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FAR 16.103:  Negotiating contract type.

Comptroller General - Key Excerpts

Validity of the No-Cost Contract

LCPtracker and eMars both assert that the contract with Elation should be considered void for lack of consideration. LCPtracker Protest, May 27, 2015, at 1-2; eMars Comments on AR/Supp. Protest, July 10, 2015, at 5-7. We disagree.

To be enforceable, a contract with the United States government requires an offer, acceptance of the offer, and consideration. Rickís Mushroom Service, Inc. v. United States, 76 Fed. Cl. 250, 259 (2007), citing Total Medical Management Inc. v. United States, 104 F.3d 1314, 1319 (Fed Cir. 1997). A contract is supported by adequate consideration if it involves mutual promises of the contracting parties whereby each party obtains a benefit. See GSA: Real Estate Brokersí Commissions, B‑291947, Aug. 15, 2003; T.V. Travel, Inc.; World Travel Advisors, Inc.; General Services Administration--Request for Reconsideration, B-218198.6 et al., Dec. 10, 1985, 85‑2 CPD ∂ 640 at 4-6. Consideration for a contract need not be monetary, and this Office has repeatedly concluded that adequate consideration exists where a contractor promises to perform certain services, the government promises to grant the contractor the right to perform the procured services, and both parties obtain benefits from the arrangement. See, e.g., No‑Cost Contracts for Event Planning Services, B-308968, n.2, Nov. 27, 2007; GSA: Real Estate Brokersí Commissions, supra.

Here, as the agency points out, the award of this contract represents a commitment by HUD to use Elationís wage-rate services for projects across the nation that have a total value of $8 billion--which will expose Elationís system to more than 6,000 users nationwide. eMars AR, exh. 9, COC Referral Letter. Elation expects to benefit from this exposure though an elevated competitive position in the national marketplace, and further expects to reduce the marketing costs that it would otherwise incur. In short, Elation projects that the extensive visibility it will obtain through performance of the HUD contract will substantially increase its share of the national market, and that this increase, along with marketing cost savings, will more than offset Elationís costs to perform the requisite services without monetary compensation. On this record, we find no basis to question the existence of benefits flowing to Elation as a result of HUDís promise to use Elationís services, and we reject the protestersí assertions that the contract is void for lack of consideration.  (LCPtracker, Inc.; eMars, Inc. B-410752.3, B-410752.4, B-410752.5: Sep 3, 2015)  (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
LCPtracker, Inc.; eMars, Inc. B-410752.3, B-410752.4, B-410752.5: Sep 3, 2015  (pdf)  

U. S. Court of Federal Claims - Key Excerpts

 

U. S. Court of Federal Claims - Listing of Decisions
For the Government For the Protester
   

Court of Appeals for the Federal Circuit - Key Excerpts

 

Court of Appeals for the Federal Circuit - Listing of Decisions

For the Government For the Protester
   
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