IDIQ Contract Spending Accounts for a Third of Contract Spending, per GAO

In a recently published study, Agencies Widely Used Indefinite Contracts to Provide Flexibility to Meet Mission Needs, the Government Accountability Office (GAO) examined federal agencies' use of indefinite delivery / indefinite quantity (IDIQ) contracts from fiscal years (FY) 2011 through 2015.

In addition to analyzing Federal Procurement Data System-Next Generation (FPDS-NG) data on civilian and DOD obligations for fiscal years 2011 through 2015, the GAO reviewed and analyzed a non-generalizable 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.

Some of GAO’s key findings include:

• Agencies obligated over $130 billion annually on IDIQ contracts from fiscal years 2011 through 2015. Total IDIQ obligations ranged from about $180 billion in fiscal year 2011 to about $130 billion in fiscal year 2015.
• IDIQ obligations accounted for about one-third of government-wide contract spending from FY 2011 through FY 2015 and the proportion of IDIQ obligations relative to total government contract obligations remained relatively constant. As total contract obligations declined from FY 2011 through 2015, IDIQ obligations followed suit.
• The Department of Defense (DOD) accounted for more than two-thirds of all IDIQ obligations over the five year period, with all civilian agencies accounting for less than one-third.
• The three civilian agencies with the highest amounts of IDIQ obligations were the Departments of Homeland Security (DHS), Health and Human Services (HHS) and Veterans Affairs (VA). From fiscal years 2011 through 2015, these agencies combined accounted for about 8 to 13 percent of government-wide IDIQ obligations each year.
• Agencies primarily bought services through IDIQ contracts. During the reviewed period about two-thirds of government-wide IDIQ obligations were for services, while about one-third were for products. There were differences in the relative proportion among defense and civilian agencies, however.  For example, in FY 2015 obligations on services accounting for 62 percent of total IDIQ obligations at DOD, but 85 percent at civilian agencies.
• Agencies obligated the majority of IDIQ dollars through single-award IDIQ contracts, even though the FAR states a preference for multiple-award IDIQs. Approximately 60 percent of IDIQ obligations were awarded through single-awards and about 80 percent of all single-award IDIQ obligations were at DOD. However, about 70 percent of all single-award contract obligations were competed from FY 2011 through 2015 – and that proportion was fairly consistent across DOD and civilian agencies.
• More than 85 percent of all multiple-award IDIQ orders were competed, government-wide, and from each fiscal year from 2011 through 2015 a higher percentage of order obligations were competed at DOD than at civilian agencies.

The reasons that DOD contracting officials gave to GAO for using IDIQ contracts were fairly well known, including that 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. Contracting officials also stated that IDIQ contracts were easier to administer and IDIQs also provide more funding flexibility, as funds are obligated as needed through orders and not at contract award. Further, DOD officials reported that the contracts they used served a broader customer base, for example, multiple commands, other federal agencies, and foreign military sales. Finally, IDIQs provide contracting officials flexibility by not needing to specify an exact quantity or timing of delivery at the time of contract award, program offices can accommodate unforeseen needs through the issuance of orders.