait before the next go-around. Once the contract is in place, when the logistics system says we need something, a Delivery Order is issued within a short period of time. Short being way less than the normal procurement lead times.

Our office has automated this to less than 24hrs, not counting the time it takes for a manager to approve the buy. This allows us to reduce lead times to nearly nothing, and to reduce stock levels, because our contracting action is so short.

In the larger scheme of things, our activity has made it a policy to award as many long term contracts as is practicable.

Kennedy

By Anonymous on Friday, February 16, 2001 - 11:37 am:

How about IDIQ type contracts with multiple awards for items where the government maintains strict control over the specifications (for example, purchases using government drawings)?

Possible? Desirable?

By Kennedy How on Tuesday, February 20, 2001 - 12:44 pm:

16 Feb Anon,

That's what our IDIQs are for. We generally buy the "build to print" stuff here. It's a Government-owned TDP, and all the potential offerors submit their proposals against that.

Or, are you talking about some other multiple awards? I know DLA has some big, long term contracts for competetive items; when a requirement comes up, they do a price comparison and award to the low, which might not be the contractor who's holding the IDIQ contract.

Kennedy

By Anonymous on Tuesday, February 20, 2001 - 01:55 pm:

Kennedy,

How many awards do you typically do off of one IDIQ? How do you handle drawing changes in the middle of a delivery? Do you only award each delivery order to one vendor?

By Kennedy How on Thursday, February 22, 2001 - 12:31 pm:

Anon,

Here are the replies:

#1 Generally, our IDIQs are up to 5 years long. We've historically bought on a 6 month reorder cycle, but because of mandates to reduce depot stock, we've gone to something closr to every 3 months. So, you see anywhere from 15-25 orders over the life of the contract.

HOWEVER, for the tires we manage, it's on a 2 month cycle. These contracts are only about 2 yrs long, so we're looking at about 12 D/Os. BUT, we also have a process to generate these orders electronically, but instead of split deliveries, each order is specific to one location. Since we have 3 locations, we're looking at about 36 D/Os.

On top of that, we used to do Direct Vendor Delivery, where we turn an individual requisition into a Delivery Order. In that case, we've seen up to 15,000 (yes, thousand) delivery orders against one 2 year contract.

#2 This can be handled the same way as a Waiver/Deviation, or ECP change. It gets negotiated into the existing spare parts contract, and priced accordingly. We used to do this a lot when we bought Bradley and Abrams spare parts, FMC and GD would submit ECPs which affect spare parts.

#3 This can be done a couple different ways. One order to each vendor, but we know of a number of cases where there was a split award, and so, based on quantity split (60/40 or whatever), you just had to make sure you kept the order quantities close. If your item has a steady demand, and your buy histories are stable, you can alternate awards. We know of a DVD contract like that; split award by percentage. They put in a counter which kept track of how many were awarded to each, and it directed the delivery orders appropriately. I don't think we've ever split a single requirement in two and awarded two delivery orders simultaneously to two different contractors, i.e., we need 100ea, 60/40 split, 60 to contractor A, 40 to contractor B. You could do that, I suppose. Depends on what your activity allows you to do.

Kennedy