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Single Award IDIQ


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New to posting but not new to the forum. Hoping I can get some good feedback from the group. My question has to deal with Single Award IDIQs. For this example, lets say a single award IDIQ for production resources (welding, inspection services, etc.) is being considered. Trade skill work. For anyone tapped into this environment, it is know that resources are endlessly changing due to urgent needs that arise, especially in the ship building industry.

If a single vendor get a five year IDIQ effort, and for some reason they can't support a new task order (meaning they cant supply the trade labor) a year or two into the contract, is that considered a performance issue? My understanding is a IDIQ of this nature would more a first right of refusal. If the vendor cant support a specific task a year into the contract due to market changes, they would not be penalized for it. If they were to be penalized, then I find it hard for a small business or any business to bid on such a contract initially.

Would like to know everyone's thoughts.

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Guest Vern Edwards

Everything depends on (1) the language of the contract and (2) the behavior of the parties during the course of performance, thus far.

As a general proposition, an IDIQ contractor is obligated to perform any task order that is within the scope and ordering limits of the contract. Refusal or inability to do so would ordinarily be a breach of contract (default). What the government would do in such a case is up to the CO. Although the CO can issue an order, he or she is not obligated to do so and could go to a different contractor without taking any action against the contractor.

If the contractor is good, but is suffering a temporary inability to perform a particular order, the CO could go to someone else without taking any action. If the contractor were a regularly poor performer or incapable of performing in the future, then the CO would have to decide whether to terminate the contract for convenience at no cost to the government, simply not use the contract any more, or terminate for default. The latter would be rather drastic if the government is not damaged by the default.

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Another long time reader of this forum, I am very interested in this topic as well.

I agree with what Vern said "an IDIQ contractor is obligated to perform any task order that is within the scope and ordering limits of the contract", as this how I understand the language in 52.216-22( b ) Indefinite Quantity.

Regarding the CO not being obligated to issue orders off of an IDIQ, I have always been under the impression that if a contracting activity awards an IDIQ for a particular product or service, any contract or order issued from that contracting activity for the same product or service outside of that contract would be viewed as splitting a requirement unless the IDIQ either ended or was terminated first. Of course, this is a bit of a grey area, but I wanted to see what others thought.

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...Regarding the CO not being obligated to issue orders off of an IDIQ, I have always been under the impression that if a contracting activity awards an IDIQ for a particular product or service, any contract or order issued from that contracting activity for the same product or service outside of that contract would be viewed as splitting a requirement unless the IDIQ either ended or was terminated first. Of course, this is a bit of a grey area, but I wanted to see what others thought.

KOnut124 and Beeman, are you thinking of a requirements contract or an indefinitie quantity contract? Under an indefinite quantity contract, the government activity is only obligated to purchase the minimum quantity specified in the contract. See:

16.501-2 -- General.

..( b ) The various types of indefinite-delivery contracts offer the following advantages:

...(3) Indefinite-quantity contracts limit the Government’s obligation to the minimum quantity specified in the contract.

...(4) Requirements contracts may permit faster deliveries when production lead time is involved, because contractors are usually willing to maintain limited stocks when the Government will obtain all of its actual purchase requirements from the contractor.

Under a requirements contract, the government activity is generally obligated to purchase all requirements of the supplies or services designated in the contract during a specified period. See:

16.503 -- Requirements Contracts.

(a) Description. A requirements contract provides for filling all actual purchase requirements of designated Government activities for supplies or services during a specified contract period (from one contractor), with deliveries or performance to be scheduled by placing orders with the contractor.

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New to posting but not new to the forum. Hoping I can get some good feedback from the group. My question has to deal with Single Award IDIQs. For this example, lets say a single award IDIQ for production resources (welding, inspection services, etc.) is being considered. Trade skill work. For anyone tapped into this environment, it is know that resources are endlessly changing due to urgent needs that arise, especially in the ship building industry.

If a single vendor get a five year IDIQ effort, and for some reason they can't support a new task order (meaning they cant supply the trade labor) a year or two into the contract, is that considered a performance issue? My understanding is a IDIQ of this nature would more a first right of refusal. If the vendor cant support a specific task a year into the contract due to market changes, they would not be penalized for it. If they were to be penalized, then I find it hard for a small business or any business to bid on such a contract initially.

Would like to know everyone's thoughts.

KOnut124, are you determined to use a single award ID/IQ (indefinite quantity) contract because "(t)he projected orders are so integrally related that only a single contractor can reasonably perform the work" and/or for this and/or other reasons covered under 16.504 ( c)(1)(ii)( B )? Just curious. If you can use other contract vehicles in instances when the single award contractor doesnt have the resources or capacity, why do you need a single award ID/IQ? Correct me if I am wrong but I don't think that there is a natural "right to first refusal" under a single award Indefinite-quantity type contract unless that is somehow written into the contract.

Our organization tried large capacity, single award ID/IQ, construction contracts on a large scale several years ago and when pricing of follow-on projects was unreasonably high in many instances (as I expected would occur), the contracting activities ended up using other methods to fulfill the program.

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Guest Vern Edwards
Regarding the CO not being obligated to issue orders off of an IDIQ, I have always been under the impression that if a contracting activity awards an IDIQ for a particular product or service, any contract or order issued from that contracting activity for the same product or service outside of that contract would be viewed as splitting a requirement unless the IDIQ either ended or was terminated first. Of course, this is a bit of a grey area, but I wanted to see what others thought.

I think you've been operating under a false impression. I see nothing "grey" about the matter.

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Thanks for the feedback. Joel, the requirement will be indefinite quantity and have the appropriate documentation for a single award iaw part 16. The question is more focused on the performance of the single award contractor. As the CO has no obligation to issue an order as Vern said, they do have an obligation to track performance, specifically drawing that line in the sand between being a good performer or not. If the contractor performs task orders adequately, but cannot support multiple orders over a specific period, (say they cannot support two or three TO in the first year) there has to be some trigger that would put the focus now on termination. Determining that line can be tricky as allowing a contractor not to perform two or three times could put the government in forbearance.

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Thanks for the feedback. Joel, the requirement will be indefinite quantity and have the appropriate documentation for a single award iaw part 16. The question is more focused on the performance of the single award contractor. As the CO has no obligation to issue an order as Vern said, they do have an obligation to track performance, specifically drawing that line in the sand between being a good performer or not. If the contractor performs task orders adequately, but cannot support multiple orders over a specific period, (say they cannot support two or three TO in the first year) there has to be some trigger that would put the focus now on termination. Determining that line can be tricky as allowing a contractor not to perform two or three times could put the government in forbearance.

The matter of capability of performing multiple or simultaneous task orders is apparently important here, so I assume that you would develop some type of evaluation scheme during the acquisition process. You also said that " those tapped into this environment " are aware that "resources are endlessly changing", etc. Therefore, if you are very concerned about this possibility or probability, i would recommend not issuing a five year ID/IQ contract. Perhaps include options and/or consider performance based extensions instead. Performance based extensions should be bat least partially based upon the ability to perform multiple and or simultaneous task orders, for which you need to define some performance criteria, as well as any other performance based criteria.

Rather than "putting the focus on termination", you have some additional "options" a available. You can simply stop issuing orders after meeting the minimum obligation. You can also not extend the contract via performance based extensions or not issue further option periods. Each of those alternatives provides for not issuing further orders. Not issuing any further orders may facilitate agreement on a no cost termination, in that contractor may accept that as being in its best interest or just let the contract run out.

Another option is to use a MATOC if that is practicable.

Edit: of course, I'm no expert on shipyard contract or operations. But I have been to Coast Guard Installations. In Oakland, for instance, at least three large ships were docked at the main pier for what appeared to be extensive repair or modifications. Is it possible to issue a task order and any necessary follow-on orders to one pool member for each ship or for for the two or three ships in port at the same time, if not practical to have multiple firms working at the same time?

Just throwing out some suggestions based upon your expressed concerns.

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