Let me know if you’ve heard this one.
Three contractors walk into a . . . .
The first contractor, a small business, says proudly, “I just won a $1M firm fixed price service contract!”
The second contractor smiles and says, “That’s nice, but I just won a $2M IDIQ service contract!”
Not to be outdone, the third contractor snorted and says, “Guys! I’ve got that beat! I just won a $13.5M BPA for services!”
So who really has the bragging rights for the biggest contract?
If you guessed the small business contractor with his $1M firm fixed price contract, you are right. He has a guaranteed $1M (assuming he completes performance). And with the possibility of prices increases based on Department of Labor wage determinations, he could actually end up with MORE than the $1M.
Now the second contractor only has bragging rights on whatever the minimum quantity is on the IDIQ contract. And normally the minimum is a fairly small amount. So in reality if the minimum on this contract is $200,000 (10% of the contract value), all this contractor is guaranteed is that $200K.
And the third guy has NO bragging rights at all! A BPA is an agreement, not a contract. There is NO requirement for the government to ever use the BPA for even $1 worth of services. And traditionally, BPAs are used for small dollar services (water delivery, carpet cleaning, maintenance and repair of small items, etc.) so even if he does get any “calls” under the BPA, they will probably be less than $3,500 (the micro-purchase threshold).
So the moral to the story is this. Be aware of the differences between different types of contractual instruments and how that effects your bidding on them. This is really a case where $1M in the hand is worth much more than a larger amount of potential work in the future.