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A Critical Analysis of IDIQ Award and Work Order Pricing Procedures.


Driven by the need to enhance traditional procurement procedures, transportation agencies across the country have been increasingly implementing alternative contracting methods (ACMs) for the procurement of construction and maintenance services. Among these alternative contracting approaches, there is one that allows the delivery of multiple similar projects under a single agreement without the need to reprocure every new project. This method is called Indefinite Delivery/Indefinite Quantity (IDIQ) contracting – also termed Job Order, Task Order, and On-Call contracting. By definition, an IDIQ is a “type of contract that provides for an indefinite quantity of supplies and/or services whose performance and delivery scheduling is determined by placing Work Orders [also called Task Orders or Job Orders] with one or multiple contractors during a fixed period of time” (NCHRP Synthesis 473: Indefinite Delivery/Indefinite Quantity Contracting Practices). This research need statement (RNS) refers to award and Task Order pricing procedures in single-award IDIQ contracts, which is the most common IDIQ model used by DOTs.

There is a number of contractor selection and Task Order pricing approaches used by DOTs in IDIQ construction and maintenance contracts. Most of these approaches are intended to award IDIQ contracts on a low-bid basis. IDIQ solicitation documents advertised by DOTs usually include a list of pay items and bid quantities to be priced by potential bidders. Quantities provided by the agency and unit prices submitted by contractors are used to calculate total bid prices to identify the lowest price proposal. The IDIQ low-bid contractor selection approach is fundamentally similar to the one used in traditional non-IDIQ low-bid contracts, with two main differences. First, unit prices in the successful IDIQ bid are used to price all Task Orders (all projects) to be issued under the contract. Even though unit prices in multi-year contracts are usually adjusted on an annual basis, contractors still must consider the risk of having price adjustments that do not reflect actual changes in the construction market. Thus, bidders may be forced to include large contingencies in their price proposals as a risk mitigation strategy. The second difference refers to the fact that IDIQ contracts carry a greater uncertainty in final quantities of work, increasing the risk of selecting a price proposal that will not correspond to the lowest total cost at the end of the contract.

These two differences between IDIQ and traditional low-bid award/pricing procedures basically refer to two additional risk factors inherent in single-award IDIQ contracts. The NCHRP Synthesis 473: Indefinite Delivery/Indefinite Quantity Contracting Practices describes various strategies used by DOTs to deal with each of these issues. Price escalation approaches to adjust unit prices over time include the use of a fixed annual adjustment rate stated in the contract documents and the use of a national/local construction cost index. Alternatively, the agency may decide to use no escalation clauses to fully transfer this risk to the contractor, which might be reflected in higher bid prices. On the other hand, there are three main strategies to set the bid quantities: using the best approximation of the total quantities of work for the entire contract; using the estimated quantities for a typical Task Order; and using the known quantities of work for the first Task Order. All price escalation and bid quantity estimating approaches mentioned in this paragraph have been used by at least one state DOT, and each has its own particular advantages and disadvantages.

An alternative low-bid award and Task Order pricing method used by some DOTs, including New York State and Missouri DOTs, consists of the use of unit priced books commonly called construction task catalogs. The construction task catalog is advertised with the solicitation documents and includes bid quantities and unit prices for all pay items to be required during the entire contract period. These unit prices include labor, equipment, and material costs. Contractors are required to bid a set of adjustment factors intended to represent profit and overhead under different working conditions (e.g. a normal work adjustment factor, a nighttime work adjustment factor, and a weekend work adjustment factor). The IDIQ contract is awarded using the entire catalog and applying all adjustment factors according to an estimated distribution of work among all working conditions (e.g. 80% normal work, 10% nighttime work, 5% weekend work). Thus, this method supposes and additional source of risk for DOTs since the successful selection of the low-bid would also depend on the accuracy of the estimation of the amount of work to be performed under each working condition. Catalogs are either developed by the agency based on state bid tabulations or purchased from vendors that use commercial price databases.

NCHRP Synthesis 473: Indefinite Delivery/Indefinite Quantity Contracting Practices found that while DOTs using the contractor selection and Task Order pricing procedures mentioned in this RNS seem to be satisfied with the outcome, there is no substantive implementation guidance for their use in IDIQ contracts and their implications are unknown. Thus, it is difficult for these agencies to justify the implementation of these methods and demonstrate value for money.

The proposed research should address the following questions:

· What types of construction and maintenance projects are best suited for each of the different IDIQ award and Task Order pricing procedures?

· What are the appropriate procedures to minimize the risk of selecting a low bidder who will not eventually result in the lowest actual cost?

· What are the time, cost, and risk implications associated with each of the IDIQ award and Task Order pricing procedures?

· What are the advantages and disadvantages of each of the different IDIQ award and Task Order pricing procedures?

· To what extent should non-price factors be combined with price factors in single award contracts to select the best contractor?

For the questions above, “IDIQ award and Task Order pricing procedures” include price escalation approaches, bid quantity estimating, and the use of construction task catalogs and adjustment factors, as applicable.


The main research objective is to benchmark the state-of-the-practice in contractor selection and Task Order pricing procedures in IDIQ contracts and combine it with existing research on construction procurement and project delivery procedures, processes, and policies. This study will critically analyze the time, cost, and risk implications associated with different award and Task Order pricing procedures for single-award IDIQ contracts. The research will develop a methodology to compare all contractor selection and pricing options for IDIQ contracts and will develop a framework to determine which approach would be preferred for a given construction or maintenance IDIQ contract.

Related Research:

NCHRP Synthesis 473: Indefinite Delivery/Indefinite Quantity Contracting Practices.

NCHRP Synthesis 438: Expedited Procurement Procedures for Emergency Construction Services.

NCHRP Report 561: Best-Value Procurement Methods for Highway Construction Projects.

Final Report for SHRP 2 C 12: The Effect of Public-Private Partnerships and Non-Traditional Procurement Processes on Highway Planning, Environmental Review, and Collaborative Decision Making.


Specific Tasks of the research to accomplish the main objectives include:


Task 1 – Benchmark the state-of-the-practice by federal, state, and local agencies in the use of IDIQ contractor selection and Task Order pricing procedures for both horizontal and vertical projects. Propose a methodology for quantitatively comparing different award/pricing approaches for a set of case study IDIQ projects obtained from a survey of federal, state, and local agencies that use IDIQ procurement. This task includes a review of price escalation approaches, bid quantity estimating practices, and the use of construction task catalogs and adjustment factors.


Task 2 – Review the legal issues involved with the different IDIQ award and pricing procedures with respect to statutory competition constraints, award mandates, and other salient issues that pose potential barriers to implementation of these concepts. Identify remedies, if any, that have been successfully implemented. Prepare a white paper documenting the results of Tasks 1 and 2.

· Task 3 – Based on the results of Tasks 1 and 2, prepare a research work plan that describes the details of the research methodology and methods for identifying potential effective practices and developing authoritative conclusions that will lead to the accomplishment of the research objectives and the final guidebook.* *The plan shall include a detailed description of any statistical analysis methods, qualitative research instruments and a justification that is well grounded in the literature to their use.

· Task 4 – Develop a rational methodology for selecting 6 to 10 federal and state IDIQ contracts with diverse contractor selection and Task Order pricing provisions. These contracts should be similar to the types of contracts present in a typical DOT annual program. Provide a list of potential case study candidates for approval by the NCHRP project panel.

· Task 5 – Execute the research work plan and prepare an interim research report that articulates the case study data collection and analysis as well as emerging conclusions, effective practices, lessons learned, and a proposed outline for the critical analysis of each alternative. Include appendices that contain the details of the case study analysis written in a form that permits it to be published separately as a stand-alone report should the NCHRP panel decide that would be appropriate. Also, include appendices that contain samples of IDIQ award and Task Order pricing provisions.

· Task 6 - Prepare the draft report documenting the results of the analysis of the case study IDIQ. Develop a plan for implementing each IDIQ award and pricing option, providing sufficient guidance for a DOT to utilize one or more approaches in their IDIQ program.

· Task 7 - Publish the final implementation plan and a final research report that details the full results of the research.


The intent of this project is to furnish a uniform set of

guidelines for the implementation of different contractor selection and Task Order pricing approaches for single-award IDIQ contracts for construction and maintenance projects. These guidelines will contribute to the optimization of IDIQ contracting programs, which are increasingly used by DOTs. The study will provide DOTs with the ability to uniformly create sets of award and Task Order pricing provisions for projects that are similar in scope, size, and technical complexity. It will also provide DOTs with the means to justify the use of specific award and Task Order pricing provisions in IDIQ contracts as well as to effectively evaluate different types of risk factors associated with these provisions. Previous research has proven a high correlation between effective award/pricing provisions and project success in terms of time, cost, and quality. Thus, this study is expected to significantly improve the performance of IDIQ programs in these aspects.

Sponsoring Committee:AFH15, Project Delivery Methods
Research Period:12 - 24 months
Research Priority:High
RNS Developer:Jorge A. Rueda, PhD – Auburn University Matthew Scott Stanford, PE – University of Colorado Boulder Girum S. Awoke, PhD, PE – Montgomery County Department of Transportation Eric Kahlig, PE – Ohio Department of Transportation
Date Posted:11/07/2017
Date Modified:01/05/2018
Index Terms:Project delivery, Construction projects, Pricing, Contract administration, Contracting, Contractors, Contracts, Maintenance management,
Cosponsoring Committees: 
Administration and Management

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