Introduction to
Job Order Contracting (JOC)

A Job Order Contracting (JOC) system is based on a competitively bid indefinite delivery-indefinite quantity (IDIQ) contract between a facility owner and a construction contractor. The contract typically has a base year with two to four option years. The contract sets parameters such as the types of work that can be done, location of the work, design criteria and maximum amount of work to be awarded. The contract also has a unit-price book (UPB) that establishes a unit price to be paid for each of a multitude of construction line items. A typical UPB has over 40,000 line items and covers almost every construction task. Items that are not in the UPB can be negotiated, priced, and added to the UPB at any time.

Ideally, contractors compete for JOC contracts on the basis of performance as well as price. The contracts price is put in terms of a coefficient, which is a multiplier that covers the contractor's overhead and profit as well as any adjustment between the UPB and actual local prices. Once awarded a contract, the JOC contractor normally establishes a permanent office in close proximity to the facility management staff. The contractor's project manager becomes part of the owner's facilities management team. The facility owner or manager decides how much work is performed by the JOC contractor based on the need and the performance of the contractor. There is a strong incentive for the JOC contractor to impress the facility owner with outstanding service and quality.

Once a JOC contract is in phase, facility work requirements can be accomplished very easily and quickly if the contractor is a "performing" JOC contractor. Typically, the facility owner needs to give the contractor a simple description of work to start the process. The contractor's project manager then arranges for a site visit and prepares a simplified design. Once the design is approved, the contractor and the facility manager prepare a cost estimate by compiling the appropriate quantities of necessary UPB line items. Normally, the UPB data is linked with an estimating software system; thus, the estimating process goes very quickly. After the cost estimates are completed, the contractor and user negotiate to resolve differences in line items and/or quantities. Once a price is agreed upon, a job order is issued to the contractor and construction begins. The entire process usually takes anywhere from 20 to 30 days from the time the work was first identified. The following flow charts show how the JOC process compares to the traditional design-bid-build process.