What Is an Indefinite-Delivery Contract?

An indefinite-delivery contract provides for an indefinite quantity of services, but a fixed period. It provides flexibility to meet government needs while still protecting a business's interests in the deal. 

An indefinite-delivery contract provides for an indefinite quantity of services, but a fixed period. They are commonly utilized when the General Services Administration (GSA) cannot determine the precise quantities of services or supplies that the government will require during a particular period. It provides flexibility to meet government needs while still protecting a business’s interests in the deal. 

Effective contract management is a must when dealing with complex agreements like these. A template agreement can save you considerable time and effort, but you also need the capability to quickly modify an agreement for a particular deal. You must closely monitor the terms of the agreement, but a modern software can do much of that work for you. Automated contract renewals, data metrics, and much more are available with the right digital contracting software.

What is an indefinite-delivery contract?

An indefinite-delivery contract is usually awarded for a specific number of base years and with additional renewal options in the contract. It provides a series of indefinite elements that give the government the flexibility it needs to contract for goods or services. It allows the government to acquire the supplies and services it needs when it needs them and in the exact quantities it needs. These amounts are not known at the time of contracting but are instead based on future requirements.

These agreements are commonly known as:

  • Indefinite-delivery contracts
  • Indefinite quantity contracts
  • Requirements contracts
  • Task order contracts

Examples of indefinite-delivery contracts

Indefinite-delivery contracts are most common with government contracts. Businesses may enter into these agreements for business deals like:

  • Establish construction relationships for emergency and as-needed projects
  • Federal information technology contracts
  • Maintaining emergency ration stocks for the government
  • Military contracts
  • Telecommunication contracts

The purpose of indefinite-delivery contracts

The government is often unable to specify the exact needs they have for products or services. However, they do want to have a contract in place for when they do need them. Federal law permits the government to enter into indefinite-delivery contracts to handle these situations. This provides the government or others the flexibility needed to handle the unknowns but also allows them to know what they will pay when they need these goods or services.

This can help streamline the contract process and speed service delivery because the parties know the terms for when it is time to fulfill an order. Time is saved by being proactive rather than reactive—i.e. waiting to enter a contract when a party desperately needs certain goods or services.

When do I need an indefinite-delivery contract?

Indefinite-delivery contracts are most commonly used for on-call service contracts, job order contracting, and architect-engineering services, but the possibilities are endless. They are appropriate when a client needs to contract for goods or services but does not know exactly how much they will need or when. The client, often the government, will base its requirements on its needs at that exact time or for a specific project.

These contracts set forth minimum and maximum quantity limits for supplies or services to protect the provider and the client. They help limit the effective dates of when either party is obligated and the maximum contractual obligation either party may face.

Parts of an indefinite-delivery contract

Federal law and prudent business practices dictate that certain provisions be included in every indefinite-delivery contract. The following include, but are not limited to, provisions that should be a part of any legally binding agreement.

Date of order

Indefinite-delivery contracts operate when they are needed, so this date is subject to change. However, once the agreement is invoked, the parties need to know when the order was placed and the date of delivery that is ultimately scheduled.

Contract number and order number

This is critical identifying information and a business must properly track them to ensure the order is fulfilled. Failure to do so could result in a breach of the indefinite-delivery contract terms.

Delivery or performance schedule

If the contract is for goods, it should specify the delivery date for those goods. If the contract is for certain services, the agreement should outline when those services should start, continue to occur, and any relevant end dates.

Place of delivery or performance

The contract should state where the services should be performed or the goods delivered.

Method of payment and price

The price of goods or services should be clearly outlined in the agreement. It should also contain information on how the client can pay for these goods or services.

Minimum and maximum quantities

A critical component of any indefinite-delivery contract is the minimum and maximum requirements for each party. For example, if the contracts for the delivery of toiletries for a government agency, the contract will specify the minimum amount that will be purchased during the contract period and the maximum the business will be required to provide if asked.

Breach of contract provisions

Several different provisions are needed to address what happens if either party breaches the contract. This may include provisions concerning:

  • Arbitration or mediation
  • Choice of law
  • Forum for any lawsuits
  • Liquidated damages

Limitations of an indefinite-delivery contract

Indefinite-delivery contracts require thorough negotiation of their terms. They are not fixed-price or even fixed-quantity contracts. There is a lot that is left to future determinations. This makes it difficult to estimate the potential obligations a company takes on as well as the potential revenue it may acquire through the deal. 

This contract also requires the company to be ready to fulfill a contract, often with short notice. While maximum limits help limit this risk, they can still create uncertainty for a business.

How to create an indefinite-delivery contract

Your business can create indefinite-delivery contracts that fit your individual needs. With a modern contract management software, you can customize and track all of your agreements. Instead of starting from scratch each time, you can have a template agreement ready to go that may require little to no editing. 

Even when you need to make changes to an agreement to fit a particular deal, it is easy and tracked within the system to streamline legal’s review of the new contract language.

Managing indefinite-delivery contracts

Instead of using outdated and incredibly onerous contracting methods, you can employ the Ironclad software to manage your indefinite-delivery contracts. You can track their metrics and get real-time data on how each contract performs. You can reduce the time it takes to manage these agreements and get to the contract acceptance stage.

You can fast-track your contracts through:

  • Built-in redlining, editing, and audit logging
  • No-code capabilities for contract automation
  • Powerful approval and signature technology for contracts
  • Self-service contracting
  • Word/.DOCX native for seamless negotiation with other parties

Why indefinite-delivery contracts can be time-consuming and hard to keep track of

indefinite-delivery contracts require a great deal of information to reach an agreement. They are typically quite complex and require detailed tracking. Modern contract management software uses a Dynamic Repository to automatically track agreements and save a lot of time. It can save these documents and analyze their information, like:

  • Contract renewal dates
  • Minimum and maximum quantity requirements
  • Party identification
  • Service requirements
  • Start and end dates
  • Template and automation suggestions
  • User agreement terms and conditions
  • Workflow suggestions

Automating workflows for indefinite-delivery contracts

With the Workflow Designer, you can create a centralized location for contracting requests and customizing indefinite-delivery contracts. You can upload a template, tag fields, and add approvers and signers. You can create conditional contract clauses that are easily modifiable and adaptable to the needs of a particular contract. 

How templateable workflows can help simplify the process

Templateable workflows help to ensure that contracts are in compliance with organization policies and relevant legal requirements but without the need for comprehensive manual review every time. This is especially critical when dealing with government organizations. Once a template is ready, it won’t need re-designed every time you enter into a new contract. Instead, you can utilize institutional memory to save significant amounts of time and costs.

Why indefinite-delivery contracts are hard to manage

An indefinite-delivery contract has a lot of terms you have to track carefully. The indefinite nature of the agreement means you have to be ready to comply with the terms, often without knowing what this will mean exactly. When your systems cannot communicate well, it is difficult to identify the right contract with the proper party. It may even be difficult to locate the agreement you created when using antiquated storage systems like Excel spreadsheets or unorganized cloud storage.

The solution to your indefinite-delivery contract needs

Contract lifecycle management offers you one source of truth about your indefinite-delivery contracts. You get full transparency throughout the entire process by utilizing the many tools Ironclad’s software can provide:

Why use digital contract management for indefinite-delivery contracts?

Indefinite-delivery contracts are—without a doubt—difficult to manage and track with other types of contract management systems. Their unique complexities mean that creating them without appropriate templates will be time-consuming and very hard to manage. While they offer many unique benefits, their limitations are often exacerbated by outdated management systems.

Try a free demo of Ironclad today to start automating your indefinite-delivery contracts. You can reduce your turnaround time to prevent costly errors and delays

Table of contents

What Is a Time and Materials Contract?

Time and materials contracts outline payment based on a contractor's time/cost for materials. Learn how to effectively create and manage them.
Read it