For many businesses, government sales can be long term profitable work that empowers their company. Whether their operation is large or small, the true goal is landing an IDIQ contract is to set up a contractual vehicle with the government to sell products and services over a very long time period and with a minimum amount of paperwork once the contract is won.
An Indefinite Delivery/Indefinite Quantity contract means that for a certain amount of time, usually at least 3-5 years, the bidder agrees to supply goods or services to the government on-demand. The exact quantity of deliverables is not set, hence “indefinite.” However, there are often more than one company on larger IDIQ contracts capable of delivering the same thing and you still have to sell yourself and your ideas to the government buyers.
IDIQ contracts actually bring substantial benefits for both sides, so they’re extremely popular among both contracted suppliers and government project managers. Understanding why this is can help you decide if bidding on an IDIQ contract is right for your business.
For the government and their project contractors, IDIQ contracts solve one of the biggest problems: calculating orders for projects where precise estimation is difficult or impossible. This is particularly the case for larger-scale projects or those where significant research and development will be involved.
When the government knows they will need certain products and service over many years, IDIQ is perfect. They can hold a competition and choose the best supplier or team of companies. Once the contract is in place, they can order when their funding is available, and they have the need. If there is no money or no need, the contract sits in place waiting for the right time.
By the same token, IDIQ contracts also guarantee reliable services. There’s no need for project managers to look for suppliers every year- their suppliers are already under contract. This eliminates a lot of contractual overhead for project offices. Eliminating the costly bidding and approval process lowers costs for their project.
Suppliers benefit because of how reliable the business is, if they work hard to sell themselves and keep the work coming in. IDIQ contracts are rarely given out when there’s no expectation of making use of that contract. A signed IDIQ contract is about as close as a business can come to guaranteed income for the length of the contract. It sounds easy but there is also always the need to be selling to the government program offices or the “tasks” won’t keep coming in.