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5 year Ordering Periods on Construction IDIQ Contracts


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Hi folks, I'm just looking for some guidance/authority on 5 year ordering periods for construction IDIQ contracts.  I've researched FAR/DFARS/AFARS and other acquisition websites looking for some guidance/authority that allows this.  I understand DFARS 217.204 talks about this, but the section applies to supplies and services and not construction.  In my opinion, because FAR/DFARS/AFARS doesn't specifically prohibit it, I can do it.  Am I wrong?  Is there no guidance/authority that specifically allows for this on construction contracts?  Thanks for any information in advance!  Appreciate your thoughts.

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13 hours ago, Thomas Williams said:

Hi folks, I'm just looking for some guidance/authority on 5 year ordering periods for construction IDIQ contracts.  I've researched FAR/DFARS/AFARS and other acquisition websites looking for some guidance/authority that allows this.  I understand DFARS 217.204 talks about this, but the section applies to supplies and services and not construction.  In my opinion, because FAR/DFARS/AFARS doesn't specifically prohibit it, I can do it.  Am I wrong?  Is there no guidance/authority that specifically allows for this on construction contracts?  Thanks for any information in advance!  Appreciate your thoughts.

The Corps of Engineers has been using multiple award task order construction contracts for at least 24 years. You can contact one of the Districts for info. 

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14 hours ago, Thomas Williams said:

Hi folks, I'm just looking for some guidance/authority on 5 year ordering periods for construction IDIQ contracts.  I've researched FAR/DFARS/AFARS and other acquisition websites looking for some guidance/authority that allows this.  I understand DFARS 217.204 talks about this, but the section applies to supplies and services and not construction.  In my opinion, because FAR/DFARS/AFARS doesn't specifically prohibit it, I can do it.  Am I wrong?  Is there no guidance/authority that specifically allows for this on construction contracts?  Thanks for any information in advance!  Appreciate your thoughts.

Please clarify your post.  17.2 covers the use of options. Are you asking about single award and/or multiple award ID/IQ contracts with option years? Or are you referring to a SATOC and/or MATOC with a five year ordering period?

“17.200   Scope of subpart.

This subpart prescribes policies and procedures for the use of option solicitation provisions and contract clauses. Except as provided in agency regulations, this subpart does not apply to contracts for

(a) Services involving the construction, alteration, or repair (including dredging, excavating, and painting) of buildings, bridges, roads, or other kinds of real property;

(b) Architect-engineer services; and

(c) Research and development services.

However, it does not preclude the use of options in those contracts.”

Regarding SATOC’s some Agencies have limitations on use of SATOC’s for pure construction (or Design-Build construction ) contracts. Such coverage might likely be found under applicable supplements to 16.5.

EDIT: DoD Branches, such as Army and Air Force use ID/IQ contracts called JOC  (Job Order Contracts) and SABER (Simplified Acquisition of Base Engineer Requirements) , respectively. 

Edited by joel hoffman
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By the way, I don’t think that an ID/IQ contract - SATOC or MATOC - with a single five year ordering period is advisable or wise. It doesn’t encourage high performance or encourage economical pricing, that is reflective of ever changing construction labor, material and subcontracting market conditions. 

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On 2/20/2020 at 4:57 AM, joel hoffman said:

Please clarify your post.  17.2 covers the use of options. Are you asking about single award and/or multiple award ID/IQ contracts with option years? Or are you referring to a SATOC and/or MATOC with a five year ordering period?

“17.200   Scope of subpart.

This subpart prescribes policies and procedures for the use of option solicitation provisions and contract clauses. Except as provided in agency regulations, this subpart does not apply to contracts for

(a) Services involving the construction, alteration, or repair (including dredging, excavating, and painting) of buildings, bridges, roads, or other kinds of real property;

(b) Architect-engineer services; and

(c) Research and development services.

However, it does not preclude the use of options in those contracts.”

Regarding SATOC’s some Agencies have limitations on use of SATOC’s for pure construction (or Design-Build construction ) contracts. Such coverage might likely be found under applicable supplements to 16.5.

EDIT: DoD Branches, such as Army and Air Force use ID/IQ contracts called JOC  (Job Order Contracts) and SABER (Simplified Acquisition of Base Engineer Requirements) , respectively. 

Joel, to clarify, I'm looking for guidance that allows the use of 5 year ordering periods for construction IDIQ contracts.  Not the use of options.  I realize what FAR/DFARS state about this situation, but that language is specific about it applying to supplies and services.  I'm just wondering if there is guidance out there that specifically applies to construction contracts.  If it doesn't, then I'm ok with that.  Just was trying to use WIFCON as a source while researching this topic.

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Ok, then my advice is to check with those who regularly use construction ID/IQ contracts, like the Army Corps of Engineers.

if you are an attorney, you can check with USACE Office Of Counsel. I have a contact at HQ in Construction Policy who might be able to answer your question but would need to know particulars. 

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See FAR 1.102-4(e):  "The FAR outlines procurement policies and procedures that are used by members of the Acquisition Team. If a policy or procedure, or a particular strategy or practice, is in the best interest of the Government and is not specifically addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, Government members of the Team should not assume it is prohibited. Rather, absence of direction should be interpreted as permitting the Team to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority. Contracting officers should take the lead in encouraging business process innovations and ensuring that business decisions are sound."

I don't think you're going to find anything that specifically authorizes a five-year ordering period, or even a one-year ordering period for that matter -- you can have an ordering period for as long or as short as you want using sound business judgment.

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My advice is don’t worry about finding anything construction specific because there isn’t any, at least at the FAR/DFARS level.  Just do it.  GSA Schedules have 5 year ordering periods.  To provide flexibility, they use EPA provisions.  They also allow for new items to get added by contractors.

ji20874, I think I know you.  You used to work at Commerce NOAA?

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I wrote RFP’s for construction Multiple award ID/IQ’s for Mobile District back in1996. I moved on to another USACE Division before they were advertised but they awarded the first one and others, subsequently. Many Districts have awarded similar MATOC’s.

Mobile used options. however, there wasn’t any reason why one couldn’t have used a single ordering period.

It just didn’t make sense at the time for the reasons I mentioned above.

I do remember a successful (2007) Court of Federal Claims protest by a dredging company (Weeks Dredging) against a solicitation for a USACE South Atlantic Division Dredging MATOC, to replace individual Dredging contracts that were traditionally awarded using IFB’s. Restraint of competition for the life of the MATOC was one of the grounds for the protest. in addition, the Government hadn’t justified why sealed bidding shouldn’t be used to award dredging contracts per 6.401(a).

As a result, the USACE issued policy that anything other than IFB’s had to be justified pursuant to 6.401(a) and 14.103-1(a).

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In 2009,  the Court of Appeals for the Federal Circuit later reversed the 2007 Court of Federal Claims,  Weeks Decision  and the permanent injunction, therefrom.

https://caselaw.findlaw.com/us-federal-circuit/1379675.html.

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I also recall a Protest within the past 20 years against the idea that ID/IQ’s. Can be used for construction because it wasn’t specifically authorized or mentioned in FAR. Might be the same Weeks Decision or another one. I do remember that the protestor did not prevail on that point. Sorry that I don’t have a Specific reference. Regardless,  unless there is some reason why an ID/IQ would unreasonably restrain trade, they are being used and for up to five years ordering periods (single or with options) are not uncommon. 

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@joel hoffman @ji20874 @formerfed

I find the OP's post interesting and I wonder if the responses to date have overlooked some facts.  Here are my thoughts.

Has not the OP proposed the idea of a multiyear base period?  If so why isn't the reference FAR 17.1 in a total read.

More specifically FAR 17.101 states that it implements 10 USC 2306b.   10 USC 2306b at (k) states the following -

For the purposes of this section, a multiyear contract is a contract for the purchase of property for more than one, but not more than five, program years. Such a contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds and (if it does so provide) may provide for a cancellation payment to be made to the contractor if such appropriations are not made.

 

A further read of DFARS 217.1, as has been pointed out by the OP, discusses services and supplies and not construction.   There is much discussion about the FAR being specific and that "construction" by definition is held out to be neither a service or a supply.

 

DFARS 217.1 would support that a MATOC/SATOC for service with regard  "Operation, maintenance, and support of facilities and installations" is an appropriate use.  But what about straight construction?

 

All said it would seem to me that a ordering period of 5 years for an IDIQ for specifically "construction" would not only be questionable as Joel points out in one of his posts but one could, in a deep dive, of the regulation conclude that a IDIQ for "Construction", in other words not "supplies or services" (FAR 17.101), would not be appropriate.  Rather a IDIQ for strictly construction would need to have a base of 1 year with options to extend.  

 

I pose these thought's genuinely.  I do understand the reference to  FAR 1.102-4(e) but wonder if alternatively any attempt to have a 5 year base period in a construction IDIQ would have to be authorized through FAR 17.1 and associated agency supplements thereto?

 

Where am I off track?

 

PS - I dug this up too   http://www.wifcon.com/anal/analfiveyear.htm

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Carl, one clarification - the OP specifically referred to 17.204, which falls under 17.2, Options. Therefore - it should be obvious - it would not have referenced construction contracts.

However, I completely overlooked 17.1.

I tend to agree with you.  Construction contracts were Traditionally awarded for whatever period was deemed appropriate for a single project and weren’t addressed as ID/IQ’s In the FAR (to my knowledge).

I wish that I could  find the Protest Decision that addresses whether ID/IQ’s can be used for construction. Obviously, they are used. 

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Thomas,

Are you talking about a construction contract to do minor repairs on a pre-priced basis, such as a coefficient off the RS means book, or are you talking about a contract to do brand new construction of brand new buildings?

I am assuming the former, and I think Joel is assuming the latter.

Carl,

We are talking about an IDIQ contract, so FAR 17.1 is not implicated.

A key to FAR 1.102-4(e) is sound business judgment.  When I point to that citation, I inherently mean that sound business judgment is needed.  No one can rely on that citation as permission to proceed without sound business judgment.  An IDIQ contract with a 5-year ordering period for pre-priced minor construction services would be far closer to sound business judgment than an IDIQ contract with a 5-year ordering period for new construction.  

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JOC and SABRE contracts are used for the purposes that ji is referring to. There is much guidance and policy on those easily accessible on the Internet. In my reviews, I did not see whether they are multi-year or base plus option years - I just don’t see any advantage to a multi-year construction ID/IQ, though. Use options.

Single award Construction contracts would not have been addressed in 17.1.

i don’t think that construction ID/IQ’s , other than JOC/SABRE, are specifically discussed in FAR or DoD Supplements. 

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3 hours ago, ji20874 said:

We are talking about an IDIQ contract, so FAR 17.1 is not implicated.

Ah you clicked in memory.    I can not find this on the web but I have a hard copy -  Bureau of Customs and Border Patrol Protection - Automated Commercial Environment Contract, B-302358, December 27, 2004.   Has a great discussion of multiyear contracts and IDIQs.    Sorry for raising the matter without my further research.  In reality 1.102-4 does not come into play it still all revolves around 17.1 and its statutory connection.   A IDIQ is not a multiyear contract as noted in the aforementioned GAO decision.

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I found the Decision that I was looking for with regard to a Protest that ID/IQ for construction contracting isn’t authorized by law or by regulation: “Tyler Group vs. US”:

https://federalconstruction.lexblogplatform.com/wp-content/uploads/sites/116/2009/10/Tyler_Fed_Claims_2008-08-14.pdf

In that  2007 Court of Federal Claims, pre-award Decision, the proposed solicitation was for a construction (Design-Build)  Multiple Award ID/IQ with one year base and two year options. 

The 2007 Weeks Dredging Decision (Which, as I said was overturned by the Court of Federal Appeals in 2009)  was for a five year ID/IQ.

I also found a 1986 GAO Decision in response to a Congressional request for GAO’s legal opinion whether JOC contracts were legal.

https://www.gao.gov/assets/b-222337.pdf

Here is a link to a Federal Construction Blog that discusses thee use of ID/IQ’s for construction.

https://federalconstruction.phslegal.com/2009/10/articles/federal-procurement-policy/court-of-appeals-keeps-matoc-alive/

The bottom line is that ID/IQ’s for construction don’t necessarily violate law, regulations or public policy.  However, in every cited case, the government had to properly justify why it needed to use an ID/IQ in lieu of competitive bidding or other negotiated acquisition methods for individual project contract awards. The effects upon full and open competition, small business and small, disadvantaged business had to be considered in the acquisition strategies. 

I was on the USACE Program ManagementTeam for the Army MILCON Transformation Program at the time. We developed a Model RFP to be used Corps-wide for Army Design-Build contracts under the $50 plus billion dollar program for construction projects in support of Re-organization, growth, BRAC and the Transformation of the Army.to Brigade Combat Teams

The model included various versions for Single award contracts, ID/IQ Base contracts and for task orders under ID/IQ contracts.

I hope this addresses the OP’s initial question - with respect to acquisition planning and desired method.

Its a yes, BUT...

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5 hours ago, ji20874 said:

...and that BUT is where sound business judgment from FAR 1.102-4(e) is supposed to be inserted...

Yep

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2 hours ago, formerfed said:

And the operating environment has changed since 2007-2009

Yes, Congress has tightened restrictions on SATOCs for one thing. 

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On 2/19/2020 at 10:36 PM, ji20874 said:

See FAR 1.102-4(e).

 

17 hours ago, ji20874 said:

...and that BUT is where sound business judgment from FAR 1.102-4(e) is supposed to be inserted...

Yep. To elaborate, the references I cited backup your initial thoughts. Thomas was seeking some guidance or authority to allow a five year ordering period for construction ID/IQ’s.
 

On 2/19/2020 at 4:55 PM, Thomas Williams said:

  In my opinion, because FAR/DFARS/AFARS doesn't specifically prohibit it, I can do it.  Am I wrong?  Is there no guidance/authority that specifically allows for this on construction contracts? 

There is no specific mention of construction ID/IQ’s - Period - in the FAR. There is coverage of JOC style contracts in Army supplement. There is no specific restriction on a five year ordering period for construction - perhaps because the FAR didn’t anticipate more than single project construction awards. I don’t know.

I do know that the USACE used construction ID/IQ’s during Operations Desert Shield/Desert Storm in 1990-1991. I was in the office in Saudi Arabia that issued them. Of course, they didn’t have a five year ordering period. Contingency operations breed a lot of innovation, though.

The USACE South Atlantic Division , Regional Dredging ID/IQ included a five year ordering period. The protest against that solicitation and permanent injunction was overturned by the Fed Ct of Appeals.

The cited legal references above should clearly provide guidance to an organization contemplating use of a construction ID/IQ - especially with a five year ordering or base plus four years - to assess the possible impact on the applicable/affected construction community(‘a).  They should also weigh the advantages and disadvantages of five year vs. base plus options.

The organizations had justified why the use of an ID/IQ with limited contractor pools or sole source was beneficial or necessary and how the organization planned to mitigate the impact on the rest of the local construction contract community.

The FAR still officially favors the use of traditional IFB, unless negotiated sole source or competitive acquisitions are otherwise justified. If affected firms protest against an ID/IQ on that basis, the agency may have to show how it justified other than full and open and/or IFB. And the Boards/Courts don’t favor contemporaneous justifications developed in response to a protest. 

The construction industry differs from other service or supply industries in several aspects. A single, long term contract could tie up a (especially small business) construction company’s bonding capacity and management and equipment resources for a single customer. A MATOC, less so.

But If you end up with a less than stellar performer or performers, you may be stuck with them for the remainder of the five year ordering period.. Also, a locked-in five year relationship for a SATOC doesn’t necessarily promote economic pricing in addition to the lack of competition.

Just some things to consider in pursuit of “sound business judgement”.  

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