[Federal Register Volume 83, Number 85 (Wednesday, May 2, 2018)]
[Pages 19393-19395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09276]



Federal Highway Administration

[FHWA Docket No. FHWA-2018-0003]

Indefinite Delivery and Indefinite Quantity Contracts for 
Federal-Aid Construction

AGENCY: Federal Highway Administration (FHWA), U.S. Department of 
Transportation (DOT).

ACTION: Notice--request for comments.


SUMMARY: The FHWA is announcing that the Indefinite Delivery and 
Indefinite Quantity (ID/IQ) method of contracting (including Job Order 
Contracts) for low-cost construction contracts in the Federal-aid 
highway program will be allowed, without prior FHWA approval, under 
certain circumstances.

DATES: Comments must be received on or before June 1, 2018. Late 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments, identified by the document number 
at the top of this document, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE, West Building Ground Floor, 
Room W12-140, Washington, DC 20590.
     Hand Delivery/Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Ave. SE, between 9:00 a.m. and 5:00 p.m., 
Monday through Friday, except Federal holidays. The telephone number is 
(202) 366-9329.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to www.regulations.gov, including any personal 
information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For questions about this notice, 
please contact Mr. John Huyer, FHWA Office of Program Administration, 
(202) 366-1562, or via email at [email protected]. For legal 
questions, please contact Mr. Jomar Maldonado, FHWA Office of the Chief 
Counsel, 202-366-1373, or via email at [email protected]. Office 
hours for the FHWA are from 8:00 a.m. to 4:30 p.m., E.T.,

[[Page 19394]]

Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION: This notice announces that contracting 
agencies no longer need to submit individual requests and work plans 
pursuant to Special Experimental Project No. 14 (SEP-14) for low-cost 
contracts that are awarded to the lowest responsive bidder based on an 
invitation for bids. However, this contracting technique continues to 
be authorized on an experimental basis while FHWA explores rulemaking 
to revise FHWA's regulations to accommodate this contracting technique.


    The ID/IQ contracts are a method of contracting that allows an 
indefinite quantity of services for a fixed time. They are used in the 
Federal Government when agencies cannot determine, above a specified 
minimum, the precise quantities of supplies or services that the 
Government will require during the contract period. For construction 
ID/IQ contracts, contractors bid unit prices for estimated quantities 
of standard work items and task orders are used to define the location 
and quantities for specific work. The ID/IQ contracts may be awarded to 
the lowest responsive bidder based on an invitation for bids or the 
best-value proposer based on responses to Requests for Proposals. 
Contracting agencies use other names for these types of contracts 
including on-call contracts, area-wide contracts, continuing contracts, 
push-button contracts, and task order contracts. Job Order Contracts 
(JOCs) are a form of ID/IQ contracts that utilize a construction task 
catalogue with pre-priced work item descriptions and where contractors 
bid ``mark-up rates.'' The contract is awarded to the lowest responsive 
bidder determined by their rates.
    Although ID/IQ contracts have been specifically authorized in the 
Federal procurement process (48 CFR 16.5) and for the contracting of 
architecture and engineering (A/E) services in the Federal-aid highway 
program (FAHP) (23 CFR part 172), the FAHP authorization and 
procurement laws for construction do not address the possible use of 
ID/IQ contracts. The FAHP construction procurement statute, 23 U.S.C. 
112(b)(1), requires contracts to be awarded by a competitive bidding 
process to the lowest responsive bidder (traditional design-bid-build 
project delivery method based upon the premise of a 100 percent-
complete design and a well-defined scope of work). The ID/IQ contracts 
are awarded based upon a general, but not completely defined, scope of 
work for a geographic area and limited time period (but not specific 
locations, designs, or quantities) and are often awarded based upon 
specific evaluation criteria.

A. Experience Under Special Experimental Project Number 14 (SEP-14)

    The FHWA has used its authority in 23 U.S.C. 502(b)(1) to test the 
use of ID/IQ contracts for the construction of FAHP projects through 
the SEP-14 Program for innovative contracting techniques. Under the 
SEP-14 Program, contracting agencies interested in testing an 
innovative contracting technique submit project-specific (or 
programmatic) work plans for their implementation. The FHWA Division 
Office evaluates the work plan, coordinates with FHWA Headquarters, 
and, if it finds the work plan to be acceptable, FHWA approves the use 
of the technique on a temporary basis for a project or group of pilot 
projects. Over time, FHWA Headquarters staff assess the initiative to 
determine if it is a technique that should be operationalized for the 
FAHP on a permanent basis without the need for individual requests, 
work plans, and evaluation reports. Operationalizing SEP-14 experiments 
has taken different paths in the past based on the source of the policy 
warranting innovation and FHWA's risk assessment, such as FHWA-
initiated memoranda (for example, cost plus time bidding and lane 
rental), FHWA-initiated rulemaking (for example, warranty clauses at 23 
CFR 635.413), and congressionally initiated statutory amendments (for 
example, design-build and contractor manager/general contractor under 
23 U.S.C. 112(b)(3)-(4)). More information on SEP-14 can be found at 
    Having evaluated the use of JOCs and ID/IQ contracts for 
construction in the FAHP for over a decade, FHWA has now determined 
that they are suitable for operationalization. For more than 10 years, 
FHWA and State departments of transportation (State DOTs) have 
experimented with the use of ID/IQ contracts and JOCs for construction. 
FHWA has approved the use of these contracts under SEP-14 for 16 
different State DOTs and 6 local public agencies. Evaluation reports 
indicate that JOCs and ID/IQ contracts allow for cost-effective 
contracting for small value contracts and preventive maintenance 
programs. These evaluation reports can be found at https://www.fhwa.dot.gov/programadmin/contracts/sep14list.cfm. Specifically, 
the reports indicate that these contracts eliminate the need for 
contracting agencies to advertise and award numerous small contracts 
and provide contracting agencies with wide flexibility in programming 
and addressing preventive maintenance needs.
    The FHWA's determination that this contracting technique is 
suitable for operationalization is consistent with requests in Senate 
reports for fiscal year 2017 and 2018 appropriations to operationalize 
JOCs. S. Rept. No. 114-243, 43 (April 21, 2016); S. Rept. No. 115-138, 
52 (July 27, 2017).

B. Steps for Operationalizing ID/IQs and JOCs for Construction in the 

    The FHWA is proceeding with two phases to operationalize ID/IQ 
contracts and JOCs for construction in the FAHP. The first phase is the 
issuance of this Notice, and the second phase is the initiation of a 
1. Notice To Allow ID/IQ and JOCs for Low-Cost Construction Contracts
    The first phase is the issuance of this Notice describing when 
contracting agencies may use ID/IQ contracts and JOCs for construction 
without the need for project-specific work plans from contracting 
    The FHWA considers ``low-cost contracts'' to be 1- or 2-year 
contracts awarded to the lowest responsive bidder for construction of 
projects that qualify for FHWA categorical exclusions (CE) under the 
National Environmental Policy Act (NEPA) of 1969 (23 CFR 771.117) and 
where the total value of task or work orders does not exceed $2,000,000 
per year. Contracting agencies should continue to following existing 
procedures for contract extensions. The FHWA may allow contract 
extensions, but the maximum length of the contract period with 
extensions may not exceed 5 years.
    Contracting agencies interested in this contracting method should 
provide assurances to FHWA, including assurances that the total value 
of task or work orders will not exceed $2,000,000 per year, that the 
actions covered will be for projects that qualify for a CE, that the 
work will comply with applicable Title 23 requirements, and that the 
contracting agency will comply with applicable Disadvantaged Business 
Enterprise requirements.
    Individual tasks must undergo a complete environmental review prior 
to their approval (23 CFR 771.113(a)). The FHWA Division Office should 
determine how individual task orders will be approved. In addition, 
there are

[[Page 19395]]

requirements in 23 CFR part 635 that may not apply to ID/IQs (for 
example, standard change conditions clauses in 23 CFR 635.109 and self-
performance requirements in 23 CFR 635.113), but FHWA will encourage 
contracting agencies to use similar requirements consistent with State 
or local government policy.
    This contracting technique will continue to be experimental under 
FHWA's SEP-14 authority because FHWA's regulations and procedures do 
not accommodate this type of contracting technique; however, 
contracting agencies will not need to submit individual SEP-14 requests 
and work plans for low-cost contracts under these conditions. The FHWA 
would expect contracting agencies to continue to request specific SEP-
14 approval for best value awards, multiple-award ID/IQ contracts and 
JOCs, and contracts that exceed the low-cost threshold or are not 
otherwise within the limitations of this notice. The FHWA will request 
its division offices to report annually on different metrics to assess 
the contracting technique's impact on competition. The FHWA seeks 
public comments on this approach.
2. Step Two: Rulemaking Initiation
    Under the second phase, FHWA intends to initiate rulemaking to 
address the construction and approval regulations that need amendments 
in order to allow the contracting technique on a permanent basis. This 
rulemaking would be published in the Federal Register and provide an 
opportunity for the public to comment on the use of ID/IQ contracts or 
JOC for construction in the FAHP.

    Authority:  23 U.S.C. 112 and 502; 23 CFR 635.

    Issued on: April 25, 2018.
Brandye L. Hendrickson,
Acting Administrator, Federal Highway Administration.
[FR Doc. 2018-09276 Filed 5-1-18; 8:45 am]