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Indefinite Delivery, Indefinite Quantity (IDIQ) Task Order Contracts

Convenient Tool for Flexible Contracting

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingWhat is it?

• An IDIQ “master” or “umbrella” contract provides for the procurement of an indefinite quantity of supplies and/or services

– Facilitates the order of goods or services defined by a broad SOW– Throughout a specified period of performance– Allowing a customer to place Task Orders for individual requirements– Quantity limits may be stated as number of units or as dollar values– Customer is required to order and Seller required to furnish a minimum quantity– Contract may also specify maximum or minimum quantities – IDIQ Contract does NOT authorize work– Work authorized by Task Orders

• Authorized by FAR 16.504 and as adapted by commercial customers

• FAR requires customer to buy a Guaranteed Minimum Amount under the contract but leave actual requirements to later determination

– Guaranteed Minimum is typically low– Commitment of funds (including guaranteed minimum) does not occur until actual

orders are placed

• Can be single award or multiple awards

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Indefinite Delivery, Indefinite Quantity (IDIQ) IDIQ Master Contract & Task Orders

IDIQ Master Contract with Multiple Task Orders

TaskOrder

2

TaskOrder

1

TaskOrder

3

IDIQMaster

Contract

TaskOrder

4Etc.

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingDiverse Applications

• FFP Commercial Production – Aircraft & Space– Machine & Sheet Metal parts– Subassembly & Assembly– Tooling– Multiple Customers

• Boeing• MDC LB & St. Louis• General Dynamics• Rohr Industries

• CPFF Studies w/ USAF, AFRL• T&M Studies w/ USAF, AFRL• CPFF/CPIF Software Development for US Navy• CPFF Engineering Development for Commercial & US Govt

customers• Engineering Service Contracts to address Obsolescence & Product

Improvements• Site Construction & Maintenance• GSA Schedule Contracts

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingMaster IDIQ Contract - BASICS

•Many similarities to Basic Ordering Agreements (BOA)

•“D” for IDIQ Delivery Order Contract–F33615-11-D-2014–“C” for Contract & “G” for BOA

•IDIQ Contract is a “contract to contract”, containing–Cover Page (like a SF 26)–Contract Schedule including CLIN’s, Special & General Provisions, SOW, etc.–SOW with high level description of goods or services to be procured by TO’s–CDRL that serves as “shopping list” for Delivery/Task Orders–GFE, GFI, Patent & Data rights, fee, Invoicing, shipping, security–Minimum & Maximum Quantities (usually expressed in dollars)

•IDIQ contract does not authorize any work or expenditures–Contains “Ceiling Price(s)” limiting total of Task Orders–Minimum Quantity that must be procured under IDIQ contract–Task Orders authorize expenditures to accomplish specific SOW’s

•Contract Value•Funding

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingTask/Delivery Order - BASICS

• Task Orders authorize work– Cover page (like SF1155 for TO award, then SF 30 for mods)– Employs IDIQ Contract Ts&Cs by referencing contract number– Specific SOW & CDRL requirements– Contract Value– Contract Funding– TO values “count” towards IDIQ Minimum & Ceiling Price

• Task Orders each managed like a stand-alone contract– TO Unique Changes, Value & Funding, including Proposals & Mods– Unique SOW & CDRL requirements– Separate Accounting– Unique ACRN’s– Each Task Order is Closed individually

• Types of Work authorized may differ– Completion– Level-of-Effort”

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingRFP’s

• RFP for IDIQ contract– Very Comprehensive– Pro-forma contract schedule– Terms including Invoicing, Packaging & Marking, Inspection &

Acceptance, Ordering, shipping, etc. – Detailed Special & General provisions– Section L, “Instructions to Offeror”– Section M, “Evaluation Factors”

• RFP for Task Orders– Very Brief– Cover Letter referencing IDIQ contract invoking schedule, including

associated terms– SOW– CDRL– Terms applicable to Task Orders are in IDIQ contract– Proposal TAT often short (5 to 15 days not uncommon)– Proposal Certification may be required

– FAR 16.501-2(c) allows orders to be any type under Part 16

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingADVANTAGES & DISADVANTAGES

• Advantages– It is a binding contract– Expedites ordering of services & goods

• Reduces Procurement Lead Times• Simplifies Ordering process

– Establishes negotiated contract terms – Up-front selection of qualified bidders– Long term Commitments on rates (if T&M) or fee arrangements

(CPIF/CPAF)– Assist with medium to long range resource planning– May establish option terms under the contract– May award multiple contracts for the same service, but the minimum

requirement must be met with each award– No dollar limit on individual orders (TO’s may be small or large)– Simplified administration – Procuring agencies can MPR money to procure goods or services

• GSA schedule contracts being used frequently• NASA MPR money to USAF to authorize Contractors to perform studies • Outsourcing Procurement

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Indefinite Delivery, Indefinite Quantity (IDIQ) Contracting

ADVANTAGES & DISADVANTAGES

• Disadvantages– IDIQ (Master) Contract Proposal Prep costs can be considerable– Minimum Order Quantity can be very small

• May have stated quantity limits in units or dollar values• Example: $100K minimum & $100M Maximum/Ceiling

– Limited to a fixed period• Ordering Period• Period of Performance for completion of all Task Orders

– May require greater administration, depending upon terms– Limited Competition– Outsourcing Procurement

• Use of MPR to Govt Agency w/ IDIQ contract to procure• Loss of Direct Control over Contractor• Some increased costs for Procuring Agency’s Admin & Mgmt Costs

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingTask/Delivery Orders

• Multiple Awards– Preferred as a matter of policy: FAR 16.504(c) – Are mandatory for IDIQ advisory and assistance service requirements

exceeding 3 years and $12.5 million unless • Multiple awards are not practicable • Only one contractor can reasonably perform the work • Only one responsive, responsible Contractor• Only one offer is received

• Per FAR 16.505(b)(1),“Fair Opportunity” is required for all orders exceeding $3,000 except:

– Urgent requirements;– Requirements that can be fulfilled by only one Supplier; or – Requirements that are logical follow-ons to previously ordered requirements.

• Limits on Task/Delivery Orders in Excess of $100 Million– Prohibition on award to a single source unless agency head determines:

• Only single source can perform work, • Firm fixed price task orders, • In the Public Interest

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingTask/Delivery Orders

• DoD 2008 Authorization Act Changes for Task or DO over $5M– Notice of the planned task/DO– Reasonable time to respond– Disclosure of significant evaluation factors– Best value documentation– Post award debriefing

• Protests of IDIQ Task Orders– Awards of task orders (a.k.a. “down selects”) have historically not been

protestable– Protests of task order awards

• >$10M were authorized by 2008 DOD Appropriations Act • TO increased the scope, period or maximum value of the IDIQ contract

– Protests of IDIQ (Master) contracts are protestable

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingDrives Procurement Changes

• New Applications for IDIQ Contracts– Major System Development– Software Maintenance

• Multiple Awards

• Task Orders are competed

• Lowers Customer Administrative Burden on Buyer

• Increases Administrative Burden on Contractors, so Contractors must find leaner ways of doing business

– Develop new Processes • Proposal Prep Process

• Co-SOW Development

• Alpha Price

• Obtain expeditious Subcontractor proposals

• Expedite estimating, pricing & sign-off approval

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingKey Contract Provisions

• (Task/Delivery) Ordering Provision• Min & Max Order Quantities/Dollars• Guaranteed Minimum• Fee/Profit• Fixed Hourly Rates (T&M or FFP-LoE)• Order of Precedence – More likely to have conflicts between IDIQ & Task Orders• Organizational Conflict of Interest (OCI)• Delivery/Task Order Placement Procedures• Task Order Proposal Prep Cost recovery

– Separate CLIN– Use B&P– Recover under TO . . . If awarded

• Payment Terms• Special & General Provisions• Period of Performance

– Ordering– Task Order Performance

• IP Rights• Security Requirements• Key personnel• Reimbursement of Travel costs• Subcontracting – ID “approved” subs in contract• SOW & CDRL – high level shopping lists

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Indefinite Delivery, Indefinite Quantity (IDIQ) ContractingTo bid or not to bid - Things to Consider

1. How many awards will there be?2. If there are multiple awards by size and socio-economic categories, what will the order

of preference be for deciding the competitive category at the Task Order Level?3. For Small Business Set-asides, does the Prime have to do 50% of the work? (Contract

Level vs. Task Order Level)4. Can I bid as both a Prime Contractor and a Subcontractor?

a. To other Small Businessesb. To other Large Businesses?

5. Is this a bundling of existing contracts? If so which ones?6. If I win, can I afford to do business development? 7. Who/How to pay for proposal prep?8. If this award is for new business, what is the projected budget by fiscal year? (Does the

customer have any money?)8. Do I have the Subcontracting Staff and Process in place to price Task Order proposals

& administer this contract?9. If there is only going to be a single award do the RFP Section L proposal instructions

and Section M evaluation criteria lend themselves to making a single award?10. Contract type (CPFF, CPIF, CPAF, FFP, FFP-LoE, T&M, or ???)11. Will provisions for Fee/Profit allow for reasonable returns (ROC, ROS, RONA)?11. Will contract establish fixed rates or rate ceilings? If so, how long?12. Will Key Personnel provision dedicate resources needed for other programs/pursuits?

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Indefinite Delivery, Indefinite Quantity (IDIQ) Acquisition Concerns

• Pricing Baselines – for IDIQ & subsequent Task Orders. Need to Implement a pricing and analysis tool that enables the development, categorization, and factoring of baseline estimates to focus pricing analysis on high risk or competitive advantage areas.

• Bid Approvals – The standard proposal governance and approval models are often not agile enough to accommodate the timelines required for TO’s

• Subcontractor Management/Collaboration – Affects Competitiveness & Time needed to respond to Task Order RFP’s.

• Strategic Variables – Need to assess high rate of complexity based on the wide range of services and work products included under the IDIQ contract. Because each task order SOW will vary, use of a consistent bidding strategy may not be feasible. For this reason it is vital that a variable and configurable proposal strategy be adopted.

• Subcontracting/Teaming – Speed is critical to compete and win IDIQ contracts, including subsequent task orders. Subcontract agreements are necessary to configure a timely response that meets customer requirements. In order to lower the “overhead” inherent in complex teaming arrangements, a modular strategy and framework should be established. This bid approach aligns subcontractors with services and work products in a pre-bid “matrix” that facilitates rapid proposal TAT’s and PO placement for TO support.

• Competitive Intelligence/Analysis – As competition increases, contractors will discover that a robust competitive intelligence capability will play a key role in their success. Both the gathering of critical competitor information (while complying with Procurement Integrity laws) and the enablement of an analysis utility will be vital to winning