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NGDenise

"Term Liability" like language

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Understand that term liability requires incremental funding, but under a requirements contract, with no funding or obligation,  how can a contractor "obligate" the Government (DOD)? Hypotheticially speaking, USG issues a requirements contract for contractor A to buy and store widgets upfront with the hopes that other contractors will enter agreements with contractor A to buy down the widgets, and thus compensate Contractor A. What can Contractor A do to obligate the Gov if they are left with inventory or if no contractors agree to contract for the widgets?

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Is contractor A a willing party to the requirements contract?

Who can issue delivery orders under the contract?  Other contractors?  I don’t understand how a Government agency, in a contract with contractor A, can force other contractors B, C, . . . n, to order their widget needs from contractor A. 

Maybe contractor A needs to negotiate for some other contract type.

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Contract A is a willing party. Hoping to gain goodwill and future opportunities with USG. USG administers the requirements contract. Other contractors are "expected" to contract with Contractor A under a DOD directive for a widget that they can only get with Contractor A. Contractor A is looking for a way, however, to obligate the USG if not enough other contractors come to buy this widget. Term liability language doesn't seem to apply here, but is there any other language or clause that Contractor A can invoke? Also, USG did not plan for this in their current budget, so have no way to fund this themselves for another 2 fiscal years. May have funding in FY22.

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Negotiate an IDIQ contract instead of a requirements contract, and have the government promise to order the difference between whatever the other contractors purchase and the contract minimum.  And negotiate a reasonable minimum, not a nominal minimum.

Or, accept the risk that goes along with a requirements contract in exchange for the goodwill you seek.

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"Hypotheticially speaking, USG issues a requirements contract for contractor A to buy and store widgets upfront with the hopes that other contractors will enter agreements with contractor A to buy down the widgets, and thus compensateContractor A."

"Store"  Neither a  Requirements nor an IDIQ contract buys a "thing" it buys a promise.  A promise to pay for a minimum (IDIQ) or a promise to only order needs, if they arise, from you exclusively (Requirements).  So if the government wants you store widgets for you then to provide to other contractors then make them buy them.

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NGDenise, in your scenario, what is the consideration flowing from the government that is sufficient to establish a binding contract?

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