This week we're, again, taking some liberties with our Agency Insight series to address an aspect of government procurement that's getting some attention in the media. Indefinite Delivery Indefinite Quantity (IDIQ) contracts are an incredibly common tool used by agencies to more quickly award projects to companies. If you've seen our infographics on HHS, NASA, and DHS, you probably noticed that the largest contracts awarded in FY 13 for each of them were multi-million or multi-billion, multi-award, multi-year contracts. IDIQs (and their brethren, Blanket Purchase Agreements (BPA)) are the primary vehicle through which government agencies obligate budgeted funds.
From the government's perspective, IDIQs are a necessary tool for actually getting anything done. Procurments, especially for large, complex tasks, can take between nine and 18 months when competed on a full-and-open basis. They're expensive and bureaucratically complex, and all parties generally hate them. Through IDIQs, the government is able to compete task orders among a pre-screened pool of companies in a fraction of the time. Though the IDIQ contracts themselves often takes several years to award, once they're in place both sides will use them over a full-and-open competition whenever possible. They are, if nothing else, a well-engineered workaround for the truly awful standard procurement process.
The downside to IDIQs, some are arguing, is the limited, exclusive environment that makes the procurement process so much easier. They are, first-of-all, far less transparent. While the content of IDIQ task orders is technically public domain, the information is much less accessible to the general public - or to organizations like GovTribe who deal in government data. It literally takes a Freedom of Information Act (FOIA) request to obtain any such information.
IDIQs also, arguably, make it much more difficult for newer companies to enter a market. Even the IDIQs that are awarded only to small businesses often have a five- to ten-year lifespan before they need to be recompeted. Any company that tries to enter an agency space that has a few active IDIQs is often out of luck. Their only option is trying to subcontract to one of the existing awardees - assuming they can even find out about new task orders being competed.
Another often unspoken issue with IDIQs is the frequent disproportion with which funds are obligated. One of these contracts may be awarded to ten companies, but it's likely that only a few are winning task orders of any significant value.
Let's look, for instance, at dollars obligated under the Enterprise System Development (ESD) IDIQ. This is the vehicle, awarded in 2007, through which the Centers for Medicare & Medicaid Services (CMS) awarded the contract for Healthcare.gov.
As of October, 2013, about $2.5 billion has been obligated against ESD - a bit more than 60% of the IDIQ's $4 billion ceiling. Immediately it seems that, of the 16 awardees for ESD, only five are really getting any work. And, though the IDIQ was awarded in 2007, no real money was obligated against it until about 2010.
It's also clear that CGI Federal, the primary contractor for Healthcare.gov, has been obligated more money off of ESD than the bottom eleven companies combined. Here's the same data in pie chart form.
CGI has receive one-quarter of all funds obligated against ESD. The top five companies together have received more than 75% of funds obligated to date. Seeing this, it's easy to imagine that companies like SAIC, Deloitte, and Lockheed are wondering why they spent so much time and money going after this IDIQ back in 2007.Over the next couple of weeks, GovTribe is going to be taking a deeper look at the IDIQs, BPAs, and Governmentwide Acquisition Contracts (GWACs) the government uses to award so many of its high-value contracts. They are a fact of life for companies competing in the public sector space, and we're making it our mission to help them make the most informed decisions possible. If readers have favorite IDIQs they'd like us to look in to, or specific stats they'd like to see, please let us know by commenting on this blog post or on our Facebook page.