“Multiple-award IDIQ contracts” refers to situations when contracts are  awarded to two or more contractors under a single solicitation. Obligations on  IDIQ contracts were more than $130 billion annually during these years,  with DOD accounting for more than two-thirds of all IDIQ obligations. IDIQ Obligations Accounted for about One- Third of Government-wide Contract Spending

From fiscal years 2011 through 2015, the proportion of IDIQ obligations  relative to total government contract obligations remained relatively  constant, accounting for about a third of total obligations (see figure 1). For example, in fiscal year 2015, government-wide IDIQ  obligations for services accounted for about 70 percent of total IDIQ  obligations. Agencies Obligate the Majority of IDIQ Dollars through Single-Award IDIQ Contracts and Most IDIQ Contract and Order Obligations Were Competed

While the FAR states a preference for multiple-award IDIQs, the majority  of all government-wide IDIQ contract dollars were obligated through  single-award IDIQ contracts from fiscal years 2011 through 2015. Approximately eighty percent of all single- award IDIQ obligations were at DOD. Contracting officials noted it was easier and faster to place an  order under an IDIQ contract than to solicit and award a separate contract  each time a need arose. The Air  Force placed an order only when a specific need arose. Ten of the 18 single-award IDIQ contracts we reviewed were not  competed, generally because only one contractor could meet the need. For the 8 single-award IDIQ contracts we reviewed that were competed,  contracting officials cited various reasons for using a single-award IDIQ  contract, such as that orders were being used for interrelated tasks and  therefore there was a need to build knowledge over time. The contracting officer cited  urgency as the reason for not providing fair opportunity. The contracting officer acknowledged that although  the orders did not meet any of the exceptions listed in the DFARS, he did  not revise the solicitations or allow for an additional solicitation period. Once prices are established at contract award, those prices were  referred to when placing an order, for instance:
The pricing for a noncompeted Navy single-award IDIQ contract with  a value of up to $420 million to procure commercial radios used in  fixed wing aircraft was established in the IDIQ contract. Sonobouys are well-defined products that have been used by  the Navy since the 1940s. No prices were established at the time of IDIQ contract award  because specific requirements were not known at the time of contract  award. Prices for DOD IDIQ Contracts with a Mix of Well-Defined and Less- Defined Products and Services Established at Both IDIQ Contract Award and Order Levels

Eighteen DOD IDIQ contracts, which include both multiple- and single- award, in our selected sample had some price elements established at  the time of contract award and some price elements established at the  time of order award. Agency Comments

We provided a draft of this report to DOD for review and comment. DOD  had no comments. Appendix I: Objectives, Scope, and Methodology

This report addresses (1) federal agencies’ use of indefinite delivery /  indefinite quantity (IDIQ) contracts from fiscal years 2011 through 2015,  the latest year for which complete data were available; (2) the role of  competition when awarding and using selected IDIQ contracts and orders  at the Department of Defense (DOD); and (3) when and how DOD  contracting officials established prices for these contracts and orders. To examine the use of IDIQ contracts by federal agencies, we analyzed  government-wide Federal Procurement Data System-Next Generation  (FPDS-NG) data on IDIQ obligations from fiscal year 2011 through 2015  to identify information such as overall agency obligations on IDIQ  contracts, obligations for products and services, obligations for single-and  multiple-award IDIQ contracts, and extent of competition for single-award  IDIQ contracts and multiple-award orders. Within DOD, we focused on  the four DOD components with the highest obligations on IDIQ  contracts—the Army, Navy, Air Force, and Defense Logistics Agency.
Why GAO Did This Study

Over the past 5 years, the federal government obligated over a hundred billion dollars annually through the use of IDIQ contracts. IDIQ contracts are awarded to one or more contractors when the exact quantities and timing for products or services are not known at the time of award. DOD uses IDIQ contracts more than all other agencies combined. The FAR establishes a preference for awarding multiple-award IDIQ contracts under a single solicitation such that a number of contract holders compete for subsequent orders.
GAO was requested to examine federal agencies' use of IDIQ contracts. This report addresses (1) federal agencies' use of IDIQ contracts from fiscal years 2011 through 2015, the latest year for which complete data were available; (2) the role of competition when awarding selected IDIQ contracts and placing orders at DOD; and (3) when and how DOD contracting officers established prices for these contracts and orders. GAO analyzed Federal Procurement Data System-Next Generation data on civilian and DOD obligations for fiscal years 2011 through 2015; reviewed and analyzed a nongeneralizable sample of 31 IDIQ contracts and 76 IDIQ orders selected across four DOD components—Army, Navy, Air Force and Defense Logistics Agency; and interviewed DOD contracting and program officials.

What GAO Found

From fiscal years 2011 through 2015, the proportion of spending by federal agencies on indefinite delivery/ indefinite quantity (IDIQ) contracts remained stable and accounted for about a third of total government contract obligations. Agencies obligated more than $130 billion annually on these types of contracts, as shown in the figure.
The Departments of Defense (DOD), Homeland Security, Health and Human Services, and Veterans Affairs were the main users of IDIQ contracts, with DOD accounting for about 68 percent of all IDIQ obligations from 2011 through 2015. About two-thirds of government-wide IDIQ obligations were for services, with the remainder for products. Although the Federal Acquisition Regulation (FAR) states a preference for multiple-award IDIQs, the majority of dollars government-wide, approximately 60 percent, were obligated through single-award IDIQs. About 70 percent of single-award IDIQ obligations and more than 85 percent of order obligations under multiple-award contracts were competed. Contracting officials at DOD cited flexibility as the main advantage for using IDIQ contracts, noting that it was easier and faster to place an order under an existing IDIQ contract than to award a separate contract when a specific need arose.
Ten of the 18 single-award IDIQ contracts GAO reviewed at DOD were not competed, generally because only one contractor could meet the need. For the competed single-award contracts, contracting officials cited various reasons for choosing a single-award IDIQ approach, such as the need to build and maintain knowledge as orders were awarded over time. For about one-third of the multiple-award IDIQ orders GAO reviewed, DOD did not provide an opportunity for all contract holders to compete due to urgency or other reasons.
Prices on IDIQ contracts and orders at DOD were established at different points, depending on how well-defined the requirements were at the time of contract award. For example, for a Navy contract to buy commercial radios used in fixed-wing aircraft, the pricing was established upfront in the contract since the radios were defined products that have been used for many years. In contrast, for an Air Force contract to buy research and development services for cybersecurity and malware detection, all pricing was established at the order level since specific research needs were not known when the contract was awarded.

What GAO Recommends

GAO is not making any recommendations at this time. DOD had no comments on a draft of this report.