Overview
This section establishes the foundational definitions and general principles for Indefinite-Delivery Contracts (IDCs), which are used when the government cannot determine the exact time or quantity of future needs at the time of award. It distinguishes between delivery-order contracts for supplies and task-order contracts for services across three specific contract types.
Key Rules
- Terminology Distinction: "Delivery-order contracts" apply specifically to the procurement of supplies, while "Task-order contracts" apply to the procurement of services.
- Three IDC Types: The FAR recognizes three distinct indefinite-delivery vehicles: definite-quantity, requirements, and indefinite-quantity contracts.
- Quantity Constraints: Except for definite-quantity contracts, these vehicles do not specify a firm quantity but must include a minimum and maximum quantity limit.
- Government Obligation: In an indefinite-quantity contract, the government’s legal financial obligation is strictly limited to the minimum quantity specified in the contract.
- Pricing Flexibility: Indefinite-delivery contracts are not limited to a specific price type and may utilize any cost or pricing arrangement permitted under FAR Part 16.
Practical Implications
- Inventory Management: These contracts allow agencies to maintain "just-in-time" inventory levels, reducing the cost and burden of maintaining large government-owned stocks.
- Mission Flexibility: Agencies can quickly respond to emerging requirements by issuing orders as needs materialize, rather than undergoing a full new procurement cycle for every individual requirement.
- Risk Mitigation: The use of minimum and maximum thresholds protects the government from over-committing funds while providing contractors with a guaranteed baseline of work.