There are many contract types available to the federal government and contractors to provide needed flexibility in acquiring the variety and volume of supplies and services required by agencies to complete their missions. In general, the contract types are grouped into two broad categories: cost-reimbursement contracts and fixed-price contracts.
Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer.
Fixed-price types of contracts provide for a firm price or, in appropriate cases, an adjustable price. Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both. A firm-fixed-price contract provides for a price that is not subject to any adjustment based on the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.
Contracts can be further defined into the following categories.
Incentive Contracts are described in this part are appropriate when a firm-fixed-price contract is not appropriate and the required supplies or services can be acquired at lower costs and, in certain instances, with improved delivery or technical performance, by relating the amount of profit or fee payable under the contract to the contractor’s performance.
Indefinite delivery contracts (IDC) provide 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. These are sometimes referred to as Task Orders or Delivery Order Contracts.
It is a vehicle (IDV) that has been awarded to one or more vendors to facilitate the delivery of supply and service orders. There are three types of indefinite-delivery contracts: definite-quantity contracts, requirements contracts, and indefinite-quantity contracts. These are also known as Parent Awards.
- 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.
- 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. After award, the contract is a mandatory source for the agency for the supplies or services specified. The quantities of supplies or services specified in the IDC or Multi-Agency Contract are estimates only and are not purchased by this contract. Except as this contract may otherwise provide, if the government's requirements do not result in orders in the quantities described as "estimated" or "maximum" in the Schedule, that fact shall not constitute the basis for an equitable price adjustment.
- An indefinite quantity contract provides for an indefinite quantity, within stated limits, of specific supplies or services to be furnished during a fixed period with deliveries to be scheduled by placing orders with the contractor. The contract shall require the Government to order and the contractor to furnish at least a stated minimum quantity of supplies or services and, if ordered, the contractor to furnish any additional quantities not to exceed a stated maximum. For services, it is often called a Task Order Contract. For Supplies, this is often called a Delivery Order Contract.
- Task Order means a contractor for services that does not procure or specify a firm quantity of services (other than minimum or maximum) and that provides for the issuance of orders for the performance of tasks during the period of the contract.
- Delivery Order means a contract for supplies that does not procure or specify a firm quantity of supplies (other than minimum or maximum) and that provides for the issuance of orders for the delivery of supplies during the period of the contract.
IDV Types include Government-Wide Acquisition Contract (GWAC), Multi-Agency Contract, Other Indefinite Delivery Contract (IDC), Federal Supply Schedule (FSS), Basic Ordering Agreement (BOA), and Blanket Purchase Agreements (BPA). These are also known as child awards.
- Government-Wide Acquisition Contract (GWAC)- is a multi-agency contract. It offers Information Technology (IT) services to agencies across the government. It is an Indefinite Delivery Vehicle (IDV) for certain types of IT work: System design, Software engineering, Information assurance, enterprise architecture. Vendors compete for the initial contract. Once selected, they are eligible to compete further for agency specific tasks.
- Multi-Agency Contract (MAC)- is a task-order or delivery-order contract established by one agency for use by government agencies to obtain supplies and services.
- Other Indefinite Delivery Contract (IDC)- facilitates the delivery of supply and service orders during a set timeframe. This type of contract is awarded to one or more vendors. Types are Indefinite Delivery/Definite Quantity Contract, Indefinite delivery/Requirements Contract, Indefinite Delivery/ Indefinite Quantity (IDIQ).
- Federal Supply Schedule (FSS)- is a listing of contractors that have been awarded a contract by GSA that can be used by all federal agencies. This is also known as a Multiple Award Schedule (MAS)
- Basic Ordering Agreement (BOA)- is a type of Indefinite Delivery Vehicle (IDV). It is not a contract; it is a written understanding between government and contractor. It details the supplies or services offered, as well as pricing and delivery for future orders. BOA’s can speed up contracting when requirements are uncertain. These agreements can also help the government achieve economies of scale for part orders. For the contractor, they can lessen lead time, enable a larger inventory investment and lessen old inventory.
- Blanket purchase agreement (BPA)- is a method federal agencies use to make repeat purchases of supplies or services by setting up a ‘charge account’ with trusted vendors. A BPA is a type of indefinite delivery vehicle with an individual agency and can be awarded to a set of vendors who will then be able to bid up on upcoming orders. A BPA can be set up with or without General Services Administration (GSA) schedules; without GSA schedules, orders are capped at the Simplified Acquisition Threshold (SAT) of $100,000.