General
Indefinite-delivery contracts provide flexibility for both the government and contractors when exact delivery times or quantities are unknown, streamlining procurement and inventory management.
Overview
FAR 16.501-2 outlines the general principles and advantages of indefinite-delivery contracts, which include definite-quantity, requirements, and indefinite-quantity contracts. These contract types are used when the government cannot determine exact delivery times or quantities at the time of award. The section explains the flexibility and logistical benefits of these contracts, such as maintaining minimal government stock levels, enabling direct shipment, and allowing for flexible ordering and delivery schedules. It also clarifies that requirements and indefinite-quantity contracts are also known as delivery-order or task-order contracts, and that any appropriate cost or pricing arrangement may be used, provided it complies with relevant FAR procedures.
Key Rules
- Types of Indefinite-Delivery Contracts
- There are three types: definite-quantity, requirements, and indefinite-quantity contracts, each suited for situations where delivery times or quantities are uncertain.
- Advantages of Indefinite-Delivery Contracts
- These contracts help minimize government inventory, allow direct shipment, and provide flexibility in ordering and delivery.
- Cost or Pricing Arrangements
- Contracts may use any appropriate cost or pricing method, but must follow applicable FAR procedures, especially when estimating quantities.
Responsibilities
- Contracting Officers: Must select the appropriate indefinite-delivery contract type and ensure compliance with cost/pricing procedures.
- Contractors: Should be prepared to fulfill orders as requirements materialize and maintain flexibility in delivery and quantities.
- Agencies: Oversee contract compliance and ensure proper use of indefinite-delivery contracts.
Practical Implications
- This section enables agencies to procure supplies/services efficiently when needs are uncertain, reducing inventory costs and improving responsiveness. Contractors must be adaptable to fluctuating order quantities and schedules, and both parties must ensure contract terms align with FAR requirements.