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  • Question

    I was asked by a PEO that since the PM doesn't have a good grasp on the # of units wouldn't it be better to do a requirements contract instead of another IDIQ. As I understand it the requirements contract would in essence give the contractor right of first refusal and if the contractor didn't want to accept a requirement they could refuse it and the Government would have to proceed with awarding a new contract. If I'm correct I believe the correct contract type would still be an IDIQ because this type of contract would give the Government the greatest flexibility with future requirements within its ceiling.


    Answer

    I'm going to point you to the FAR and I'll have to let you decide which is best for your agency and provide a little clarity about a Requirements contract since I believe you are familiar with the IDIQ.

     

    16.501-2 -- General.

    (a) There are three types of indefinite-delivery contracts: definite-quantity contracts, requirements contracts, and indefinite-quantity contracts. The appropriate type of indefinite-delivery contract may be used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award.

     

    (b) The various types of indefinite-delivery contracts offer the following advantages:

     

    (1) All three types permit --

     

    (i) Government stocks to be maintained at minimum levels; and

     

    (ii) Direct shipment to users.

     

    (2) Indefinite-quantity contracts and requirements contracts also permit --

     

    (i) Flexibility in both quantities and delivery scheduling; and

     

    (ii) Ordering of supplies or services after requirements materialize.

     

    (3) Indefinite-quantity contracts limit the Government’s obligation to the minimum quantity specified in the contract.

     

    (4) Requirements contracts may permit faster deliveries when production lead time is involved, because contractors are usually willing to maintain limited stocks when the Government will obtain all of its actual purchase requirements from the contractor.

     

    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. The contract may also specify maximum or minimum quantities that the Government may order under each individual order and the maximum that it may order during a specified period of time.

     

     

    If you set up a requirements contract, the contractor is required to deliver the product(s) on that particular contract.

     

     

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