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HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance

Using Indefinite-Delivery/Indefinite-Quantity Contracts to Acquire Severable and Non-severable Services.

Indefinite-delivery/indefinite-quantity (ID/IQ) contracts establish a guaranteed minimum amount that the Government is committed to purchase. The Contracting Officer must obligate appropriations available at the time of the ID/IQ award to cover the required minimum, and at the time of each individual task order award consistent with the type of services acquired (severable or non-severable).

It is possible to order both severable and non-severable services under a single ID/IQ contract. Using an ID/IQ contract for information technology services to develop, enhance and maintain a set of OPDIV systems as an example, Task Order 1 is awarded to convert a system from a client-server to a web-based application. There are interim products, but the contractual commitment is to deliver a working web-based application within 18 months of award. The required work represents a single undertaking, thus the services are non-severable, and the Contracting Officer must obligate the entire task order value at the time of award execution using current appropriations.

Task Order 2 under the same ID/IQ contract requires the contractor to provide continuous maintenance support for a different system. The task order establishes and funds an estimated level-of-effort for a base period and 3 option years. Here, the contractual commitment is to provide hours of labor to deal with system problems as they occur. The services are needed on a continual and recurring basis and do not represent a single undertaking; thus they are severable. The Contracting Officer must fund the base period and the options from appropriations current at the time of the award or option exercise.

REMINDER:

HHS recommends against using task orders under an ID/IQ contract to procure non-severable services using multi-year contracting procedures pursuant to FAR 17.1. While HHS has not identified an express statutory prohibition on this point, please note that FAR 17.105-1(a) provides that prior to using a multi-year contract, the Head of the Contract Activity must determine that "[t]he need for the supplies or services is reasonably firm and continuing over the period of the contract." Making such a determination and finding would seem at odds with the use of an Indefinite Delivery/Indefinite Quantity contract. See e.g., Bureau of Customs and Border Protection - Automated Commercial Environment Contract,B-302358, December 27, 2004 (The FAR [17.105-1(a)(1)] authorizes multi-year contracts only when "the need for the supplies or services is reasonably firm and continuing over the period of the contract." The FAR [16.504(b)] authorizes an ID/IQ contract, however, "when the Government cannot predetermine, above a specified minimum, the precise quantities of supplies or services that the Government will require during the contract period").

Should an OPDIV determine to use ID/IQ task orders structured as multi-year efforts to acquire non-severable services, HHS recommends that the terms and conditions of the umbrella ID/IQ contract vehicle permit it and the task orders adhere to FAR 17.1 and HHSAR 317.1. However, HHS neither envisioned nor authorized the structuring of multi-year efforts under ID/IQ orders, nor the further extension of such orders by using options to acquire additional non-severable requirements. Instead, new ID/IQ orders may be awarded for that purpose.

Finally, in this context, HHS believes that ID/IQ contracts would be best used as a means of ordering separate non-severable requirements.


Content last reviewed on December 4, 2014