What is an IDIQ contract?

How does an IDIQ contract work?

Sometimes an agency knows it will need something but not how much, or when. The Federal Acquisition Regulation has a contract type for that case. An indefinite-quantity contract provides an indefinite quantity of supplies or services, within stated limits, during a fixed period. The government then places orders for individual needs. The limits can be stated as numbers of units or as dollar values.

Two limits matter:

• A minimum. The government must order at least a stated minimum. The rule says it must be more than a nominal amount.
• A maximum. The contractor must supply what is ordered, up to a stated maximum. News reports often call this the ceiling.

The regulation also prefers awards to two or more companies, where practical. Each holder is then meant to get a fair chance at each order.

Why is the ceiling not the amount spent?

A ceiling is the most the government may order. It is not a promise to spend that much. Money is committed only when it is obligated. The Government Accountability Office (GAO) defines an obligation as a definite commitment that creates a legal liability to pay. Placing an order is one way an agency incurs one.

Recent defense awards show the gap. On September 29, 2026, the Army listed ten counter-drone awards of $150 million to $500 million each. DefenseScoop reported a combined ceiling of $4.15 billion. An official told the outlet that $50 million had been obligated as of that day.

Other large awards carry the same caveat. In March 2026 the Army gave Anduril an enterprise contract worth up to $20 billion. Its release does not use the term IDIQ. It said the figure is the maximum potential value, not an obligated amount.

How common are IDIQ contracts?

A 2017 GAO report found that federal agencies obligated more than $130 billion a year through them from fiscal 2011 through 2015. That was about a third of all federal contract obligations. The Department of Defense accounted for about 68 percent of the IDIQ total. Defense contracting officials told GAO that ordering under an existing contract was easier and faster than awarding a new one.

A 2018 GAO review covered fiscal 2015 through 2017. It found that about three-quarters of the department's IDIQ awards went to a single contractor, not several.