1. Contracting Officer Podcast Slides
Knowledge & Insights From Contracting Officers

2. What is an Indefinite Contract?
Episode 045
What is an Indefinite Contract?
Original Air Date: September 21, 2015
Hosts: Kevin Jans & Paul Schauer

3. Formatting notes
Hyperlinks: Blue font indicates hyperlinks – presentation must be in ‘Slide Show’ mode to activate the link
Red bold font indicates a point of emphasis
Green bold font indicates CO’s personal comment or perspective

4. Introduction
Purpose of this podcast: To examine and explain Indefinite Contracts
Indefinite contracts
Sound confusing
Can be confusing
If you don’t understand how they work, you can't forecast the cash flow/revenue.

5. Contract Types that deal with Risk
Listen to Podcast 009 and 040 for more details on cost vs. fixed price
Fixed-price
One extreme is firm-fixed-price, where the contractor has full responsibility for performance costs and resulting profit (or loss)
Cost-reimbursement
The other extreme is cost-plus-fixed-fee, where the contractor has minimal responsibility for performance costs, and negotiated fee (profit) is fixed.

6. Contract Types that deal with Execution
Exact times and/or exact quantities of future deliveries are not known at the time of contract award
“Estimated” quantities or schedules
Indefinite-delivery contracts (FAR 16.5)
Definite-quantity contracts
Requirements contracts
Indefinite-quantity contracts

7. Example: Definite-quantity contracts
FAR Definite-Quantity Contracts. (a) Description. A definite-quantity contract provides for delivery of a definite quantity of specific supplies or services for a fixed period, with deliveries or performance to be scheduled at designated locations upon order. (b) Application. A definite-quantity contract may be used when it can be determined in advance that -- (1) A definite quantity of supplies or services will be required during the contract period and

8. Example: Definite-quantity contracts
(2) The supplies or services are regularly available or will be available after a short lead time.
I know I need 5000 medical kits
However, I don’t know exact rate of use (don’t know exactly when needed)
I’ll send you an order when I need them.
I may need 100, 1000, or 1850 at different times during the contract
We’ll have a min order and max order.

9. Example: Requirements contracts
FAR 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.
I don’t know that I’ll need 5,000, but
When I do buy them, I will buy them all from you for the period (ex: one year)
I’ll send you, and only you, an order when I need them.

10. Example: Requirements contracts
State reasonable estimate of orders and max quantity
Ceiling is $103 million (or CO must write a Determination & Finding)
Limitation on using for Advisory & Assistance Services: (3 years & $12.5 million)

11. Example: Indefinite Quantity contracts
FAR Indefinite-Quantity Contracts.
Description. An I-Q contract provides for an indefinite quantity, within stated limits, of supplies or services during a fixed period
Government places orders for individual requirements
Must order a minimum quantity
If more orders placed, contractor must deliver up to a stated maximum
Quantity limits may be stated as number of units or as dollar values
Must state min/max for each order and max over certain time period
"only when a recurring need is anticipated"

12. Example: Indefinite Quantity contracts
IDIQ – Indefinite Delivery and Indefinite Quantity
We will have a separate podcast for this important topic
See FAR (Ordering) and (Order Limitations)

13. When do Indefinite Contracts happen?
Acquisition Time Zones (from Podcast Episode 003)
Requirements Zone
Market Research Zone
RFP Zone (proposal zone)
Source Selection Zone

14. Why are Indefinite Contracts important?
Execution
Selecting the right structure can make contract execution a simple job
Improper (or less than optimal) assignment of contract type can endanger program performance regardless of technical risks
Communication between Government and Industry is essential to avoid surprises after award
Government must understand user needs and funds availability
Industry must be capable of delivering per the contract

15. Why Should Government Care?
Contract type is the structure on which results are built
Goal is less administrative burden for everyone
The best COs examine the options, then craft the perfect fit among the contract types available (this is the thinking part of the job)
And get feedback from industry – they can “discuss”

16. Why Should Industry Care?
Did you celebrate the big win?
You now have a $0 contract (or a $1000 meaningless contract) with no promise of any future work/deliveries
Do you understand the user's needs and budget?
First question of RFP Score: “How confident are you the entire contract is funded?”
Definite Quantity: Know end result but not phasing of cash flow/delivery
Requirements: Know min/max but not timing
Indefinite Quantity: Know nothing
Contract does not promise anything

17. Summary
Mutually review available contract types to assess the best fit between Government needs and Industry capability
Flexibility is nice, unless you’re holding a wet noodle; too much flexibility can make these hard to manage
If you don’t spend some time picking the right contract type, it will haunt you…
It’s how Government and Industry get the best solution
Drives the execution process
Industry must understand "indefinite" - don't party too soon

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