Job Order Contracting
In short
A master arrangement under which individual orders define the actual work. Each order is classified on its own, so one arrangement can produce both MRRA and Modification.
In full
Job Order Contracting is an arrangement in which an owner engages a contractor for a specific duration or a general scope of services, and the specific scope is then defined in individual orders issued under it. The master agreement commits to quantities that are not yet known and specifies no construction of its own.
That structure is what makes the tax question unusual, and ADOR answers it directly: each order is considered separately when determining whether the work is an MRRA contract or a Modification contract.
Three consequences follow. Where the arrangement is only for MRRA work, each order is treated as an MRRA contract. Any order involving alteration is evaluated against the applicable alteration threshold on its own. And where an order contains both MRRA and Modification activity, the modification activity must be de minimis — the 15% test — or the entire order is taxable.
The unit of analysis is the order, not the master agreement and not the year's work. A contractor holding one arrangement may report some orders as Modification and deduct others as MRRA, on the same return.
The naming is not consistent across sources and the difference is worth knowing before reading any of them. A.R.S. § 34-101(17) hyphenates the term, defines it as a project delivery method in which the contract is a requirements contract for indefinite quantities of construction, and calls the instruments job orders. ADOR's Contracting FAQs call the arrangement a contracting method and call the instruments work orders. ADOR's mixed-contract worksheet heads the case JOB ORDER CONTRACT.
Section 34-101 is public procurement law rather than tax law. It describes the same structure; it does not decide the tax treatment.
ADOR Contracting FAQs; A.R.S. § 34-101(17); A.R.S. § 42-5075(P)(2); ADOR Evaluating Mixed Construction Contracts worksheet