How to determine if a job order contracting program is right for your organization

Is your organization challenged with procuring high-quality construction projects competitively and efficiently? Job order contracting (JOC) can help. As a rapid procurement delivery method, JOC creates value for owners and contractors. By facilitating competitively awarded, task-order based contracts JOC helps save time and money, organizes procurement and contract management for construction programs, and creates a transparent and competitive environment for construction procurement. In this article, we’ll discuss how to determine when a JOC program is right for you and what components are necessary for a successful implementation.

First, you may be asking “what is job order contracting?”

Job order contracting is an indefinite-delivery, indefinite-quantity (IDIQ) construction procurement method. JOC facilitates competitively awarded, task-order based contracts that help:

• Reduce or eliminate traditional procurement processes, saving time and money.
• Organize procurement and contract management for construction programs.
• Create a transparent and competitive environment for construction procurement.
• Reach procurement participation goals like, but not limited to: small, woman-owned, veteran, minority and local businesses.

Using JOC, task orders for construction projects are governed using a unit price book (UPB). The UPB is a catalog of locally priced construction tasks, used to develop line-item proposals based on scopes of work. Each line item in the UPB contains the costs of equipment, materials, and labor (based on local prevailing wage rates) to complete a measurable unit of construction work. UPBs are developed to the specific needs, specifications, and standards of each owner, and reflect actual regional conditions and wage rates. All line items in the UPB are subject to contractor adjustment factors that are submitted when competing for qualified work. With this method, organizations can execute multiple projects under one solicitation.

With the ability to order multiple projects under one competitive contract, JOC can reduce an owner’s administrative burden. A study by Arizona State University (available through the Center for JOC Excellence) shows that owners using JOC see overall project delivery reduced by 65 percent versus traditional methods. As emergencies arise and priorities change, JOC is designed to remain fluid and accommodate a broad range of project types. This agility allows JOC to fit the ever-changing priorities of building owners.

JOC accommodates needs of owners and contractors, which generates trust between the two parties. Owners are generally not required to guarantee work to contractors; however, if expectations are met or exceeded then there’s a potential for a steady stream of work, motivating contractors to provide quality services. This agility and trust reduces the number of change orders and delays, saving time and money.

Typically, contractors only win 17 percent of the projects they bid and spend most of their operating budget in the bidding process. With JOC, the contractor has an opportunity to execute multiple projects off a single bid. Repetitive maintenance, renovation and emergency type construction projects, especially those that must be completed quickly, are well suited for JOC programs.

A downside to JOC is that it’s rarely used for new construction projects. Local, state or organizational procurement codes often define which types of projects are authorized. In addition, these codes generally define the maximum contract and individual project dollar amount limits apply.

Think a JOC program is right for your organization? Public entities such as the federal and state government, higher education institutions, local government agencies, housing authorities, public works, transportation departments, K12 school districts, public health care providers, and any other public entities that are permitted to use JOC based on applicable procurement codes are the most frequent users. While public entities are the traditional users of JOC procurement, the private sector can apply this approach and reap the same benefits.

Joe Cassata RA NCARB, founder and president of Facility Optimization Solutions (FOS), leads his team in its efforts to help organizations understand and leverage their facility assets to be more efficient, effective, and sustainable. FOS is a multidisciplinary professional services and software consultancy that provides solutions to facility managers and owners across the United States. FOS has developed Simplebid, an adaptable and comprehensive JOC procurement and project management platform.