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ID/IQ Contracts vs. BOA's


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I recently read an article by Kate M. Manual, who is a legislative attorney for the Congressional Research Service (the congressional think tank that writes information and policy papers for federal review, it helps them make decisions, basically) in which she describes several types of contracts as described in Part 16 of the FAR. In it, she describes ID/IQ contracts as "providing for the contract to deliver goods or services to the procureing activity at future dates unspecified at the time of contracting." For basic ordering agreements, she says they are used " when the procuring activity anticpiates acquiring a sustantial, but presently unknown, quanities of goods and services."

Besides the fact that a BOA is technically not a contract, what is the difference between the two? Why would you use an ID/IQ in one procurement activity, and a BOA in another? Is one more appropriate than the other?

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Guest Vern Edwards

A BOA is an administrative convenience in which the parties agree to terms and pricing formulas in advance of a specific procurement, which makes it possible to make an award more quickly in the future. BOAs are not priced and you don't need competition in accordance with FAR Part 6 when you enter into a BOA. Because BOAs are not priced, not contracts, and are not entered into pursuant to FAR Part 6, you cannot issue an order against a BOA without first getting prices and competition. See FAR 16.703(d)(1)(i). IDIQ contracts are priced and awarded in accordance with FAR Part 6. Thus, no competition is required before issuing an order.

IDIQ contracts are appropriate when you know you are going to buy at least a minimum quantity. The minimum must be funded at the time of award. BOAs are appropriate when you anticipate award of a number of contracts but have no present requirement for a minimum quantity.

The Congressional Research Service report can be found here: http://www.fas.org/sgp/crs/misc/R41168.pdf

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  • 1 year later...

Vern, you state "IDIQ contracts are priced and awarded in accordance with FAR Part 6." In the case of an IDIQ contract where Cost Plus Fixed Fee Level-of-Effort Task Orders will be issued, what exactly will be "priced" at the IDIQ level?

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Guest Vern Edwards

IDIQ contracts were originally designed to be used to buy pre-specified and pre-priced products and simple services The idea was that the output is specified and priced in advance and then ordered at the times and in the quantities desired. What happened over the course of the 1980s and 1990s is that IDIQ contracts began to be used more and more often to buy complex services that cannot be fully priced at the time of award. In such cases only the input (an hour) is priced, not the output.

What about cost-reimbursement contracts? The "price" of a cost-reimbursement contract is the estimated cost fee. (See the definition of price at FAR 15.401.) In theory, a CPFF IDIQ contract would specify a kind of job and an estimated cost and fee for each performance, but that is not how it works. What is happening is that CPFF IDIQ contracts are awarded for complex service tasks that are to be specified, priced, and performed on an order-by-order basis. The contract may stipulate hourly rates or maximum (ceiling) hourly rates, but does not stipulate estimated costs and fees. The latter are negotiated and stipulated at the time of task order issuance. In many cases, "pricing" consists of proposals based on sample tasks.

Make sense?

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Putting maximum ceiling hourly rates in the IDIQ makes sense to me, but simply stipulating hourly rates in the IDIQ may not. In the event that a Task Order is to be issued and none of the exceptions in 15.403-1(B) applies, and the amount of the Task Order exceeds the cost and pricing threshold per FAR 15.403-4(a)(1), then the current cost or pricing data would take precedent over any hourly rates established in the IDIQ.

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Guest Vern Edwards

KMY:

Putting maximum hourly labor rates in an IDIQ contract does not "establish the price" pursuant to FAR 16.505(B)(3), Pricing Orders. However, it is virtually impossible to "establish the price" in the underlying contract for services that will vary from order to order. The price for each order must be established pursuant to FAR Subpart 15.4.

I don't know what you mean when you say, "the current cost or pricing data would take precedent over any hourly rates established in the IDIQ." That does not make sense. Cost or pricing data don't "take precedence" over other things. Perhaps you meant that even with the establishment of maximum hourly labor rates, the CO may still have to obtain certified cost or pricing data when pricing each order valued in excess of the TINA threshold.

It may be that the CO will have to obtain certified cost or pricing data when negotiating the maximum hourly rates and then obtain certified cost or pricing data when negotiating the price for each order. Whether the parties would have to renegotiate the hourly rates would depend on the terms of the contract.

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