Transportation agencies are increasingly implementing
alternative contracting methods (ACMs) to deliver their construction and
maintenance projects. One of those ACMs is called Indefinite
Delivery/Indefinite Quantity (IDIQ) contracts. This method awards a single
contract to deliver construction and/or maintenance services on an unspecified
number of similar projects over a specified period of time. The projects are
called Task Orders, Job Orders, Work Orders, and other terms. Most IDIQ users
in the transportation construction industry use a single-award approach where a
single contractor is selected on a low bid basis to perform all Task Orders to
be issued under the contract. The scope of work in these contracts is
essentially limited to a set of pay items that are anticipated to be used in
all (or most) Task Orders. Single-award IDIQs are characterized by a guaranteed
minimum amount of work (in some cases Task Order #1), a not to exceed amount
for future work, and a period of performance that often covers more than one
year with options to extend it a maximum number of times. While these contracts
have been found to be very effective, they come with two disadvantages. First,
the DOT must provide for escalating Task Orders issued in the out-years to
avoid unnecessarily large contingencies built into the unit prices. Thus, it is
possible to overpay for out-year work if the escalation factor is larger than
the actual rate, or to incur contingencies if competing contractors foresee unfair
adjustments. The second disadvantage is that once the IDIQ is awarded, there is
no competition between contractors at Task Order level.
As DOTs get more experienced with IDIQ, one would
expect that like the federal agencies that have been using these contracts for
three decades, DOTs would begin awarding larger and longer contracts. An
example is the US Naval Facility Engineering Command, which has awarded
nationwide DB IDIQ contracts with a capacity of over $200 million to design and
build specialty projects like medical or communications facilities with
estimated Task Order amounts exceeding $20 million each. Federal agencies have
enhanced their IDIQ contracting capabilities by developing multiple-award IDIQ
contracting procedures where a pool of contractors (usually 3-6) are selected
on a basis of qualifications, and other factors, to compete with each other for
each Task Order. This arrangement satisfies both issues. Since the contractors
compete for each task order, value for money is demonstrated and there is no
need to estimate escalation as each Task Order will be awarded to the low
bidder based on current market conditions.
NCHRP Synthesis 473: Indefinite Delivery/Indefinite Quantity Contracting Practices found
that while there are a few DOTs that have experimented with multiple-award
IDIQs, there is no substantive implementation guidance for their use in IDIQ
contracts. However, the federal experience combined with the anecdotal
experience at the state-level provides a foundation of valuable experiential
information from which to extract effective practices to assist DOTs with the
implementation of successful multi-award IDIQ contracting programs.
proposed research should address the following questions:
types of construction and maintenance projects are best suited for
multiple-award IDIQ contracts?
are the appropriate procedures for accepting, reviewing, and evaluating
contractor qualifications in a multiple-award IDIQ procurement?
are the appropriate practices in contractually implementing competitive bids
for multiple-award IDIQ contracts?
there procedures for evaluating the optimal number of contractors in the
multiple-award IDIQ pool?
are effective practices to estimate the value of an average Task Order?
it possible to obtain programmatic permits for multiple-award IDIQ Task Orders
that are developed using DB or CMGC delivery procedures?
multiple-award IDIQ contracting affect DOTs’ ability to meet NEPA requirements
in construction and maintenance contracts?