Indefinite-quantity contracts
Indefinite-quantity contracts offer flexibility for recurring needs, but require clear minimums, maximums, and strong justification for single or multiple awards—especially for large or advisory contracts.
Overview
FAR 16.504 outlines the requirements and procedures for using indefinite-quantity contracts (IQCs), which allow the government to order an unspecified quantity of supplies or services within defined minimum and maximum limits during a set period. These contracts are used when the precise quantity of needed items cannot be determined in advance, but a recurring need is anticipated. The regulation details mandatory contract elements, such as minimum and maximum quantities, contract period, statement of work, ordering procedures, and authorized ordering activities. It also establishes a strong preference for multiple awards to promote competition, with specific exceptions and documentation requirements, especially for contracts exceeding $150 million or for advisory and assistance services exceeding $20 million and three years in duration.
Key Rules
- Contract Structure and Requirements
- IQCs must specify minimum and maximum quantities, contract period, statement of work, ordering procedures, and authorized ordering activities. Minimum quantities must be more than nominal and based on reasonable certainty.
- Multiple Award Preference
- Contracting officers should make multiple awards whenever practicable, unless specific exceptions apply (e.g., only one capable source, administrative burden, or best interest of the government). Special rules apply for large contracts and advisory/assistance services.
- Single Award Limitations
- Single-award contracts over $150 million require a written determination by the agency head and Congressional notification in certain cases. Additional requirements apply for advisory and assistance contracts over $20 million and three years.
Responsibilities
- Contracting Officers: Must structure IQCs with required elements, justify and document single or multiple award decisions, and comply with notification and determination requirements for large contracts.
- Contractors: Must be prepared to fulfill orders within the stated minimum and maximum quantities and comply with the contract's ordering procedures.
- Agencies: Must oversee compliance, ensure acquisition planning supports competition, and provide Congressional notifications when required.
Practical Implications
- IQCs provide flexibility for recurring but unpredictable needs, but require careful planning and documentation. Failure to properly structure or justify awards can result in compliance issues or protests. Contractors should understand the ordering process and be aware of competition for orders under multiple-award contracts.