The numbers don't lie but sometimes they don't mean anything either. If the Secretary of Defense comes out and announces that they've cut $580,000,000 in contracts at the Pentagon and a DOGE guy comes out and baldly states that one of the weird things he's finding is that it is possible to terminate a $50,000,000 contract and nobody notices or even knows what it was for, there is truth but little validity to the statements. There are a few reasons for that.
1. The Government has one Contracting Officer Representative/contract. He is the only guy who really knows all the ins and outs of it although in some companies some contracts are both well known and understood and well published so that all members of the company may be able to latch onto the contract which is called a 'vehicle' by those in the know.
2. The contract vehicle I am most familiar with in DoD were all IDIQ contracts. Indefinite Duration/Indefinite Quantities and they are popular for a good reason....that's right, they are a 'vehicle' that the savvy know and understand that if you can get the Contracting Officer's Rep (COR) to sign off on your proposed Statement of Work you can charge almost anything to such a contract and stay within the legal limits. In my bit of DoD everybody really did pay a Hell of a lot more than lip service to the idea of contracts and value delivered. It is nothing like the idiocy you see everywhere else in government contracting shops where I'm pretty sure it is true that nobody knows because it was all corrupt and hidden away from the light of day. People went way out of their way to hide these things in locked filing cabinets in disused lavatories in the basements where someone had helpfully removed all the lights and the stairs and put a sign up saying, "beware of the leopard."
An IDIQ contract is frequently negotiated for the maximum value possible because they are dandy vehicles for getting work done. These contracts (any damned contract) take years to put together, bid, respond to, evaluate and sign. It is damned helpful to have a way of putting money on a contract instantly to accommodate pop-up work as soon as humanly possible. In other words, a SOW could be written at a government COR's desk, handed to him, signed off and be executed as soon as the contractor's contract officer signed off on it and those guys were available 24/7.
This IDIQ relationship translates into a contract vehicle having a, for instance, 270 million dollar ceiling and a 5 year period of performance. Both can be and are extended if both the government and the contractor agree, with the terms usually remaining the same and not subject to renegotiation. One simply extends the ceiling by X$ and the POP by another year or 5.
I had contract vehicles that had 250 million dollar ceilings and were good for 5 years and we were unable to get any work done on them because the government program office we dealt with hadn't received the necessary funds. In other words, the vehicle was there ready and waiting but there was no gas. Sucks but normal.
If some Agent of the Government decided to cancel that IDIQ contract they could, if they wanted to, claim that they saved us $250,000,000 but it wouldn't, strictly speaking, be true. There was no money on it to save or recoup.
See? More than you ever wanted to know from a layman's POV on IDIQ DOD contracts.
I'm taking news of some of these savings we keep hearing about with a certain number of very large grains of salt—roughly the size Utah.
9 comments:
You are right. The IDIQ contracts are very common for DoD contracts and are extremely flexible and easily modified. I worked for a DoD contractor for 12 years and was involved in the contracts and invoicing for 11 of those years.
Two questions:
1). Are you saying most, if not all, contracts recently terminated are IDIQ?
2) Do IDIQ allow for remedial work?
Example: At a job site on a federal military installation in California, the gov architect in Virginia royally screwed up the plumbing for the fire station.
As no work occurs until a proper work order with the proper signatures is in hand, I wondered how that contractor was able to so swiftly make the corrections.
Whatwith the coordination between contractors, on-site inspectors, and various offices back in DC, what should have taken a week or two, was done within days. That speediness was a surprise.
Clarification:
... that contractor to begin making the repair (extra work).
To generate a W.O. usually took weeks. In this case, it took a few days.
Some savings are potential, some are actual. All savings are a good thing. What matters is accomplishing savings while maintaining readiness and functionality. Easier said than done apparently.
I don't know since I haven't looked. I am sure that someone somewhere like DataRepublican has a complete list of canceled contracts and I do suspect most are for technical services so they sound ripe for IDIQ.
The problem with the old world I was in was that Military Construction was a whole other can of worms and the old programming cycle for all milcon was 5 years in advance to get Congressional approval. Even with OIF and Noble Eagle kicking off and us ramping up like crazy, getting milcon was damned near impossible. We flexed with other vehicles. Task Orders on IDIQ are dead easy but they require active support of 2 people. You need the COR on the contract and you need your contracting officer to work together to make it happen. It can literally happen just as I described. I'd write a SOW based on what the government agent said they wanted, cost it, run it by the inhouse peeps and it would all be done in 24 hours or less. Some of the vehicles we used were maintained by different divisions of our company and in those cases you needed that division heads buy off. That too would take a phone call and 3 minutes IF HE WANTED TO PLAY WITH YOUR DIVISION and didn't hate your division head with a burning passion. Some were like that. Speed was the norm for us. It was far far harder to get stuff done in INCONUS shipyards on the repair contract because both Supships and the Contractor only worked about 30 minutes a day, on different days and then management got involved to slow roll everything for weeks.
What kills us is that Congress will NOT fund Operations and Maintenance properly. They will top you up with RDT&E and Other Procurement, etc but what we really need is the OMN $ to buy tons of spare parts and that money just never shows up in the right quantity.
Saving money that could potentially be spent is still savings. I, for one, am not counting, nor keeping track of, the savings. I am just happy to see someone, anyone trying to save money.
Oh me too! I'm not complaining, just observing that I prefer to see whole systems chopped up at the knees as real savings. Build no more LCS would be a huge savings. Build no more bombers would be an excellent savings. Wargame current warships against drones in littoral waters and let me know if we can save money by just building submarines in the future.
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