IDIQ Contracts vs BPAs: Which Works Best for DLA Suppliers?

The old saying goes, “There’s more than one way to skin a (fill in the blank).” This is a sort of blanket statement that is applicable to all kinds of things. But for our discussion today, it refers to Defense Logistics Agency suppliers and a comparison between two common contract types. For DLA suppliers, the choice between Indefinite Delivery/Indefinite Quantity (IDIQ) and Blanket Purchase Agreements (BPAs) depends on the supplier's business model. Additionally, it is influenced by the nature and type of products offered, as well as the procuring agency’s needs and demands. 

We’re going to take a look at the different types of contract vehicles, specifically IDIQs and BPAs, to see which one makes the most sense for DLA suppliers. 

Introduction to Government Contracts

Without contracts for maintenance, repair, remodel, upgrade, and a bunch of other things, the government stops working. Contractors of all shapes and sizes handle most of the major projects. Government contracts that include IDIQ contracts and Blanket Purchase Agreements (BPAs) are two of the more common types of contracts used and are both equally important, although they do different things. 

Federal agencies utilize these contracts to procure supplies or services from contractors, thereby ensuring compliance with the Federal Acquisition Regulation (FAR), a 2,000+ behemoth of federal regulations that governs all aspects of procurement at the federal level. This does not take into account the hundreds (or thousands) of pages at the lower levels of the government (MAJCOM, Group, Installation, Garrison, Department, etc). 

Understanding the differences between IDIQ contracts and BPAs is crucial for contractors to grasp, as they are distinct entities, which we will discuss in more detail later.

Understanding IDIQ Contracts

Okay, so we are starting with an IDIQ contract. There is one very important distinction between IDIQs and BPAs. An IDIQ contract is a type of government contract that provides for an indefinite quantity of supplies or services during a fixed period. Now, this is a legally binding contract between the federal agency procuring the products and the selected vendor(s). Very important. Since it is contractual, the vendor is compelled and obligated to honor the contract, which includes quantities, delivery dates, and whatever else is in it. 

Federal agencies commonly use IDIQ contracts to acquire supplies or services, and they offer flexibility in terms of delivery and quantity. If a federal customer knows that they have a need that cannot be satisfied or is impossible or at least difficult to gauge total quantities on, especially if they are on a continuing basis, an IDIQ makes sense. 

What Rules Govern IDIQ Contracts?

The Federal Acquisition Regulation (FAR) section 16.504(a) governs IDIQ contracts, and contractors must be familiar with the regulations to participate in the procurement process. This is completely on you, the vendor, to understand the process and the potential pitfalls of entering into an IDIQ contract. 

IDIQ contracts are awarded to vendors for supplies or services, and they are also called Task Orders or Delivery Order Contracts. An IDIQ is not usually for smaller, simple requisitions like regular upkeep and maintenance items, and furniture; those are usually reserved for BPAs, which we will cover next. 

IDIQs are reserved for much larger and more complex projects where the exact amounts are hard/impossible to determine up front. Projects like large-scale construction projects with large material requirements, and also some IT projects, are good candidates for IDIQ contracts. However, to keep from cost overruns and runaway spending, there is usually a value ceiling that the contract cannot exceed. 

It is completely up to the contractor or vendor to understand and abide by the terms and conditions of IDIQ contracts. If they do not comply with the contract in full, they risk losing the contract in full. 

Blanket Purchase Agreements

BPAs are actually an agreement between the vendor and the federal buyer, not a binding contract. Accordingly, they are used for smaller purchases and purchases of less consequence than materials that require a signed contract. 

Federal agencies use these agreements to fill repetitive needs for supplies or services. The idea here is to identify repetitive demands and reduce them, thereby reducing the overall administrative burden of procuring non-sensitive items. 

Some of the most common examples of BPA purchases include common consumables such as office supplies, janitorial supplies, and smaller quantities of building materials (large-scale construction projects with undetermined quantities are typically contracted through an IDIQ). These also include safety supplies and other miscellaneous items. 

BPAs reduce the need for separate contracts per project or service within a budget, and they act as collections of non-binding quotes to streamline procurement processes. Contracts are cumbersome, time-consuming, and legally binding; they are not ideal for simple consumable and expendable items that are often bought in bulk. Think about setting up contracts for printer paper. It would not make much sense. 

Contractors need to be aware of the benefits and limitations of BPAs, including the potential for fixed-price and cost accounting standards, to make informed decisions. If the price is fixed in the agreement and prices were to increase, the vendor could be left holding the additional cost. 

Key Characteristics of Contracting Methods

Alright, so let’s talk about the key characteristics of the two different models. IDIQ contracts and BPAs have distinct characteristics that set them apart from other government contracts, including the level of flexibility and risk involved (for the vendor). 

IDIQ contracts offer flexibility in terms of delivery and quantity, while BPAs provide a fixed price and reduce administrative costs. IDIQs are also binding contracts, while BPAs are simply a preferred agreement that can be terminated much more easily if need be. 

Contractors must consider the key characteristics of each contract type, including the contract term, budget, and scope of work, to determine the best approach for their business. And you are not limited to one or the other; each one has a specific set of uses that make them well-suited for different tasks. 

Also, be aware of the Multiple Award Schedule; some government contracts will require more than one schedule contractor to handle the project's scope. The agency will then seek to negotiate the best price for a specified minimum price point among the vendors they have selected.

Federal Contracting Opportunities

Finally, finding contracting opportunities. 

IDIQ contracts are listed on SAM.gov along with all other types of contract vehicles. If you are looking to supply and fulfill IDIQ contracts, check out SAM.gov and specify IDIQ.

As of this writing, there are over 1,500 listings with IDIQ in the description, so there is no shortage of demand across the federal government. BPAs are only listed on SAM.gov, and there is some potential for BPAs to be posted on GSA eBuy.   

There is a potential for BPA fulfillment through GSA Advantage, too, since it is the prime eCommerce resource for the type of products that BPAs are usually used to fulfill. 

The federal government provides resources and support for contractors, including training and guidance on the procurement process, because it is in their interest; the vendor can and often do very well on federal contracts and the GSA Schedule, but it is built entirely on the needs and demands of the government. There are a few tools at your disposal to prepare your organization for working with the federal workforce, namely those that are available at SAM.gov/help. 

Which Is Best For DLA Schedule Holders?

The answer really depends on each individual vendor. It depends on what the vendor supplies, too. Some contractors are able to support both types of schedules, while others are only going to support contracts. 

If you are able to support both types of contracts, it may be in your best interest to do so. There are over 500 BPA listings at the moment, and 1,500 IDIQ listings. Supporting both types opens up a lot of potential opportunities. 

Final Thoughts on IDIQ Vs. BPAs

Winning any contract with the DLA is a significant achievement, and IDIQ contracts can be particularly beneficial for vendors, as they can be scaled up easily. However, before you start bidding at SAM.gov, it's essential to understand how the process works. Additionally, you must be registered and approved to sell there, which requires some effort. Thankfully for you, that registration process also eliminates a lot of competition. 

Make sure to check out our other articles on contracting topics with the federal government! Additionally, Greenwood Aerospace is AS9120B certified and registered in the System for Award Management (SAM), which enables us to be identified by contracting officers as eligible to receive HUBZone contracts.

Greenwood Aerospace is a U.S. Department of State ITAR-registered company, enabling us to partner with large defense contractors on various military initiatives involving the export of ITAR-controlled items.

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