Overview
FAR 16.504 governs indefinite-quantity contracts (commonly known as IDIQs), which provide for an indefinite quantity of supplies or services within stated limits during a fixed period. These contracts are utilized when the government anticipates a recurring need but cannot predetermine the precise quantities required above a specified minimum.
Key Rules
- Minimum and Maximum Limits: The contract must specify a minimum quantity that is more than nominal to ensure it is legally binding, as well as a maximum quantity based on market research and rational planning.
- Contractual Requirements: Solicitations must clearly define the contract period (including options), the general scope and complexity of the work, and the specific procedures and authorized activities for issuing orders.
- Multiple Award Preference: Contracting officers must, to the maximum extent practicable, prefer making multiple awards under a single solicitation to maintain competition throughout the life of the contract.
- Single-Award Restrictions: Single-source awards estimated to exceed $150 million (including options) are prohibited unless the head of the agency provides a written determination citing specific justifications, such as integrally related tasks or public interest.
- Advisory and Assistance Services: For these specific services, multiple awards are generally mandatory if the contract exceeds $20 million and a three-year duration.
- Exclusions from Multiple Awards: Multiple awards should be avoided if the requirement is unique, if a single award provides more favorable terms, if administrative costs outweigh benefits, or if the total value is at or below the simplified acquisition threshold.
Practical Implications
- Guaranteed Minimums: Contractors are only guaranteed the stated minimum quantity; once the government meets this obligation, it has no further legal requirement to place additional orders.
- Fair Opportunity: The preference for multiple awards means that winning an initial IDIQ contract is often just the first step, as contractors must then compete with other awardees for individual task or delivery orders under "fair opportunity" rules.