WHAT IS A TIME AND MATERIALS CONTRACT?
Time and Materials (T&M) contracts present the highest risk to the government and lowest risk to the contractor. These contracts allow government purchasing officials to procure supplies or services on the basis of direct labor hours and actual material costs.
A Time and Materials contract is generally used only when it is not possible to accurately estimate or anticipate the extent or duration of the work being provided by the government contractor. Since these contracts carry a significant amount of risk for the government, federal rules encourage agencies to use other types of contracts.
WHAT IS AN IDIQ CONTRACT?
One of the most prevalent contract types being used by the federal government is the indefinite delivery/indefinite quantity (IDIQ) contract. These contracts can be used on both a fixed-price and cost-reimbursement basis.
When the federal government decides to buy a product or service, it doesn’t always know how many items, or hours of an expert’s time, it will need. Most types of contracts the government uses require it to list exact quantities, so it occasionally needs the flexibility of an IDIQ contract.
IDIQs are often multiple-award contracts, and have become quite popular in recent years. Using an IDIQ contract allows the government to select several possible vendors for a an agency to rely on, then ask that small group of vendors to bid against one another to complete each separate task.
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