Indefinite Delivery Contracts
The policies and best practices contained in this document apply generally to the full range of indefinite delivery (ID) contracts; definite quantity contracts, requirements contracts; and indefinite delivery indefinite quantity (IDIQ) contracts. The General Services Administration employs this contract method to award Federal Supply Schedule contracts and they permit agencies to use this methodology to establish Blanket Purchase Agreements and Government Wide Agency Contracts (GWACs).
While the Information Technology
domain is making the most innovative use of ID contracts, the potential benefits
and efficiencies that can be attained from using ID contracts applies to all
commodities and services.
The Army shall make the maximum practicable and prudent use of ID contracts, both as a user of non-Army instruments and in the establishing and awarding of such contracts.
The use of ID contracts generally
results in reduced procurement administrative lead-times and delivery schedules,
a more efficient use of trained acquisition and requirements personnel, and
lower contract costs. However, this is not always the case. There are occasions
when acquisition personnel and requiring personnel need to explore alternative
methods for satisfying requirements in order to obtain the best business arrangement
Do not award a new, single purpose contract if there is an existing ID contract, Army or non-Army, that will satisfy the requirement and represents the best business arrangement for the Army, all factors considered.
The use of any existing Army-awarded ID contracts that will meet a requirement shall be considered when deciding upon the method of satisfying a requirement that provides the best value for the Army.
Develop and award a new ID contract if:
There are no existing ID contracts that will satisfy a recurring requirement; or
An Army acquisition organization has a particular expertise in acquiring certain items or services; or
There are Army-unique requirements that are unlikely to be available on other agency ID contracts.
Permitting Army, DOD, and other Government
entities to access and place orders against established indefinite delivery
contracts creates a climate of mutual benefit and facilitates the acquisition
of the needed products and services.
An advantage to using FSS contracts is that a GSA contracting officer has already determined that the prices in the contracts are fair and reasonable. Therefore, an additional and separate contracting officer's determination of reasonableness is not required. However, while a price may be fair and reasonable, a lower price (and perhaps a better business arrangement) may be available. Market research and discussions with vendors could reveal that substantial discounts are available to high volume buyers and perhaps under other circumstances.
Request reductions to FSS and other schedule contract prices when schedule products are available elsewhere at lower prices, or when the quantity of an individual order clearly indicates the potential for obtaining a reduced price. Consider the schedule price a starting point for further research and possible negotiation. Once the best business deal is identified, consider writing a Blanket Purchase Agreement (BPA) against the schedule for all potential Army requirements if they are known or can be reasonably estimated.
As part of insuring that procurements are effected efficiently and the best value for the dollar is obtained, the Federal Acquisition Regulations (FAR) mandate that schedule contracts be competed among schedule holders. Prices and non-price factors of two or more schedule holders must be examined and the file documents to indicate the basis for selection. Best value determination documentation is extremely critical when orders are placed with other than the lowest priced technically acceptable vendors. The extent of the documentation should be commensurate with the dollar value of the order.
Blanket Purchase Agreements
BPAs used in conjunction with FSS contracts are a way to satisfy recurring requirements, reduce acquisition costs through quantity discounts, and reduce administrative effort and paperwork. BPAs are negotiated directly with FSS contractors and allow the parties to negotiate special terms and conditions and to agree to best volume discounts, regardless of the size of individual orders. BPAs further reduce administrative lead-time and paperwork and often result in the best overall price and the best overall value.
Buying activities should analyze their use of FSS contracts and where there are recurring requirements, negotiate BPAs. If there is a recurring demand at other MACOMs or Army activities, coordinate requirements and issue MACOM-wide or Army-wide BPAs.
Once BPAs are awarded advise all contracting activities that may use the BPA of its existence, scope, prices and other terms and conditions that have value for the Army; e.g., fully compliant with all Army architecture and standards.
While BPAs are not contracts, they do contain agreed-upon business matters such as the amount of discounts and other terms and conditions, and therefore shall be negotiated and signed by contracting officers directly with FSS vendors.
Marketing and Past Performance
Agency-wide and Government-wide ID contracts with very broad statements of work and schedules have been described as nothing more than licenses to sell. Contractors holding them often vigorously market the instruments. Sometimes the government organization responsible for the instrument does as well, especially if a service-for-fee is involved. Requiring activity and contracting personnel both need to keep this in mind and be aware that marketing efforts may sometimes promise more than the scope of the contract requires or permits. In addition, a marketer's comparative analysis of it's product or service with those of competitors is likely to be biased; therefore, perform or obtain independent assessments.
Make sure that placing an award under a particular ID contract is indeed the best solution to satisfying a requirement. Also make sure that items or services being ordered will conform to internal Army requirements such as open systems architecture and other items.
Don't place significant orders against ID contracts without first checking with other government customers as to the contractor's record for delivering quality items and services as promised and on time. Use of the past performance procedural requirements in FAR 42.15 is not required.
Providing and Gaining Access Electronic Catalogs
Publicize Army-awarded ID contracts that permit ordering by other activities on your Internet homepage and the Army Acquisition Website (http://acqnet.saalt.army.mil/virtshop). If the contract permits electronic ordering, link it to both the Army Acquisition Website and the ARnet (http://www.arnet.gov/References/References.html#catalog) where similar contracts awarded by all Government agencies are currently listed.
The Deputy Assistant Secretary of the Army (Procurement) is currently gathering information on Army-awarded ID contracts that allow ordering by others, whether electronic or not. We will list that information on our website in the near future.
Design new ID contracts with EC/EDI in mind and provide for the placement of electronic orders and payment with the IMPAC card. The enclosed March 14, 1997 memo from the Administrator, OFPP provides policy and useful guidance on the award of "electronic catalogs". Note under recommendation seven the statement, "We prefer that every agency place orders directly with the contractor with any reimbursement of agency costs through fees bundled in the price which the contractor would be required to transfer back to the agency."
Competition and Best Value
The competition requirements stated in FAR part 6 do not apply to orders placed against indefinite delivery contracts entered into pursuant to FAR subpart 16.5.
Placing a proper order against an ID contract, either single-award or multiple-award, does not require a separate synopsis of the intent to place an order, nor a Justification and Approval of no competition other than what may have been used for entering into the contract. Remember, for orders against multiple award contracts all contractors awarded such contracts shall be afforded a fair opportunity to be considered for award of the order. The method by which contractors are given their opportunity shall be stated in the solicitation and contract.
Request reductions to prices on ID contracts when the same or similar items and services are available elsewhere at lower prices, or when the size of an individual order clearly indicates the potential for obtaining a reduced price. Consider a published price as a starting point for additional market research and possible negotiation.
Consider any fees charged by the servicing agency when determining whether placing an order under an existing ID contract is the best and most cost effective method of satisfying a requirement. Note that government servicing agencies may be willing to negotiate the amount of the fees they charge.
Government agencies may both charge and pay reasonable fees associated with the actual costs of services performed for or by other government agencies.
Guidance on calculating the fee to be charged is in the DoD Financial Management Regulation, DoD FMR 7000.14-R. Vol. 11B covers working capital organizations and Vol. 11A is for other organizations. Consult with your servicing financial management and legal offices for assistance in calculating the rates. In addition, the DoD Comptroller publishes reimbursement rates for some activities, including contract administration services (http://www.dtic.mil/comptroller).
Small Businesses and Mandatory Sources
When placing orders against ID contracts and when establishing BPAs give preference to small, 8(a) and women-owned business concerns when their products or services meet your requirements and offer equally good value as those of other businesses. Keep in mind the Army's obligations towards meeting our socio-economic goals.
While the Army strongly endorses the use of ID contracts, the order of priority in FAR 8.001 and 8.002 and corresponding DFARS cites for the use of Government supply sources shall be observed.
When funds are sent to another, non-Army government organization for the fulfilling of requirements by the placing of orders or otherwise, the Economy Act applies. An exception provided by the Clinger-Cohen Act is for requirements and funds sent to GSA for IT. The Act does not apply when orders are placed directly with, and funds are paid to, a contractor.