Why IDIQs?

Understanding the Government’s Purchasing Strategy

During a government agency’s strategic planning (acquisition approach), it determines its need to purchase a specific product or service. Once this need is determined, a government agency must determine which type of contract or contract vehicle will best serve the government’s needs. The most common types of government contracts are fixed-price, cost-reimbursement, and indefinite delivery/indefinite quantity (IDIQ) contracts due to their distinct characteristics that cater to government procurement’s various needs and risk profiles.

The unknown quantities and timelines of an IDIQ result in government agencies choosing the flexibility of an IDIQ or GWAC contract vehicle that allows the agency the expanded flexibility in determining its needs more specifically in the future, e.g., over the life of the IDIQ contract. Indefinite delivery, indefinite quantity contracts provide for an indefinite quantity of services for a fixed time. They are used when an agency cannot determine, above a specified minimum, the precise quantities of supplies or services that the government will require during the contract period. IDIQs help streamline the contract process and speed service delivery. IDIQ contracts are most often used for service contracts and architect-engineering services. Awards are usually for base years and option years. The government places delivery orders (for supplies) or task orders (for services) against a basic contract for individual requirements.

IDIQ contracts have become a popular procurement mechanism in government agencies, offering a flexible and efficient means to acquire a diverse range of goods and services. The recent proliferation of Best in Class (BIC) IDIQ vehicles with long-term performance periods have put considerable strain on the contracting community. Contractors face tough decisions – secure a seat at the table now or engage in alternate, less than attractive methods to gain access to contracting opportunities as a subcontractor or consider invest heavily on acquisitions and novation to get access to a specific contract vehicle.

For government agencies, IDIQs provide economies of scale, streamlined procurement processes, and cost efficiencies. Contractors, on the other hand, see IDIQs as opportunities to access new agencies, compete within a limited vendor pool, and streamline the bidding process. In Fiscal Year 2023 alone, there were/are approximately 200 multiple-award IDIQs set to be released in the services sector, presenting a plethora of opportunities. To capitalize on IDIQ contracts and achieve their objectives, contractors must differentiate themselves from the competition and embrace calculated risk-taking. While popular IDIQs hold promise, it is essential for contractors to diversify their approach and not solely focus on the “Tik Tok IDIQs” garnering the most attention. Diligent preparation and a focus on building strong infrastructure and capabilities will ensure contractors are well-positioned to maximize the opportunities that IDIQ contracts offer.

Despite the enticing prospects, contractors need to approach IDIQ pursuits strategically. While popular IDIQs like GSA STARS III, Navy SeaPort-NxG, NITAAC CIO-SP4, and NASA SEWP VI have garnered significant attention, success goes beyond securing a seat at the table. Proper resources and infrastructure are essential to effectively respond to task orders and capitalize on wins.

The landscape of IDIQ contracts offers both opportunities and challenges for contractors. A proactive and strategic approach will enable companies to thrive amidst the competition and make the most of the vast array of IDIQs available in the market. Success lies in identifying the right fits, developing robust resources, and seizing the right opportunities to achieve growth and success in the ever-evolving government contracting arena.