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A Guidebook for Multiple-Award IDIQ Contracting as a Means to Increase Price Competition

Description:

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.

The proposed research should address the following questions:

· What types of construction and maintenance projects are best suited for multiple-award IDIQ contracts?

· What are the appropriate procedures for accepting, reviewing, and evaluating contractor qualifications in a multiple-award IDIQ procurement?

· What are the appropriate practices in contractually implementing competitive bids for multiple-award IDIQ contracts?

· Are there procedures for evaluating the optimal number of contractors in the multiple-award IDIQ pool?

· What are effective practices to estimate the value of an average Task Order?

· Is it possible to obtain programmatic permits for multiple-award IDIQ Task Orders that are developed using DB or CMGC delivery procedures?

· How multiple-award IDIQ contracting affect DOTs’ ability to meet NEPA requirements in construction and maintenance contracts?

Objective:

The main research objective is to benchmark the state-of-the-practice in using multiple-award IDIQ contracts and combine it with existing research on construction procurement and project delivery procedures, processes and policies. This study will assemble a set of effective practices and develop a guidebook that can be utilized by agencies to implement multiple-award IDIQ contracts based on local statutory and/or policy requirements. The guidebook should include a methodology to compare delivery of IDIQ projects on both a single-award and multiple-award basis to permit agencies 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.

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.

Tasks:

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

·

Task 1 – Benchmark the state-of-the-practice by federal, state, and local agencies in the use of multiple-award IDIQ procurement for both horizontal and vertical projects. Survey public agencies to determine if there are any using a rational methodology to select multiple-award over single-award IDIQs.

·

Task 2 – Review the legal issues involved with multiple-award IDIQ procurements with respect to statutory competition constraints and other salient issues that pose potential barriers to implementation of the concept. 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 5 to 8 federal and state multiple-award IDIQ projects that would 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 guidebook. 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 multiple-award IDIQ solicitation and task order language; general/special provisions and enabling legislation, if any.

· Task 6 - Prepare the draft guidebook for implementing multiple-award IDIQ contracts on construction and maintenance projects delivered with DBB, CMGC, and DB. The guide will also provide instructions for implementing the proposed procurement process for an agency’s annual program. Incorporate review comments as required and validate the guidebook’s efficacy with a case study DOT.

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

Implementation:

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

guidelines for the implementation of multiple-award IDIQ contracting for construction and maintenance projects to increase competition for IDIQ Task Orders and eliminate the need for establishing escalation provisions. The payoff will be an ability for DOTs to better demonstrate value for money to the public while accruing the benefits associated with an expedited procurement cycle for projects that are similar in scope, size, and technical complexity. Additionally, NCHRP Syntheses 438: Expedited Procurement Procedures for Emergency Construction Services found evidence that IDIQs create an ability to be able to rapidly react to both urgent and emergency repair and replacement requirements because the contractors are already under contract and mobilized in the DOT’s jurisdiction.

Based

on the experience of those DOTs that have already implemented IDIQ, the payoff of this research will be significant in both construction cost and time savings. The implementation of IDIQs has also been proven to provide an expeditious manner to obligate year-end funding for projects that may have not been in the current annual program because the procurement is already complete.

Sponsoring Committee:AFH15, Project Delivery Methods
Research Period:24 - 36 months
Research Priority:High
RNS Developer:Douglas D. Gransberg, PhD, PE – Gransberg & Associates, Inc. Jorge A. Rueda, PhD – Auburn University Eric Kahlig, PE – Ohio Department of Transportation
Date Posted:11/07/2017
Date Modified:01/05/2018
Index Terms:Competition, Contract administration, Contracting, Contractors, Contracts, Maintenance, Construction projects, Maintenance management,
Cosponsoring Committees: 
Subjects    
Administration and Management
Construction
Maintenance and Preservation
Transportation (General)
Economics

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