IDIQ Meaning, Indefinite Quantity Contracts and IDIQ Minimum Guarantee

Many government contractors submit IDIQ proposals for indefinite quantity contracts expecting a guaranteed minimum requirements from the government.  Not all agencies comply with the stated contract requirements and may be in breach of contract. However, bidders should exercise caution when reading the solicitation.

When the language is clear in the solicitation and the government meets the IDIQ Minimum Guarantee, it can be difficult to litigate a breach of contract claim. There are some exceptions to the general rule.

IDIQ Meaning, Indefinite Quantity Contract (IDIQ)? 

A requirements contract provides for filling all actual purchase requirements of designated government activities for supplies or services during a specified contract period, with deliveries or performance to be scheduled by the Government placing orders with the contractor. See FAR 16.503(a). 

Read RFP Language Carefully: When the solicitation language does not commit the agency to buy anything, there is a strong possibility that a bid protest can be sustained on that basis. The solicitation should at least:

• Commit the agency to order a stated guaranteed minimum quantity, or
• At least, to at least order all of its requirements from you in the contract.

GAO’s Analysis for Indefinite Delivery, Indefinite Quantity Contracts, and IDIQ Minimum Guarantee Requirements

GAO decided this very issue in (Satellite Services, Inc., B-280945; B-280945.2; B-280945.3, December 4, 1998). In that case, GAO ruled that the RFP was vague and was not reasonable.

A Promise to Contract Does not Need the Requirements for Indefinite Quantity Contracts: When the RFP contains promises that essentially have no meaning, GAO suggests that it lacks the consideration required by the Federal Acquisition Regulation (FAR) and applicable legal principles to result in an enforceable contract. The obvious problem for companies bidding on Indefinite Quantity Contracts with guaranteed minimum requirements is that with minimal guarantees, there is no trade-off for spending large amounts of resources simply to get the minimum required amount.

Even with historical data, bidders simply cannot rely on past information as a hard guarantee. For example, companies may have a hard time bidding on Indefinite Quantity Contracts on an RFP that only guarantees a minimum spending of $1,000.00. Yet, the government does this all the time. 

Your Bidding Approach: When looking at bidding on Indefinite Quantity Contracts, you must really weigh the cost-benefit of preparing your proposal response against getting only a minimum guarantee that is not worth the effort. There is an argument that if the government relies on its historical data to entice contractors to bid, then may it should look like a guaranteed minimum equivalent to the historical data. 

For help with the government’s IDIQ meaning or protesting federal bids for Indefinite Quantity Contracts and IDIQ minimum guarantee requirements, call our government contract lawyers for a FREE Initial Consultation.