Award Context and Insight

12/13/2016 12:00 AM

Will Pricing at the IDIQ Level Disappear?

One of the more fascinating provisions of the 2017 National Defense Authorization Act, now awaiting President Obama’s signature after passing with veto-proof House and Senate margins, could eliminate pricing as an evaluation factor for some multiple-award IDIQs.

The change could lead to the creation of contract vehicles that use only technical factors to evaluate bidders, leaving pricing competition to take place at the task order level. The provision is Sec. 825.

The provision comes after industry engaged in a rough-and-tumble fight over pricing on the Encore III vehicle. The Defense Information Systems Agency is evaluating proposals on a lowest-price, technically acceptable basis. That means that price will be the deciding factor. The companies that propose the lowest labor prices will win.

Industry argued that a lowest-price competition at the IDIQ level is meaningless because actual requirements come later, at the task order level, when companies bid to perform specific tasks. IDIQs merely set the playing field for those task orders. DISA stuck with the lowest-price approach despite industry challenges.

The NDAA provision gives agencies the authority to evaluate IDIQ bidders only on technical factors, though agencies could still go with a lowest-price or other pricing evaluation for future contract vehicles.

The General Services Administration showed the way on IDIQ-level evaluations that de-emphasized pricing with its OASIS, Alliant 2 and other contract vehicles that used the Highest Technically Rated with Fair and Reasonable Prices methodology. For those contracts, GSA told bidders what prices would be deemed acceptable in advance, focusing the competition on technical factors. GSA officials largely agreed with the industry view that price competition should take place at the task order level, rather than at the IDIQ level. But because federal law requires that pricing be considered in all competitions, GSA had to include an evaluation factor.

The NDAA provision could pave the way for IDIQ-level evaluations that exclude pricing altogether.

Don’t forget we are hosting a webinar on all the big developments in federal IT IDIQs on Dec. 20. Register here.