Two part question 1)Can the KO award an unpriced Multiple Award IDIQ, if the solicitation states that pricing will be established in the individual delivery orders?
2) If the government supplies material, can the contract be considered a supply contract?
The answer is based only on the information provided. Question one, look at FAR 16.504(a)(4) and you will see it does not say anything about price.
FAR 16.504(a)(4) A solicitation and contract for an indefinite quantity must—
(i) Specify the period of the contract, including the number of options and the period for which the Government may extend the contract under each option;
(ii) Specify the total minimum and maximum quantity of supplies or services the Government will acquire under the contract;
(iii) Include a statement of work, specifications, or other description, that reasonably describes the general scope, nature, complexity, and purpose of the supplies or services the Government will acquire under the contract in a manner that will enable a prospective offeror to decide whether to submit an offer;
(iv) State the procedures that the Government will use in issuing orders, including the ordering media, and, if multiple awards may be made, state the procedures and selection criteria that the Government will use to provide awardees a fair opportunity to be considered for each order (see 16.505(b)(1));
(v) Include the name, address, telephone number, facsimile number, and e-mail address of the agency task and delivery order ombudsman (see 16.505(b)(8)) if multiple awards may be made;
(vi) Include a description of the activities authorized to issue orders; and
(vii) Include authorization for placing oral orders, if appropriate, provided that the Government has established procedures for obligating funds and that oral orders are confirmed in writing.
Now look at FAR 16.505(a)(7) this is where it talks about unit prices and estimated costs.
FAR 16.505(a) (7) Orders placed under indefinite-delivery contracts must contain the following information:
(i) Date of order.
(ii) Contract number and order number.
(iii) For supplies and services, line item number, subline item number (if applicable), description, quantity, and unit price or estimated cost and fee (as applicable). The corresponding line item number and subline item number from the base contract shall also be included.
(iv) Delivery or performance schedule.
(v) Place of delivery or performance (including consignee).
(vi) Any packaging, packing, and shipping instructions.
(vii) Accounting and appropriation data.
(viii) Method of payment and payment office, if not specified in the contract (see 32.1110(e)).
If you follow FAR 16.504 and 16.505 you should be able to do what you asked in your question.
The definition in the FAR for supplies is:
“Supplies” means all property except land or interest in land. It includes (but is not limited to) public works, buildings, and facilities; ships, floating equipment, and vessels of every character, type, and description, together with parts and accessories; aircraft and aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing.
When I looked at the background information provided, the Government is contracting for the manufacturing of items and this would be a supply contract.