Every dollar spent administering a Job Order Contract (JOC) program is a dollar that cannot be invested in repairing facilities, modernizing infrastructure, or reducing deferred maintenance. The impact of excessive JOC program fees can be felt across all these areas.
While Job Order Contracting has proven to be an effective procurement method for delivering repair, renovation, and minor construction projects, owners should periodically evaluate whether the administrative costs of their JOC program, including excessive JOC program fees, continue to provide commensurate value.
The Hidden Cost of Percentage-Based Program Fees
Many managed JOC programs charge fees based on a percentage of construction volume rather than a fixed software or subscription cost. Gordian publicly states that it receives “a percentage of the total cost” of each project executed under its managed JOC programs, with total program costs, including excessive JOC program fees, dependent upon construction volume.
For owners managing tens or hundreds of millions of dollars in annual construction, percentage-based fees can become a significant long-term operating expense.
Unlike design costs or construction management services, these administrative fees generally do not increase the scope of work completed. Instead, they represent overhead associated with program administration, software, technical support, and related services.
Opportunity Cost Matters
Public owners operate with finite capital budgets.
When administrative costs increase, owners may have fewer resources available for:
- Deferred maintenance
- Facility modernization
- Energy improvements
- Life-safety projects
- Mission-critical repairs
Over the life of a multi-year JOC program, even relatively small percentage-based fees may represent millions of dollars that could otherwise be invested directly into facilities.
Owners Should Periodically Evaluate Alternatives
Competition benefits public procurement.
Today’s marketplace includes multiple approaches to supporting JOC programs, including:
- Percentage-based managed services
- Fixed annual licensing models
- Owner-managed solutions
- Independent Unit Price Books (UPBs)
Evaluating alternatives allows owners to determine whether they are paying for services they actually need or simply continuing with historical procurement practices.
The objective should not be selecting the lowest-cost provider—it should be maximizing lifecycle value while maintaining procurement compliance, transparency, and accurate construction pricing.
Looking Beyond Software
When evaluating JOC solutions, owners should consider the total cost of ownership, including:
- Administrative fees
- Software licensing
- Training
- Technical support
- Unit Price Book methodology
- Cost data transparency
- Update frequency
- Procurement flexibility
A lower administrative burden coupled with transparent, defensible construction cost data may enable more project dollars to reach the field rather than being consumed by program overhead.
The Bottom Line
The question is not whether Job Order Contracting works—it clearly does when properly implemented.
The real question is whether long-standing administrative fee structures continue to represent the best value for taxpayers and facility owners.
As construction costs continue to rise and capital budgets remain constrained, organizations should periodically ask a simple question:
“Are we investing the maximum possible amount in our facilities—or are we paying more than necessary to administer the program?”
References
- U.S. Army Federal Acquisition Regulation Supplement (AFARS) Subpart 5117.90 – Job Order Contracts.
- Gordian. 15 Frequently Asked Questions About Job Order Contracting Programs (describing percentage-based program fee structure).
- Gordian. Job Order Contracting (overview of managed JOC services and pricing model).
Disclaimer
This article is provided for informational purposes only and should not be construed as legal, procurement, or financial advice. References to Gordian are based solely on publicly available information published by Gordian and government procurement resources at the time of writing. Program pricing, services, and contractual arrangements may vary by customer and contract. Readers should conduct their own due diligence and evaluate all available JOC solutions—including providers such as Four BT, LLC and others—based on their organization’s specific operational, procurement, technical, and financial requirements.