What Is Job Order Contracting?

Malcolm Tatum

Job order contracting (JOC) is a strategy that makes it possible for a business or facility to create a contractual arrangement that addresses a multiplicity of functions through the establishment of a single agreement rather than requiring several different contract to manage those same tasks. While the exact structure of this type of contracting will vary and is often influenced by governmental regulations that apply in the jurisdiction where the contract is established. This approach can save a great deal of time and money.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

One of the more common examples of job order contracting is seen in the construction industry. Here, the goal is to include a number of different projects under the auspices of a single agreement. The end result is that a great deal of time is saved, in that a single agreement is negotiated rather than dealing with ongoing negotiations for individual projects. By using this strategy, it is often possible to trim costs associated with all the projects involved, negotiating terms that take into consideration the overall business volume that is covered in the terms and conditions of the contract.

Along with simplifying the process of contracting tasks, job order contracting also often makes it possible to cultivate long-term relationships that pave the way for additional benefits in the future. Both parties may find the effort helps to create a team atmosphere that aids in completing tasks ahead of schedule or under budget, a set of circumstances that may benefit everyone involved. The combination of lower legal fees, reduced operational costs associated with the tasks covered in the contract, and the fact that projects are often completed quickly and efficiently make this approach well worth consideration.

As with any type of contracting situation, clients have the opportunity to review the work completed under the terms of the job order contracting. The terms are usually structured to protect the interests of both the contractors and the client, while also committing all parties to certain responsibilities within the terms of the agreement. For example, a properly structured JOC provides clients with the right to halt a given task if it is not being performed to specifications, while that same agreement aids in protecting contractors from incurring losses due to changes in the wants of the client that are above and beyond the terms of the agreement. At its best, job order contracting shortens the contracting process without sacrificing quality and makes it possible to begin work on key projects sooner rather than later.

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