Definition: IDIQ construction contracts are Indefinite Delivery Indefinite Quantity construction agreements that may or may not have associated detailed construction delivery processes and workflows.
- Multi-year contract where both the specific delivery times and value of individual renovation, repair, or new construction projects are not fully defined.
- Focused upon construction projects of varying sizes
- May or may not be based upon LEAN construction practices and thus may or may not save the contracting entity money or provided higher levels of quality, etc.
- Initial basic intent was to speed procurement via the pre-selection of a pool of pre-qualified contractors, however, in may cases has evolved into an elimination of checks and bases associated with traditional procurement methods.
Multiple types of construction IDIQs
- Time and Materials – for simpler/smaller tasks
- MATOC (Multiple Award Task Order Contract) or MACC (Multiple Award Construction Contract) – for larger construction projects
- Job Order Contracting (JOC) – for the numerous renovation, repair, sustainability, and minor new construction projects, averaging $50,000-$100,000+ up several million dollars bases upon project complexity and associated design requirements.
Review of various IDIQ Construction Contracts
T and M Basics
• Pre-established labor rates and/or materials markup
• Suitable for the smallest and least complex projects
• Extension of and/or option to in-house crews
T and M Advantages
• Response time
• Ideal for simple emergency repairs
• Flexible for projects with unknown scope
• Extension of in-house staff
T and M Disadvantages
• Little price control or up-front commitment
• No ability to subcontract—limited to trade specified in the contract
• Pricing structure incompatible with optimizing efficiency and eliminating waste
MATOC/MACC Basics
• Prequalified shortlist of contractors that bid on multiple projects
• Phase 1 selection is always qualifications-based (can have price component in the form of a seed project)
• Per-project competition is usually price-based
MATOC/MACC Advantages
• Simple to implement versus more efficient LEAN delivery methods
• Similar to traditional design-bid-build thus no additional training or enhanced skills required
• Better assurance of quality contractors if best value selection process is executed properly
• Can be used for larger projects
• Streamlines post-bidding award, security clearances, etc.
MATOC/MACC Disadvantages
• Same inefficiencies, waste, and lack of financial visibility and control as that of design-bid-build(DBB). Little room for innovation or collaborative relationships
• Little time savings provided. Full bid documents are required for each project to ensure prequalified contractors are bidding appropriately.
• Spreads volume among many contractors, reducing operational efficiency and providing less incentive for quality construction contractors
• Government can favor one contractor , enabling them to dominate, precluding competitive pricing
• Contractors are higher quality, but DBB process and mentality remains. Thus, little or no improvement relative to quality, cost, or time.
Job Order Contracting Basics
• Unit-price based – Full, verifiable, and actionable cost data for every project, provided a locally researched detailed unit price book, UPB, is used and LEAN JOC Program is established and implemented properly
• Contractors compete for initial contract award via an “adjustment factor(s)”/
co-efficient”, and past performance track record.
• Post selection as an awarded JOC Contractor, there is NO priced competition among contractors. Contractors are awarded work strictly based upon performance.
• Individual projects are scoped and proposed based on unit prices, which converts to a lump- sum delivery order before proceeding. Changes orders, legal disputes, and cost/time overruns are virtually elimated.
• Performance-based
Job Order Contracting Advantages
• Operational efficiencies from having one or a pool of “go-to” contractors
• Extension of owner staff
• Collaborative, transparent, and compliant process
• Early contractor involvement on all projects
• Standardized pricing based on competitive process
• Savings on “soft costs”
• Expedited quality and delivery of projects
• Maximizes opportunity for M/DBE subcontracting
JOC Disadvantages
• Very different approach/process versus traditional design-bid-build, MATOC, MACC, design-build, etc. — requires partnering mindset on the part of the owner and the contractor(s).
• Requires staff can contractor acumen with respect to detailed line item estimating / unit price book estimating and associated evaluation of line item estimates
• No multiple quotes for comparison