From Ascgroup
The Role and Supporting Clauses for Indefinite Quantity (IQ) and in Contracting
Indefinite Quantity (IQ) is a Basis of Payment (B of P) item used on some service contracts. Since TF!© is a resource and cost estimating software tool, this B of P item can readily be modeled within the TF!© software when desired by the customer.
Indefinite Quantity (IQ)
Objective: Used to expose a known but indefinite quantity of effort to competitive pricing and to simplify negotiations for deliverables which are within the scope of the contract but not specifically identified and quantified in the Technical Requirements.
Contract Type(s): Firm Fixed (Firm Lot) Price or Fixed Price, all with IQ provisions.
Prerequisite(s):
1. Fully loaded hourly labor rates obtained during the competitive process that are proposed against the expected or historical level of effort and an indication of the qualifications or skill requirements of such work [TF! design facilitates this prerequisite]
2. A Task Order system defines requirements that are not already addressed by another Basis of Payment clause (i.e. non-priced deliverables)
3. Collateral consumable material or specialist equipment is usually treated as cost reimbursable.
4. Expected start and completion dates are a part of the IQ delivery order.
Description: Only the direct level of effort is negotiated and the contracted IQ labor rates are then applied to the level of effort to arrive at the labor cost for the non-priced deliverables, regardless of the source of the effort (prime or sub-contract).
Pros:
1. With pricing already known, the negotiation centers in the Technical Expert’s area of expertise, the amount of hours required to perform the deliverable.
2. Simplified negotiations as the only variable is hours, no added complexity of cost
3. Labor Rates are from original Contractor price buildup, so competitive pricing is sustained
4. Many IQ delivery orders become recurring and can be easily and cost effectively added into the FFP elements of the contract.
Cons:
Contractor will be discouraged from performing IQ work if they underbid their IQ rates [TF! analysis can identify underbidding of IQ rates].