IDIQ AND REQUIREMENTS CONTRACTS--LESSONS LEARNED IDIQ AND REQMTS.
CONTRACTS--FORWARD
IDIQ AND REQUIREMENTS CONTRACTS-LESSONS LEARNED
Foreword
Indefinite delivery/indefinite quantity (IDIQ) and requirements contracts provide the flexibility
agencies often need to meet the demand for efficient and effective contracting vehicles for information
technology resources. This brochure is presented to help Federal managers successfully use these types
of contracts. Many people helped with the brochure's preparation. We would especially like to thank
the following individuals for their assistance: Department of Agriculture: John Kratzke, Associate
Director of the Office of Information Resources Management; Erlend Warnick, Chief of the Soil
Conservation Trail Boss Staff Department of the Air Force: LTC Thomas Hickerson, SCXI Staff;
Major Charles Mather, Contracting and Manufacturing Staff Officer Department of the Army: David
Borland, Director of the U.S. Army Information Systems Selection and Acquisition Agency
(USAISSAA); Rex Bolton, Chief of Authorizations and Review at USA1SSAA; Kevin Carroll, Chief
of Acquisition Division A at USAISSAA Administrative Office of the U.S. Courts: Fred McBride,
Deputy Assistant Director of Automation and Technology; Albert Ball, Chief of the Automation
Resources Division General Services Administration: C. Allen Olson, Assistant Commissioner of the
Office of Information Resources Procurement; Mary Moran, Chief of the Planning and Review Branch
Department of Transportation: Richard Chapman, Deputy Director of the Office of Information
Resources Management; Margaret C. Binns, Manager of the Information Resources Management
Division; Commander Hugh Grant, Program Coordination Staff Margaret Truntich, Director of the
Regulations Analysis Division in the General Services Administration, was responsible for preparing
this brochure. Questions about the brochure should be directed to her or Judy Steele of the Regulations
Analysis Division at 202-501-3194 or FTS (202)501-3194. Dr. Thomas J. Buckholtz Commissioner,
IRMS IDIQ AND REQUIREMENTS CONTRACTS--LESSONS LEARNED IDIQ AND REQMTS.
CONTRACTS--TABLE OF CONTENTS
Table of Contents
Introduction..............................................1 Background................................................2
Findings..................................................3 Lessons Learned...........................................5 1. Assemble
and keep a good team in place.............6 2. Do a good requirements analysis....................6 3. Limit the
scope of the contract....................8 4. Use fewer, functional specifications...............9 5. Plan for
controlled technology refreshment........10 6. Use shorter term contracts........................12 7. Prevent
buy-ins...................................13 8. Ensure realistic prices throughout the contract
life.....................................13 9. Plan for protests.................................14 10. Use formal source
selection procedures............16 11. Plan for system implementation....................16 12. Closely monitor
the contract......................18 13. Negotiate before exercising liquidated damages
clauses...................................20 IDIQ Lessons Learned Highlights..........................22 Matrix of
Solutions to Common Problems...................24 IDIQ AND REQUIREMENTS CONTRACTS-LESSONS LEARNED IDIQ AND REQMTS. CONTRACTS--INTRODUCTION
Introduction
Much discussion has occurred in recent months regarding the use of indefinite delivery/indefinite
quantity (IDIQ) and requirements contracts. The Federal Acquisition Regulation (FAR) gives multiple
reasons for their use: The contracts allow the Government to stock minimal levels of resources by
permitting vendors to ship resources directly to users. They also allow flexibility in specifying
quantities required, scheduling delivery, and ordering resources after requirements materialize. Despite
their obvious value, some negative publicity has surrounded Federal use of these types of contracts.
The General Services Administration (GSA) has attempted to ensure their successful use through more
intensive reviews of agency procurement requests involving IDIQ and requirements contracts.
Additionally, GSA is currently pursuing a two pronged approach to provide guidance on this subject.
First, the Federal Information Resources Management Regulation (FIRMR) Interagency Council
requested that GSA tap the knowledge acquired by agencies that have used the contracts for a "lessons
learned" document. Such a document would provide agencies' perspectives on what to do and what not
to do when using these contracting vehicles. Second, GSA plans to follow up the lessons learned
document with the issuance of Governmentwide guidance. This guidance would be based on an
indepth GSA study of selected agency indefinite delivery contracts This brochure is the lessons learned
document requested by the FIRMR Council. The following six agencies helped in its development:
Department of Agriculture, Department of the Air Force, Department of the Army, Administrative
Office of the U.S. Courts, General Services Administration and Department of Transportation.
Interviews with thirty individuals from these agencies' IRM and contracting offices provide the basis
for the information in the brochure. Agencies selected to participate in the study form a microcosm of
all Federal agencies who use these contracts. They represent both the civilian and military
communities, are of varying size and have different degrees of experience with IDIQ and requirements
contracts. During the past 11 years, these agencies conducted over 50 IDIQ and requirements contracts
The contracts were for a variety of FIP resources: microcomputers, minicomputers, maintenance,
telecommunications, software, and technical support services. These items were procured either
individually or in combination with other resources. The contracts ranged in value from $1,500,000 to
$25,000,000,000. IDIQ AND REQUIREMENTS CONTRACTS--LESSONS LEARNED IDIQ AND
REQMTS. CONTRACTS--BACKGROUND
Background
Why did these agencies select an IDIQ or requirements contract? Selection essentially conformed to
FAR requirements. Including them in the category of indefinite delivery contracts, FAR Subpart 16. 5
states that these contracts should be used when the exact time and quantities of deliveries will not be
known at the time of contract award. In an IDIQ contract, an indefinite quantity of resources is
furnished during a fixed period, with deliveries scheduled by placing orders against the contract. The
contract must state a minimum and maximum quantity, but the Government's obligation is limited to
the minimum quantity. An IDIQ contract is used when an agency anticipates it will have recurring
requirements but can only predetermine the minimum quantity it will order. Funds for other than the
stated minimum quantity are obligated by each delivery order, not by the contract itself. In a
requirements contract, all agency requirements for the resources contracted for must be ordered from
the contract during the contract life. Deliveries are scheduled by placing orders against the contract. A
realistic estimated total quantity must be stated in the contract, but that doesn't mean the estimated
quantity will be ordered. Requirements contracts are used when an agency anticipates recurring
requirements but can't predetermine the exact quantities that will be needed, not even a minimum
quantity. Requirements contracts may permit faster deliveries of resources when production lead time
is involved because contractors are usually willing to maintain limited stocks when the Government
will obtain all its actual purchase requirements from the contractor. Funds are obligated by each
delivery order, not by the contract itself. Whether an agency used an IDIQ or a requirements contract
depended upon its specific situation. For example, one agency used requirements contracts because it
believed these contracts made contract management for its greatly decentralized components much
easier. Also, the agency felt a mandatory requirements contract would be harder for its extremely
independent components to ignore, thus making it easier to standardize resources. Most agencies used
IDIQ rather than requirements contracts. Their rationale was that it was too difficult to ensure that all
potential users nationwide knew the contract was mandatory. One agency felt it had the best of both
worlds: It issued IDIQ contracts but had a mandatory policy that everyone use the contracts. IDIQ
AND REQUIREMENTS CONTRACTS--LESSONS LEARNED IDIQ AND REQMTS.
CONTRACTS--FINDINGS
Findings
What were these agencies' experiences with IDIQ and requirements contracts? Some had positive
experiences; others did not. Despite any negative experiences, all the agencies are strong supporters of
the contracts and plan to continue using them. They say there are answers to every criticism of the
contracts and ways to make the contracts work successfully. Some agencies like the contracts because
they allow them to focus more on programmatic, rather than procurement issues. Others cite economic
benefits. They note that the Government's total costs, not just acquisition costs, should be a factor
when considering the value of these contracts. As an example, if a contracting vehicle for FIP resources
is not readily available to implement either administrative or legislative changes, agencies must find
other ways to fulfill their new responsibilities. Usually an agency's only recourse is to spend additional
money for personnel (i.e., overtime or new permanent or temporary hires). Such costs can be high, so
their avoidance should be a factor when deciding how best to acquire automated resources. In response
to criticism that these contracts lock agencies into paying higher prices for equipment in the contracts'
out years, one agency counters that these contracts typically provide more than just equipment. They
add value by providing such things as training and on-site maintenance. Critics who say that
equipment can be acquired less expensively outside an agency's IDIQ contract are, therefore,
comparing apples to oranges because they only look at one aspect of the contract's provisions.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "Some agencies like the contracts
because they allow them to focus º º more on programmatic, rather than procurement issuues." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Another agency reminds that using other
contract types doesn't guarantee a problem free acquisition. Acquisitions using definite quantity
contracts have many of the same problems as exist with indefinite quantity contracts. For example,
resource estimates can be grossly erroneous no matter which contract type is used because of changing
programmatic requirements. If such changes occur when a definite quantity contract has been used,
costs can soar either because a new contracting action has to be initiated or because of the costs
associated with delays in getting or keeping the program operational. One agency notes that use of
these contracts has evolved over time with the use of automation. Initially, the contracts were viewed
as an easy way to automate agency components Long term, all-agency "commodity" buys were typical.
Once the basic need for automation was met, agencies started doing more "system" buys. This change
caused other changes in the way the contracts were used, including a tendency to downsize the
contracts, define requirements better, contract for shorter periods of time and award multiple contracts.
Technology itself may eliminate much of the criticism directed at these contracts. The move to open
systems will allow interoperability and interconnectivity of equipment and networks. Since all vendors'
equipment will be compatible, criticism that use of IDIQ and requirements contracts will result in
competitive restrictions in future acquisitions should disappear. Additionally, commodity buys will be
easier because agencies will have few, if any, special integration constraints. While cautioning that
open systems aren't here yet, these agencies are hopeful that an open systems environment will ease
intra and inter-agency standardization and the continued use of these important contracting vehicles.
ALT-I FOR IMAGE IDIQ AND REQUIREMENTS CONTRACTS--LESSONS LEARNED IDIQ
AND REQMTS. CONTRACTS--LESSONS LEARNED
Lessons Learned
This section describes some of the interviewed agencies' experiences in conducting acquisitions using
IDIQ and requirements contracts, as well as what the agencies are doing differently because of their
experiences. The section describes positive steps agencies should take when conducting these
acquisitions. If followed, these "lessons" should simplify the successful use of these contracting
vehicles. Although listed separately, many of the "lessons" are interrelated. That is because they stem
from the same basic issues: technology's short life span and the long Federal procurement cycle. The
"lessons" touch on ways agencies can shorten the procurement cycle to take better advantage of the
most current technology. ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "A structured,
carefully planned environment has to exist for these º º contracts to be used successfully." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Most of the actions proposed are not
unique to these types of contracts. In fact, one agency says that there is nothing different about making
a successful IDIQ buy than there is about making any other kind of successful buy. Most agencies
agree that there is one difference, however. The complexity, sensitivity and dollar value of many of
these contracts, as well as the many uncertainties associated with the amount and timing of resource
deliveries, mandate greater agency commitment and attention than is necessary for other acquisition
types. A structured, carefully planned environment has to exist for these contracts to be used
successfully. Control and accountability are common themes in many of the "lessons." They are
apparent in recommendations to establish special organizations to develop requirements, award the
contract, oversee technology refreshment changes, and monitor the contract. GSA regulations ensure
accountability in the implementation phase by requiring that an individual be designated to execute the
implementation. Additionally, agencies believe planning must be more detailed and cover more factors
so that the acquisition will have a better chance of being brought to a successful conclusion. One
agency spokesman notes, "This is the time to follow the process. No matter how much it hurts, it will
serve you well in the long run." The "lessons" represent a consensus of agency views. When there is a
sharp difference of opinion, the views of the minority agencies are presented. Besides these
recommendations to agencies, implicit throughout this document are ways that industry can ensure the
successful use of the contracts, from hastening the movement to open systems to eliminating any
"gaming" (e.g., lowballing) that might occur in the procurement process.
Lesson 1: "Assemble and keep a good team in place."
Successful acquisitions demand a skilled staff throughout the acquisition cycle, from requirements
analysis through contract administration. All the agencies that conducted successful buys using IDIQ
and requirements contracts attributed their success primarily to the well trained and experienced people
who worked on the project. The size of the procurements, as well as their importance to fulfilling an
agency's mission, mandate that only the best and brightest employees work on them. Various qualities
are sought in project members besides expertise in their given fields. Because of the close cooperation
needed between technical and procurement personnel, agencies also seek good communication skills, a
positive attitude and team players. Lone rangers need not apply. Team members need to work on the
project throughout its life to ensure project stability and continuity.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "The size of the procurements, as well
as their importance to º º fulfilling an agency's mission, mandate that only the best and º º brightest
employees work on them." º º º ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Because of
the size of these procurements, agencies also should provide a structured working environment for
project members. One very large agency suggested the formation of a permanent central program
management office to develop and oversee all such acquisitions. This agency's program management
office centrally plans and manages data collection, does the requirements analyses and other studies
required to support the procurement, performs the technical administration done by contracting officer
technical representatives (COTR's), reviews orders, maintains the database of orders, assigns priorities
for resource delivery and keeps track of users. This office structure ensures that there is a permanent
body of knowledgeable, experienced individuals to work on these acquisitions. While such an office
may not be feasible for all agencies, even the smaller agencies interviewed have small project
management offices whose function is to oversee all aspects of the acquisition process, from the
requirements analysis to contract conclusion.
Lesson 2: "Do a good requirements analysis."
A common complaint about IDIQ and requirements contracts is that they don't accurately reflect
agency needs. Both total contract quantities and contract line item quantities are often estimated
incorrectly. Some items on the contracts, typically low end equipment, are never ordered. How do you
combat this? A comprehensive requirements analysis is the key. Inherent problems exist, however, in
doing requirements analyses for these types of contracting vehicles: The contracting vehicles are
selected specifically because agencies know up front that they can't determine the exact quantities they
will require. Also, if an extended period is spent in carefully trying to define requirements, given the
sometimes equally extended Federal procurement cycle, requirements could change before any
resources are delivered to the agency. Despite the above, these agencies believe that more attention
should be focused on determining the needs of potential users. This is not a trivial matter, considering
the size of many agencies and the problems inherent in Government funding. Agencies suggested
several techniques to facilitate the process. User surveys were recommended for verifying the accuracy
of forecasted information, as were on-site interviews of the various program activities participating in
the acquisition. In a very large agency, interviewing all these activities may not be feasible. An
alternative is to interview key personnel at key activities. Large agencies also should carefully consider
which people to interview to assure a representative sample of offices has been contacted.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "Inherent problems exist, however, in
doing requirements analyses º º for these types of contracting vehicles." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ One of the agencies interviewed found that
a good agency inventory system was invaluable in helping to estimate requirements and identify those
organizations that might be most likely to need specific types of equipment during a contract's out
years. Use of an inventory also can remind agencies needing integration services to require the
contractor to integrate new resources with existing hardware, software and networks. One agency cited
this as an important issue in one of its contracts. System integration wasn't adequately addressed in
either the requirements analysis or contract and the winning vendor apparently didn't have the expertise
to solve the agency's integration problems. No matter which techniques are used, sufficient information
should be collected to ensure that the resultant contract meets agency mission needs. The FIRMR now
gives a detailed description of the types of information agencies should consider to ensure that a
thorough requirements analysis is performed. Ideally, this information should be expressed in
functional terms to allow greater freedom in selecting the most advantageous alternative when the
ensuing analysis of alternatives is performed.
Lesson 3: "Limit the scope of the contract."
Some agencies try to make these contracting vehicles be "all things to all people." They make the
contracts so all-inclusive that they satisfy all the processing requirements of every agency component.
This need for "one stop shopping" often generates the problems typically associated with IDIQ and
requirements contracts: protests, disputes and litigation. These problems arise because the
procurements are so large they can't be evaluated, awarded or administered properly. Some agencies
interviewed reported that their first IDIQ requirements contracts were for total agency solutions. These
agencies found the size of the contracts caused them so many problems they had to change their
approach. One official said that his agency still places a high value on contracting for a total solution,
but recognizes that it paid too high a premium in the past for achieving such a solution, especially in
the area of contract administration. The agency had an especially difficult time handling orders and got
embroiled in liquidated damages claims. It now limits the scope of its contracts to achieve a 75-80%
agency solution. ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º Agencies should
increase the number of IDIQ contracts let and º º gear them to the requirements of individual agency
components, º º especially when resource integration is required. º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Other than contracting issues arise when
the requirements of multiple agency components are aggregated into one large procurement. If few
similarities exist in the resources required by the different agency components, both mission needs and
budgets may suffer. In one large agency, two dissimilar bureaus' requirements were combined because
they had the same client base. The resulting contract didn't completely serve either bureau's needs and
was more expensive than both bureaus had anticipated. An agency spokesman equates it to one bureau
wanting a sedan, the other a pickup and both being given station wagons. This agency is now doing
more IDIQ's that are geared to the requirements of individual bureaus. Another agency also plans to
conduct more indefinite delivery contracts. It will issue contracts according to the resource being
procured. For a recent large requirement, the agency conducted two procurements - one for
microcomputer equipment and one for integration services to make the microcomputers work with
existing resources.
Lesson 4: "Use fewer, functional specifications."
The development of good specifications is critical in ensuring a successful acquisition. Some vendors
complain that Federal specifications are too complex and often require them to provide specially
designed or modified equipment. This drives up vendor costs, they say, both for preparing proposals
and for developing new equipment or modifying standard product lines to meet Federal requirements
that can't be satisfied by commercially available products. It also can result in poor contractor
performance if the winning vendor must establish special assembly lines for the Government. Unique
specifications also have a financial downside for the Government. They can increase the cost of the
resources being procured as well as cause problems in meeting mission requirements if the winning
vendor can't supply the resources in a timely manner. Special Federal requirements regarding security
or compatibility with older resources sometimes make it imperative that specially designed or modified
equipment be procured. To the extent feasible, however, agencies should try to acquire off-the-shelf
equipment. Agencies should also limit the number of mandatory specifications in solicitations to those
absolutely necessary to meet mission needs. The use of functional specifications can facilitate this. As
an example, one agency solicitation for microcomputers had about 3300 mandatory requirements listed
on 140 pages. This agency decided to use functional specifications instead of performance
specifications in its indefinite delivery contracts. As a result, its latest microcomputer procurement
statement of work has 10 pages with about six basic mandatory system requirements.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º Functional Specifications Can Result
In: º º ù Better technical solutions º º ù Better prices º º ù Faster specification development º º ù Easier
awards º º ù Fewer protests º º º ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Other
agencies are also using functional specifications for the following reasons: ù Better technical solutions:
Agencies feel they received better proposals when vendors were allowed to submit what they thought
was the best technical solution for an agency requirement specified in functional terms, rather than
when the agency proposed its own solution. ù Better prices: Although equipment costs proposed were
not noticeably cheaper, agencies believe overall prices for resources, which typically included system
integration requirements, were less when functional specifications were used. ù Faster specification
development: Fewer mandatory requirements means less time spent in developing specifications. The
agency cited before says that it wrote 80% of the specifications for its recent acquisition in two weeks
partly because it could start practically every sentence with the words "users require" and then state a
general requirement for off-the-shelf resources. ù Easier awards: Live test demonstrations and other
validations to ensure that offerors can meet a myriad of mandatory requirements are time consuming
processes. Failure of the apparent winner to meet just one, very minor requirement designated as
mandatory means award cannot be made. The use of functional specifications alleviates this concern
and means a less resource intensive; more streamlined acquisition. ù Fewer protests: Many contract
awards are protested because an offeror believes the awardee didn't meet all the mandatory
requirements. When hundreds, and sometimes thousands, of mandatory requirements are involved, it is
fairly easy for a protester to show that the winning vendor failed to meet one of the mandatories.
Lesson 5: "Plan for controlled technology refreshment."
Getting technology that will meet agency needs throughout a contract's life is critical in this era of ever
expanding workloads. An agency's first concern, of course, is to acquire state of the art technology'
when the contract is awarded. A way to ensure that this occurs is to avoid selecting equipment that is at
the end of its product life. One agency suggests that doing this can be justified by the investment in
training and project management the agency is making in the acquisition.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "When initiating technology changes,
agencies must ensure that º º competitive acquisition statutes and regulations are not º º bypassed, the
scope of the contract is not exceeded and prices º º remain viable." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Another concern is to ensure that current
technology is delivered in a contract's out years. FIP resources have a short life span as industry tends
to release new technology a little at a time. Smaller systems typically have a twelve to eighteen month
life cycle; larger systems, a three to five year life cycle. One way to ensure that current technology is
always provided is to make the contract life the same as the expected life of the technology. The most
common way to do this, however, is to use technology refreshment clauses. Two types of technology
changes must be considered: contractor initiated replacement of out of production items and agency
planned technology upgrades within the scope of the contract. Invoking either type of clause is not
without risk. For example, one agency contractor started using different, but supposedly comparable,
mother boards for its micros. Unfortunately, the boards couldn't be implemented properly and the
equipment delivered to the agency didn't work. Another agency's contractor tried to substitute inferior
equipment for discontinued items. After finally getting the contractor to substitute comparable
equipment, the agency still had problems because all field training manuals, which were based on the
old equipment, had to be revised. When initiating technology changes, agencies must ensure that
competitive acquisition statutes and regulations are not bypassed, the scope of the contract is not
exceeded and prices remain viable. Any use of technology refreshment clauses should be closely
reviewed by the agency's legal staff. Too frequent use of tech refresh clauses has caused much of the
criticism of IDIQ and requirements contracts. Agencies say that, immediately after contract award, both
the contractor and users start clamoring to invoke the clauses. If not properly controlled, this can result
in modifications outside the scope of the contract (e.g., allowing the substitution of dissimilar
equipment such as minicomputers for microcomputers) and the substitution of higher priced resources
per unit of performance than those contracted for. There are different ways to address these concerns.
Most agencies suggest that an independent group be established to review all technology changes to
ensure that the changes are necessary and within the scope of the contract; will not restrict competition;
and result in competitive prices. This group should contain representatives from the customer base and
have a specific level of authority for determining what changes should be made. If the group is
comprised of technically oriented staff it should make its recommendations to a higher level of
management. The group's size should be dependent on the agency and contract size. As an example, a
five person staff is involved exclusively with monitoring technology changes in one large agencywide
contract. A control group can ensure that current and prospective users demanding to add items outside
the contract's scope, such as additional software packages, use other contracting vehicles to satisfy their
requirements. GSA's FIP multiple award schedules contracts, for example, are readily available to meet
pressing needs. The group also can suggest alternatives for contractor initiated changes. When
contractors want to substitute out of production items with higher priced items, one agency deletes the
items from the contracts whenever possible. Replacement items are then obtained from other sources.
Lesson 6: "Use shorter term contracts."
All the interviewed agencies recognize the problems involved with using longer term contracts. Many
have even experienced them. As a result, most of the agencies are now using shorter term contracts.
Agencies generally favor a five year contract life. The five year life is necessary, they explain, because
of the Government's long procurement cycle and the cost of contracting. A contract term shorter than
this would require more personnel to accomplish the contract in the limited time allowed, probably
even the formation of a permanent staff. Shorter terms would mean that when one procurement
finishes, work would immediately have to begin on another. Many agencies lack the resources to
conduct such consecutive procurements. One of these agencies thinks it has the solution to part of this
conundrum. It is trying to drastically streamline the procurement process and institute commercial
procurement practices to the extent feasible. Accordingly, procurement lead time and costs are not a
primary consideration for determining the length of its micro contracts.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º The type of resources being acquired
and whether a commodity buy º º is planned should be considered in determining contract life. º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Other factors agencies cite as important in
determining contract length are the type of resource being procured and how the resource is being
procured. Some resources, for example, need a longer contract life. Technical support services vendors
require a long learning curve before they can be productive so contracts for these services should last at
least five years. On the other hand, if resources are being bought as a commodity (e.g., micros bought
primarily for word processing) and there are no system integration concerns, a shorter contract term is
probably desirable. Most of the agencies, however, typically provide fully integrated systems and still
want contracts for these to last at least five years. One agency official continues to advocate the use of
an eight year system life. She says it takes a few years to deliver and install the equipment to all agency
components, a few more years for users to get their systems fully operational, and yet more years to
plan and accomplish the next procurement. Other officials of this agency who previously favored use
of an eight year system life are now considering the feasibility of shorter term contracts, however.
Lesson 7: "Prevent buy-ins."
One of the tactics vendors competing for IDIQ and requirements contracts are sometimes accused of is
"buying-in." The FAR defines buying-in as "submitting an offer below anticipated costs, expecting to:
(a) Increase the contract amount after award (e.g., through unnecessary or excessively priced change
orders); or (b) Receive follow-on contracts at artificially high prices to recover losses incurred on the
buy-in contract." Besides decreasing competition, buying-in may result in poor contractor
performance. Contracting officers are advised to minimize the opportunities for buying-in by getting a
price commitment for the total requirement up front. Identifying attempts to buy-in may be difficult but
is worth the effort expended. To illustrate, one vendor bid extremely low initial prices for high-end
contract items it hadn't expected to deliver in quantity. There was a great demand for this equipment
and the vendor couldn't supply it in a timely manner. The result was many backorders and unhappy
prospective agency users, as well as talk of financial difficulty for the vendor. Agencies strongly
emphasize the need to perform life cycle analyses when evaluating offers as a means of ensuring cost
or price realism and preventing buy-ins. At a minimum, price reasonableness can be determined by
comparing all the offerors' prices when evaluating proposals to ensure an individual offeror's price is
not out of line. ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "Besides decreasing
competition, buying-in may result in poor º º contractor performance." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Another agency spokesman reminds that
contracting officers must ensure that the cost or price evaluation criteria support the technical
requirements. In one microcomputer contract, that agency used a performance test that affected the
contract's dollar value. Vendors qualified based on their product's benefit to the agency (e.g., micro
time used relative to staff time served). The performance cost was added to the cost proposal to prevent
buy-ins. This spokesman stressed that the cost to an agency of accepting a proposal with a lower level
technical value has to be factored into the proposal's cost.
Lesson 8: "Ensure realistic prices throughout the contract life."
Anytime resources are to be delivered in a contract's out years, a contractual mechanism should exist to
ensure that the resources' prices will be competitive at the time of delivery. This is especially important
because FIP equipment costs are constantly decreasing. Without a good price adjustment mechanism to
correlate current commercial prices with contract prices, an agency could end up significantly
overpaying for technology delivered in a contract's out years. Different alternatives exist regarding how
to keep contract prices competitive. In a recent contract, one agency stipulated that contract prices
could never exceed GSA schedule prices for the same or similar items during the contract's life.
Another agency just asks vendors to propose their own automatic price indexing schemes. A third
alternative is a clause that states the agency will never pay more for an item than the contractor's most
favored customer. ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "Anytime resources
are to be delivered in a contract's out years, º º a contractual mechanism should exist to ensure that the
resources' º º prices will be competitive at the time of delivery." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Agencies caution that limits should be
established on how low the contractor's prices can drop during the contract's life. Vendors will
sometimes bid unreasonably low prices in the out years because they think they won't have to deliver
the product for one reason or another (e.g., because of the contractor or agency invoking the tech
refresh clause). Sometimes vendors even deliberately bid items going out of production to make their
out year prices look good. Offerors should be required to show in their proposals the reasonableness of
their proposed price decreases. Without this, agencies won't have an effective means to evaluate the
proposals. The subject of price adjustment should be considered in relation to contract life and
technology refreshment. A short contract life is the only sure way to ensure competitive prices in a
contract's out years.
Lesson 9: "Plan for protests."
One of the concerns in having a very large contract with extensive requirements is that it may trigger a
lot of protests. No data exists on whether IDIQ and requirements contracts have actually generated an
inordinate number of protests. A general review of General Services Board of Contract Appeals
(GSBCA) cases between 1987 through June 1991 showed that there were less than 70 cases that could
be identified involving these types of contracts in a total of almost 1100 GSBCA cases. The bases for
protest ranged from restrictive specifications to the claim that the awardee didn't meet all the
mandatories. The majority of these cases were either denied, dismissed or withdrawn.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º To Avoid Successful Protests: º º º º ù
Review specifications and evaluation criteria critically º º ù Solicit vendor comments on proposed
acquisitions º º ù Hold pre-proposal conferences for complex acquisitions º º ù Keep communication
lines open with vendors º º ù Use competition enhancing mechanisms º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Most agencies involved with this report
had few problems with protests for these contract types at either the agency level or higher. Nor did
they find any correlation between the type of contracting vehicle used and the number of protests they
received. One agency states it gets about one protest per procurement, no matter what contracting
vehicle is involved. Another agency found that the number of protests increased during a recession and
when incumbents thought they were going to lose their contracts. This doesn't mean that the possibility
of a protest is not an important concern to these agencies. To the contrary, because of the large
investments involved and the importance of most of these contracts to accomplishing agency missions,
agency officials think it imperative to try to minimize the risks for successful protests. They suggest
the following techniques to avoid successful protests: ù Critically review specifications and evaluation
criteria as they are written with a view to how they will look to the GSBCA if the procurement is ever
protested (e.g., Could the specifications be viewed as restrictive, the evaluation criteria not specific
enough?) ù Issue Requests for Information advising of the agency's procurement plans and Requests
for Comments on the draft solicitations (usually only the technical specifications and evaluation
criteria) to vendors expressing an interest in the acquisition. ù Hold pre-proposal conferences when
acquiring very complex resources (e.g., multiple large telecommunications switches). ù Work closely
with vendors throughout the procurement to ensure that they understand what is happening and why. ù
Use competition enhancing mechanisms (e.g., multiple awards) to increase vendor interest and
expectations of participation in future agency contracts. Most of the agencies believe they had few
protests because they worked closely with the vendors and were smart enough to know when the
vendor was right about a solicitation's deficiencies. For example, one agency mentions dropping six
mandatories that vendors said were technically restrictive. Another revised its performance validation
test and resolicited because of problems identified by vendors.
Lesson 10: "Use formal source selection procedures."
Accountability and control are also important in the acquisition's contracting phase. The interviewed
agencies recommend using formal source selection procedures for IDIQ and requirements
procurements because of the complexity and large dollar investments usually involved. A formal
source selection process involves the establishment of a special organization to evaluate proposals and
select the winning contractor. This organization typically consists of an evaluation board, an advisory
council and a source selection authority at a higher management level than the contracting officer. The
organization operates under a formal source selection plan that includes a description of the
organization, significant acquisition milestones, a summary of the acquisition strategy, the proposed
evaluation factors and the overall evaluation process. The agencies believe this formal organization is
necessary for a successful complex acquisition. Such an organization ensures the involvement in the
procurement process of more knowledgeable technicians; a more thorough, detailed review of the
procurement action; and a better planned procurement because those conducting the acquisition know
it will be subjected to many levels of review. Agencies particularly stress the importance of doing
comprehensive upfront procurement planning. Such planning is as critical to the success of the actual
contracting as implementation planning is to successful system operation.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º Formal source selection procedures
provide needed accountability º º and control in the procurement phase of the acquisition. º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ
Lesson 11: "Plan for system implementation."
One item agencies frequently overlooked in initial large buys was planning for system implementation.
The day the contract was signed, the program office would start getting requests for resources that they
weren't prepared to fill. As an example, one agency had not set up an office to handle requests,
established a database for tracking orders, agreed on how it would get orders to the contractor or verify
the orders were accepted, decided who would provide classrooms for training and a host of other
details. ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º Implementation
Considerations: º º º º ù Simplify the ordering process º º - Use fewer CLIN's º º - Create an ordering
book º º ù Determine the best approach for tracking resources º º ù Provide a vendor staffed hotline º º ù
Establish a users group º º ù Coordinate training with equipment delivery º º ù Structure the contract to
achieve lowest resource cost and º º proper cost allocation º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Recognizing the problems agencies were
having, GSA recently instituted new FIRMR provisions requiring the development of an
implementation plan. As with other aspects involving use of these contracting vehicles, the key to
successful implementation is control. The FIRMR requires that an individual be made accountable for
the plan's execution. The plan itself must describe tasks, responsibilities, resources and schedules
necessary to make the system operational. Agencies suggest a number of items to be considered in the
implementation plan: ù Create an ordering book for field personnel that advises which items are on the
contract, how to fill out forms to get the items, when training will be held, etc. The program office
should be in charge of developing the guide with input from the contracting office. ù Structure the
contract to allow easy ordering. The fewer the contract line item numbers (CLIN's), the better. If
multiple CLIN's are required, include all possibilities of master CLIN's comprised of the groups of
resources (e.g., hardware, software, maintenance) that users will most likely order. ù Decide how
resources will be tracked for inventory and contract administration purposes. One agency had a hard
time keeping track of its software site licenses and maintenance because master CLIN's were being
split. In the future, the agency will require all items to be on the invoice even if the CLIN is broken up.
ù Provide for a vendor staffed hotline to answer complaints and questions regarding use of the
resources. Be specific about the scope of hotline queries so that users don't call the hotline for
assistance that should be provided under a technical service CLIN. ù Establish a users group to
supplement the hotline and provide tips on all aspects of resource use. ù Coordinate the delivery of
training with equipment delivery so that equipment doesn't sit around unused for long periods of time.
Also, work with individual offices to ensure that they have adequately budgeted for training. ù
Carefully think out all aspects of implementation costs. For example, one agency's contract separated
course price from location since the number of employees who would attend at each location was
unknown. Since the cost of holding a class is dependent on location, agency contracts now tie these
two together. Another agency mentioned that hotline costs can't be allocated to individual users unless
the service is a contract line item. The agency believes the best alternative is to require that the hotline
service be offered at no cost to the Government.
Lesson 12: "Closely monitor the contract."
Contract monitoring is essential for a variety of reasons. Included among these are that it helps ensure
that the agency obtains the resources contracted for and that neither the contract's maximum order
limitation (MOL) nor the agency's delegation of procurement authority (DPA) is exceeded. Agencies
with large indefinite delivery contracts often have difficulty tracking contract use. Agency offices
throughout the country and sometimes the world use the contracts. Sometimes other agencies
piggyback on an agency's contract. Failure to adequately track orders against contracts can have
serious consequences: More than one agency has had to have GSA authorize ratification of a contract
that exceeded its DPA and MOL. Most of the agencies interviewed found that they could not rely on
the contractor for information needed to track resources. One agency reports waiting two years for
contractor reports providing such information as the serial numbers of the equipment delivered.
Another agency had to force the contractor to add personnel to its project management team at no cost
to the Government so that it could get the minimum level of service required by the contract. Agencies
suggest establishing a special multi-person team to monitor the contract and maintain necessary
information. The suggested composition of these teams varies depending on the agency and contract
size. A three member team was established to administer one medium size agency contract. The team
consists of the contracting officer, the COTR, and a technically knowledgeable computer specialist.
This group reviews all orders placed under the contract, ensures the order is used to update the
automated database, reviews and approves proposed tech refresh changes, keeps a running total of the
money expended, and meets monthly with the contractor to discuss problems. This agency also assigns
a COTR to each regional office to ensure that the regions keep abreast of the contract. The COTR's
have a monthly teleconference and meet annually in central office. Agencies differ as to whether orders
should be placed by only one central facility. Some agencies say this is the only way to assure proper
control. Others maintain that all that is necessary is for a central group to receive a copy of all contract
orders. Most of the agencies interviewed view contract administration as essential for ensuring that
their contracts remain living documents. One agency states that a surefire way of making sure older
technology is delivered at inflated prices is to view contract administration as a static process. Contract
administration is, of course, essential for finding and resolving problems. For example, one agency
reports that a contractor was so concerned with filling orders, it completely ignored the quality of the
products delivered. As a result, some equipment was shipped without screws. It was the contract
administrator who detected and identified this as a common problem. Good contract administrators can
often detect systemic problems. As an example, one agency had a fire at one site that originated in a
power supply board. Extensive discussions conducted by the contract administrator with the contractor
revealed that this problem occurred about every four years in that type of board. The agency is now
systematically replacing these power supply boards.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "Agencies suggest establishing a
special multi-person team to º º monitor the contract and maintain necessary information." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ Agencies stress that maintaining good files
is essential to successful contract administration. If a difference of opinion exists at the end of a
contract regarding money, appropriate documentation is needed to back up or dispute any claims.
Since some of these claims total millions of dollars, adequate documentation is crucial. One of the
areas mentioned where good documentation is especially needed is the list of where to send resources.
Since employees are constantly changing or moving around and offices are being reorganized,
contractors do not always have accurate information about where to deliver new resources. An
accurate, up-to-date list of delivery destinations reduces the number of misrouted and delayed
deliveries. Automated tools are also essential to successful contract administration. Tracking orders is
very paper intensive so an automated inventory system is critical. Automated tools can be used by the
project team in screening orders to make sure the configuration requested by a prospective user will
work. Some agencies are also exploring electronic data interchange as a way to facilitate transmission
of orders to the contractor.
Lesson 13: "Negotiate before exercising liquidated damages clauses."
Some agencies had negative experiences with their contracts, starting from the day the contracts were
signed. One agency reports that a contractor took almost a year after contract award to get geared up to
supply the required equipment. The agency spokesman says it seemed as if the contractor had never
planned to win the contract. Although the contract called for in-production models, it took four months
for the first equipment to be delivered. After that, deliveries were extremely slow and few support
services were provided: The contractor just didn't realize what was involved in providing contract
support to small towns in the hinterlands, where some agency offices were located. Rather than
terminate the contract, the agency negotiated a settlement for liquidated damages with the contractor.
The Government received a monetary settlement, price reductions on current and future orders, larger
credits on future deliveries and an improved level of service. To counterbalance the contractor's
additional outlay, the agency agreed to modify some delivery times and some invoicing procedures so
the contractor would be paid more promptly. Most of the agencies report that it is usually more
worthwhile in the long run to negotiate with non-performing contractors than to default or unilaterally
assess liquidated damages. Contractors are usually more amenable to correcting problems if they feel
they are getting something in return, no matter how small that something is.
ÉÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ» º º º "Most of the agencies report that it is
usually more worthwhile º º in the long run to negotiate with non-performing contractors º º than to
default or unilaterally assess liquidated damages." º º º
ÈÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍͼ The following two subjects are often cited
as reasons for assessing liquidated damages. Both are easily resolved. ù Payments and acceptance. At
what point equipment should be accepted as meeting contract specifications is often difficult to
determine in these contracts. For example, orders from all over the world were issued against one
agency contract but no one office was tasked with receiving and accepting the equipment. Often
laborers on shipping docks received equipment without any proper acceptance testing. Warranties
would often expire before equipment was delivered to users. The contractor didn't get paid for the
orders; and, as a result, the company filed a large multi- million dollar claim against the Government. It
took several years to resolve the claim because the agency didn't have good documentation. The
agency ended up paying over half the disputed amount, including interest and late payments. Now the
agency has all its micros shipped free on board (F.o.b.) origin and uses acceptance procedures similar
to normal commercial practices. An inspector goes to the plant, inspects the equipment before
shipment, signs off on the shipment when it's ready to go, and sends the order for payment. When the
user receives the equipment, he installs it and runs diagnostic tests. If there is a problem, the contractor
comes to fix the equipment or the equipment is mailed back to the contractor. ù Partial shipments.
Another problem involving warranties occurs when all items in an order are not ready for shipment at
the same time. Since a micro-computer with a key part missing isn't usable, one agency prohibits all
partial shipments to avoid any problems in having to assess liquidated damages. The only exceptions
are situations where it is vital for users to install equipment and the equipment is usable. For example,
when systems with terminals are being acquired and not all terminals in an order are available for
shipment, the agency allows the order to be modified to reflect the amount actually shipped so some
offices can start using the equipment. Agencies need to carefully think through their contracts to ensure
sufficient information will be available to assess liquidated damages. For example, if costs are buried
for usage of a vendor operated hotline, contract administrators won't have the data that shows if
problems exist with the equipment delivered. Without this data, liquidated damages can't be assessed.
IDIQ AND REQUIREMENTS CONTRACTS--LESSONS LEARNED IDIQ AND REQMTS.
CONTRACTS--HIGHLIGHTS
IDIQ Lessons Learned Highlights
Assemble and keep a good team in place. ù Get subject matter expertise, good communication skills,
positive attitude, team players for project staffers and assign them for the project's duration. ù Provide a
stable environment, preferably a permanent office, for acquisition personnel. Do a good requirements
analysis. ù Collect sufficient information but in a timely manner. Conduct user surveys. Do on-site
interviews. Use the agency's inventory system. ù Follow FIRMR provisions regarding which
information should be considered in the analysis. ù Express requirements in functional terms. Limit the
scope of the contract ù Consider a 75% rather than a total agency solution. ù Conduct more
procurements. Buy bureauwide rather than agencywide. Contract separately for different resources
(e.g., equipment and integration services). ù Reserve part of the contract for all agency components.
Use fewer, functional specifications. ù Make statements of work short, simple. ù Acquire off-the-shelf
resources whenever possible. Plan for controlled technology refreshment. ù Acquire state-of-the-art
technology at contract award. ù Follow competitive acquisition statutes and regulations, ensure
contract scope is not exceeded and viable prices will be obtained when exercising tech refresh clauses.
ù Establish an independent board to closely monitor tech refresh changes. ù Use other contracting
vehicles (e.g., GSA FIP Schedules) for items not originally intended to be bought off a contract. ù
Minimize potential contractor gaming by deleting, when feasible, any out of production items the
contractor wants to replace with higher priced items. Use shorter term contracts. ù Base contract life on
the resource, its expected technological life and how it will be procured. ù Try to streamline the
procurement process. Prevent buy-ins. ù Assure cost or price realism when evaluating offers. ù Make
sure cost or price evaluation criteria support technical requirements. Ensure realistic prices throughout
the contract life. ù Establish a mechanism to ensure realistic prices are obtained in a contract's out
years. ù Make offerors show the reasonableness of proposed price decreases. ù Consider contract life in
conjunction with technology refreshment and price adjustment clauses. Plan for protests. ù Critically
review specifications, evaluation criteria. ù Issue pre-solicitation notices, send out draft RFP's. ù Hold
pre-proposal conferences for complex acquisitions. ù Work closely with vendors throughout the
procurement so that they better understand what is happening and why. ù Use competition enhancing
mechanisms (e.g., multiple awards). Use formal source selection procedures. ù Establish a formal
process to ensure high level review of complex acquisitions. ù Prepare and follow comprehensive
acquisition plans. Plan for system implementation. ù Develop and use an implementation plan. ù
Create an order book to simplify ordering. ù Structure the contract to allow easy ordering and resource
tracking during contract administration. ù Plan for a vendor hotline and users group to supplement it to
facilitate responses to users' problems. ù Coordinate training with equipment delivery to ensure
resources are effectively utilized. ù Carefully consider how costs will be allocated during
implementation. Closely monitor the contract. ù Establish a special team/office to monitor contracts. ù
Consider whether centralized ordering or only centralized monitoring is necessary. ù Maintain
accurate, comprehensive files. ù Use automated tools whenever possible for ordering and tracking
resources. Negotiate before exercising liquidated damages clauses. ù Attempt to find mutually
acceptable grounds for negotiation instead of immediately using confrontational tactics. ù Avoid
common problems that result in assessing liquidated damages (e.g., payments and acceptance and
partial shipments). ù Adequately plan to ensure that sufficient information will be available to assess
liquidated damages. ALT-I FOR IMAGE