Job Order Contracting

It is a contracting procedure that allows for the award of a competitively negotiated, firm, fixed price, indefinite quantity contract to a contractor. The contract is bid by firms based on pricing that encompasses several upcoming construction tasks in a Unit Price Book. The Unit Price Book reflects labor rates, construction material, and construction procurement costs in the area. Each contractor bids on the proposed umbrella contract by giving a coefficient that includes overhead, profit, bonds, insurance, and contingency costs. A typical contractor may submit a bid with a factor of 1.25, then each work item anticipated in the scope of work and established in the Unit Price Book is multiplied by 1.25 for a particular project. This allows the owner the opportunity to evaluate each contractor on performance and qualifications knowing that the fixed price has already been established. Finally, once a contractor has been accepted the contractor will be given projects in a work order format. The contractor and the owner will meet to establish the tasks associated with each project and outline the pricing in the unit price book. The contractor will be paid for each work order based on the tasks outlined and the multiplication factor already established.

Why Use Job Order Contracting?

1. Quality
        Partnering between the agency and contractor for the long term on several projects gives an increased incentive to the contractor for several additional projects based on quality performance. The decreased risk of having one contract for several jobs ensures the contractor of upcoming projects based on the fact that they have produced high quality work.
2. Responsiveness
        Having already bid out the contract allows the agency to acquire the services of the JOC contractor much quicker. The usual process of soliciting and acquiring a contract, detailed plans and specifications, and approving the contractor has previously been accomplished through the procurement of a Job Order Contract.
3. Dependability
        A long term relationship based on performance motivates the contractor to impress the owner with fast, dependable, quality service in order to receive the maximum possible amount of work.
4. Line by Line Approval
        The initial approval of the Unit Price Book between the owner and the contractor allows for simple contract documents that contain only the specific tasks of the project.
5. Time and Cost Savings
        The administrative and time costs born by the owner in traditional methods are eliminated with the umbrella approval of a Job Order Contract. Each work item is scoped and specific tasks are identified by the owner and the contractor together alleviating the cost of administrating bids and time for approvals in a specific project.
6. Owner Risk
        The owner can stop the contract at any time after which the contract minimum has been reached. Also, under a performance based contract the owner can terminate the project due to lack of performance.

What Types of Documents are Used in Job Order Contracting?

1. Location Specific Unit Price Book- includes labor and material rates for each work item.
2. Technical Specifications and Requirements
3. The terms and conditions of the contract

Steps in JOC Procurement

Step 1

The owner develops a set of precise standard performance specifications covering all the work for which a JOC contract is anticipated to be used.

Step 2

The owner develops a unit price book (or uses one already available commercially) that includes the cost of labor, equipment, and materials for each item in the specifications.

Step 3

The owner issues a request for proposals and each bidder submits technical and price proposals covering all work contained in the specifications. The price proposal consists of two coefficients (multipliers) covering all indirect costs such as overhead and profit--one for work performed during normal working hours and one for work performed outside of normal working hours.

Step 4

Proposals are evaluated on the basis of management ability, subcontracting support capability, contractor's experience, technical staff capability, price (the coefficients are the basis for the price evaluation), and fiscal management plan, with price weighted at no more than 25 percent. The contract is awarded to the bidder determined to have submitted the best bid based on the ratings received on his/her proposals.

Step 5

Once the contract is in place, the owner multiplies items form the unit price book by the estimated quantity and the coefficient to arrive at the price the contractor will be paid for each job order.

Step 6

When the owner has a need for work to be accomplished, the owner's and the contractor's staff visit the site to discuss the work. They jointly develop a detailed scope of work: requirements for plans, and shop drawings, and completion schedule. The contractor submits a fixed price proposal based on project requirements, site conditions, the technical specifications and the unit price book generally within 10 days to two weeks. The owner's staff reviews the scope, completeness, method of construction, and pricing accuracy of the proposal, then sets up a meeting to resolve discrepancies.

Step 7

Once the owner and the contractor agree, they jointly issue a job order that constitutes the contractor's notice to proceed.