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  • Question

    Does each service or equipment requested at or above the simplified acquisition threshold (SAT) through the FFP IDIQ contract require a new Independent government cost estimate (IGCE) or was the IGCE to let the original contract the only one required?


    Answer

    The FAR, DFARS, and DFARS PGI do not require an IGCE for most service contracts.  The FAR identifies the IGCE as one of several tools available to establish that the contractor’s cost or price is fair and reasonable (FAR 15.404-1(b)(v)).  According to the Department of Defense COR Guidebook, dated May 2021, an IGCE is required for every procurement action in excess of the Simplified Acquisition Threshold (SAT).  The DoD IGCE Handbook for Services Acquisition states that the IGCE is prepared “for every new services acquisition in excess of the SAT and when requested for some individual projects under an existing contract.”   

    Although not required by the FAR, DFARS, and DFARS PGI, an IGCE can be developed in conjunction with requirement documents to identify all costs associated with a requirement; to support contract negotiations; to determine that price is fair and reasonable, and to compare with the program budget to request funding. 

    IGCEs can be developed for individual task order under IDIQ contracts as well as the base IDIQ contract.  For example, in GAO study (GAO-17-398), “Army officials said they develop task order IGCEs even when the labor rates are pre-negotiated in the base IDIQ contract, in part because the IGCEs include other estimated costs, such as travel expenses and other direct costs, which help contracting officials understand the services the program office expects to receive. Officials for several task orders cautioned that it is important for them to develop separate IGCEs specific to each task order because the base IDIQ contract may not contain the level of detail necessary to estimate requirements at the task order level.”        

    Recommend reviewing agency specific policy to determine the requirement for an IGCE at the task order level.

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