Job Order Contracting - Use of Federal Funds

Use of Federal Funds

It is legal to use job order contracting when a project is funded, in whole or in part, with Federal Funds. This is also true for American Recovery and Reinvestment Act (ARRA) of 2009. The federal government uses the Federal Acquisition Regulation (FAR) to regulate acquisitions. Job Order Contracting is covered in the FAR in three key areas:

• Subpart 6 Competitive Requirements,
• Subpart 16.202 Firm-Fixed-Price Contracts, and
• Subpart 16.504 Indefinite Quantity Contracts

The American Recovery and Reinvestment Act of 2009, in section 1554, states that:

To the maximum extent possible, contracts funded under this Act shall be awarded as fixed-price contracts through the use of competitive procedures. A summary of any contract awarded with such funds that is not fixed-price and not awarded using competitive procedures shall be posted in a special section of the website established in section 1526.

JOC is a firm fixed-price, indefinite quantity contract that is competitively procured. JOC is ideally suited to accomplish work with stimulus funds because it expedites the procurement process, saves money and is completely transparent.

"Competitive JOCs"-Poor Practice? The practice of awarding more than one JOC contract for one location and then bidding the contractors against each other on each job order. Owners have the idea that if two contractors compete against one another, they will get a better price. The way to avoid the problem of only having one JOC contractor is to award multiple JOC's each having their own defined geographical boundaries. The work in a particular boundary will always go to the JOC contractor awarded that geographical area unless that contractor is failing to perform or is over committed. In that case the work could be given to another JOC contractor in an adjacent region. The goal is to never compete two JOC contractors on an individual project.

Attempting to compete multiple contractors on a JOC project is motivated by the following reasons:

• The owner mistrusts the contractor.
• The owner perceives that JOC can be a "win-lose" proposition (win for the owner and lose for the contractors).
• The owner does not understand the differences in performance by the contractors.
• The owner does not understand construction, construction management or facility systems.
• Someone within the owner’s management organization will receive recognition for reducing the short-term cost of JOC construction by forcing contractors to provide services with minimal or no profit.