Sign In
  • Question

    My question is in regard to FFP IDIQ vs. Requirements contracts for supplies (Depot Level Repairables)


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.

    FAR 6.302-1 -- Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements
    (d) Limitations.
      (1) Contracts awarded using this authority shall be supported by the written justifications and approvals [J&A] described in 6.303 and 6.304.

    FAR 16.503 -- Requirements Contracts.
    (a) Description. A requirements contract provides for filling all actual purchase requirements of designated Government activities for supplies or services during a specified contract period (from one contractor), with deliveries or performance to be scheduled by placing orders with the contractor.

      (1) For the information of offerors and contractors, the contracting officer shall state a realistic estimated total quantity in the solicitation and resulting contract. This estimate is not a representation to an offeror or contractor that the estimated quantity will be required or ordered, or that conditions affecting requirements will be stable or normal. The contracting officer may obtain the estimate from records of previous requirements and consumption, or by other means, and should base the estimate on the most current information available.

      (2) The contract shall state, if feasible, the maximum limit of the contractor’s obligation to deliver and the Government’s obligation to order.

    (b) Application.
      (1) A requirements contract may be appropriate for acquiring any supplies or services when the Government anticipates recurring requirements but cannot predetermine the precise quantities of supplies or services that designated Government activities will need during a definite period.

    FAR 16.504 -- Indefinite-Quantity Contracts
    (a) Description. An indefinite-quantity contract provides for an indefinite quantity, within stated limits, of supplies or services during a fixed period. The Government places orders for individual requirements. Quantity limits may be stated as number of units or as dollar values.
      (2) To ensure that the contract is binding, the minimum quantity must be more than a nominal quantity, but it should not exceed the amount that the Government is fairly certain to order.
      (4) A solicitation and contract for an indefinite quantity must— (ii) Specify the total minimum and maximum quantity of supplies or services the Government will acquire under the contract.

    2. In addition to the information provided in this inquiry, we learned the following from the telecom. The contractor is the sole source for these supplies due to their intellectual property rights. The buying activity has been awarding IDIQ contracts for these supplies, each of which being supported by the execution of a J&A pursuant to FAR 6.302-1(d)(1). We also learned that the nature of the “inadequate customer forecasting” is that such forecasts for the relevant period of performance have been generally understated to a significant degree as compared to the higher actual requirements realized during those timeframes. As a result, because these IDIQ contracts specified the total maximum quantity of these supplies to be acquired under each contract pursuant to FAR 16.504(a)(4)(ii), significant administrative effort was being expended preparing revised J&As for the acquisition of the additional number of supplies that were actually required by the customers.

    3. Pursuant to FAR 16.503(a), a Requirements contract provides for filling all actual purchase requirements of designated Government activities for supplies during a specified contract period from one contractor. Therefore, the use of this contract type would certainly be appropriate when contracting with a sole source supplier such as the case here. Pursuant to FAR 16.503(b)(1), a Requirements contract is also appropriate for acquiring any supplies when the Government anticipates recurring requirements but cannot predetermine the precise quantities of supplies that designated Government activities will need during a definite period. Therefore, the use of this contract type would also be suitable for this acquisition situation to address the consistent inadequacy of customer forecasting of their actual requirements for these supplies during the relevant performance periods, such as the case here.

    4. Based on the above, we believe that the use of a Requirements type contract would be more suitable than the use of an Indefinite Quantity contract to address this particular acquisition situation and would most likely result in the need to execute only one J&A for the procurement action covering the relevant periods of performance. As indicated in FAR 16.503(a)(1), using a Requirements type contract would provide significantly more flexibility in addressing any inadequate (i.e., low-side) customer forecasting of its actual requirements because the contract states a realistic estimated total quantity in the solicitation and resulting contract. Unlike under an Indefinite Quantity contract, the “realistic estimate” specified in a Requirements contract is not a representation to the contractor that the estimated quantity will be required or ordered, or that conditions affecting requirements will be stable or normal.

    5. Also as indicated in FAR 16.503(a)(1), the contracting officer may develop this “realistic estimate” of the total quantity that may be required from records of previous requirements and consumption, or by other means (e.g., applying quantitative forecasting tools to this data), and base the estimate on the most current information available. Pursuant to FAR 16.503(a)(2), the contract must state, if feasible, the maximum limit of the contractor’s obligation to deliver and the Government’s obligation to order. The contracting officer can analyze the same data from previous requirements and consumption, along with other quantitative forecasting tools, to establish these maximum limits that may be higher than the “realistic estimate”. If such analysis clearly shows that it is not feasible to establish such maximum limits, then the contracting officer must also adequately document that outcome in the contract file and then need not include such maximum limits in the Requirements contract.



    Open full Question Details
Chat with DAU Assistant
Bot Image