Infra Insight Blog

A recent court case upholds the concepts of innovative design and quality performance utilized by alternative delivery methods that have become necessary due to shrinking public agency budgets and the need to accelerate critical projects. The case concerned the U.S. Army Corps of Engineers’ (Corps) use of an Indefinite Delivery/Indefinite Quantity (IDIQ) Contract through a two phased proposal process for a $301 million construction project to build a series of military facilities to be performed under a series of future task orders.

An IDIQ Contract allows the procuring agency flexibility to engage contractors before the exact times and/or exact quantities of future supplies and/or services become known. The goal of the Corps’ project was to meet time, cost and quality targets set by the Army as well as to standardize construction methods to provide new facilities for soldiers and their families. The Corps determined, through market research, that the use of an IDIQ contract was the most appropriate method to meet these goals.

The government’s use of an IDIQ contract was challenged by Tyler Construction Group, a small business general contractor, on the ground that the Federal Acquisition Regulation (FAR) did not authorize the use of an IDIQ procurement for the acquisition of large design-build military construction projects or for major construction projects generally and its use violated the Small Business Act.  The award of the IDIQ Contract was upheld in June 2009 by the U.S. Court of Appeals for the Federal Circuit. (SeeTyler Construction Group v. United States, No. 2008-5177, 2009 WL 1796702 (Fed. Cir. June 25, 2009).

The Court reasoned that explicit legal authorization is not required to use an IDIQ contract where it is in the best interests of the government, not addressed in the FAR and is not prohibited by law. Further information may be found in the Construction Litigation Reporter, Volume 30, Number 9, September 2009, p. 363-366.

Although this case involved a federal agency procurement, the reasoning of the court may also apply to state and local agencies interested in using IDIQ to meet their goals. Any agency interested in using IDIQ should consult with counsel before undertaking any procurement action.