How would you/how does your organization assess a contract to ensure that you can meet the requirements of a contract? How do you evaluate a contract prior to bidding on it?By leveraging external sour

Akira Wells

The State of Kansas uses an Indefinite Delivery/Indefinite Quantity (IDIQ) contract to manage services when it does not know exactly how much work it will need. This type of contract is useful when the state wants flexibility in how much it buys and when. However, another contract type that could have been used is a Time-and-Materials (T&M) contract. This paper explains why a T&M contract might be a practical choice, its advantages, and disadvantages, and how it could be used.

An IDIQ contract allows the government to order a flexible number of goods or services over a period. This is helpful when the exact amount of work is not known at the start. The government agrees to a minimum and largest amount, giving them control and flexibility. (Textbook Chapter – Contract Types, Page 24, Contract Management Body of Knowledge (CMBOK) Overview).

A Time-and-Materials (T&M) contract pays a contractor for each hour of work and for the cost of materials used. This type of contract is helpful when the work is unclear or may change over time. It is like IDIQ in that both offer flexibility. (Textbook Chapter – Contract Types, Page 26, Contract Management Considerations).

One major benefit of a T&M contract is flexibility. The contractor can adjust the hours and materials as the work changes. This is useful when projects change often, like in emergencies or urgent repairs.

Another benefit is speed. T&M contracts let work start faster because there is less needed to plan everything upfront. This helps in situations where quick action is needed. (Textbook Chapter – Contract Performance Management, Page 49, Contract Risk Allocation).

Also, the pricing is clear. The government sees the hourly rates and material costs, making it easier to track spending and manage the project.

But T&M contracts have some risks. If not managed closely, the project can cost more than expected. Without a set budget or result, the contractor might take longer to finish the job. (Textbook Chapter – Contract Risk Management, Page 52, Performance-Based Risks).

Managing T&M contracts takes more time. The government must review timesheets, approve expenses, and make sure everything is fair. This requires a strong management team.

T&M contracts are not good for projects that are clearly defined and have fixed goals. For those, a fixed-price contract is better. T&M should only be used when the work is not fully planned or likely to change.

If the State of Kansas had used a T&M contract, it might have worked well for services like IT upgrades or emergency repairs. These projects often change and need flexibility.

To use a T&M contract well, the government should:

1. Set clear labor categories and hourly rates.

2. Add a maximum cost to stay within budget.

3. Monitor hours and materials closely.

4. Add bonuses for finishing early or doing high-quality work.

By doing this, the state can get the benefits of T&M contracts while reducing the risks.

While IDIQ contracts are good for flexible needs, T&M contracts could also work. T&M is useful when the work is changing or uncertain. It needs good oversight but gives quick results and clear pricing. With proper planning, T&M contracts can support Kansas in many types of projects.

Contract Management Body of Knowledge (CMBOK), 7th ed. Ashburn, VA: National Contract Management Association, 2023. ISBN-13: 978-0-940343-92-4.