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Today's main page includes a decision from the CBCA that seemed to turn on the differences between a single award ID/IQ contract and a requirements contract. Because the Board found that the contracts awarded were unambiguously ID/IQ contracts, it concluded that the appellant (Sage) was not entitled to any termination settlement expenses once the guaranteed minimum value had been satisfied.

A sentence from the decision struck me as a good lesson to keep in mind for contractors receiving such contracts: "The risk of any losses incurred by the contractor as a result of start-up costs that exceeded this minimum lies squarely with the contractor."

 

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13 hours ago, here_2_help said:

A sentence from the decision struck me as a good lesson to keep in mind for contractors receiving such contracts: "The risk of any losses incurred by the contractor as a result of start-up costs that exceeded this minimum lies squarely with the contractor."

What has me wondering is the next sentence:

"Additionally, any projected costs for terminated work are not recoverable because, when the contracts were terminated, the Government had no further legal obligation under the contracts because the guaranteed minimums had already been met.""

What does that mean?

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“2. Termination Expenses After The Guaranteed Minimum Was Satisfied
The Government was obligated under each of the contracts to purchase the guaranteed minimum but had no legal obligation to purchase services beyond that. See Travel Centre, 236 F.3d at 1319. The guaranteed minimum under each was $1,000,000. None of the options in the AM contracts contained additional guaranteed minimums nor were they required to include a minimum. See Varilease Technology Group, Inc. v. United States, 289 F.3d 795, 800 (“Minimum quantities are not required to be associated with each option period.”). It is undisputed that the guaranteed minimums were met for each area based on monthly payments alone. Specifically, Sage received $1,823,347.96 in monthly payments for the area 7A contract, $2,225,087.49 in monthly payments for the area 1D contract, and $3,924,285.64 in monthly payments for the area 5P contract. The risk of any losses incurred by the contractor as a result of start-up costs that exceeded this minimum lies squarely with the contractor. Additionally, any projected costs for terminated work are not recoverable because, when the contracts were terminated, the Government had no further legal obligation under the contracts because the guaranteed minimums had already been met. 8 TravelCentre, 236 F.3d at 1319; see CAE USA, Inc. v. Department of Homeland Security, CBCA 4776, 16-1 BCA 36,377, at 177,353 (“Even if an IDIQ contract is terminated for convenience, a contractor cannot recover convenience termination settlement costs if the Government has satisfied the minimum order requirements of an IDIQ contract.” (citing International Data Products Corp. v. United States, 492 F.3d 1317, 1324 (Fed. Cir. 2007))).”

“The solicitation also stated as follows:
In accordance with FAR 16.504(a)(4)(ii) and incorporated HUDAR [HUD Acquisition Regulations] clause 2452.216-76 [48 CFR 2452.216-76], the Government has established both minimum and maximum quantities and amounts for orders placed under the subject contract. The minimum guarantee shall serve as full consideration for the Government’s liability under this contract, and the Government will be under no obligation to conduct further ordering of services from the named contractor beyond the guaranteed contract minimum.”

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1 hour ago, Vern Edwards said:

"Additionally, any projected costs for terminated work are not recoverable because, when the contracts were terminated, the Government had no further legal obligation under the contracts because the guaranteed minimums had already been met.""

What does that mean?

I think the point CBCA gets wrong in that sentence is that there should be no "work" to be terminated under the IDIQ, which only requires that the Government order the guaranteed minimum and the contractor accept properly-placed orders. Any "terminated work" would be on a task/delivery order which would have established new legal obligations above and beyond those in the IDIQ. 

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39 minutes ago, Witty_Username said:

I think the point CBCA gets wrong in that sentence is that there should be no "work" to be terminated under the IDIQ, which only requires that the Government order the guaranteed minimum and the contractor accept properly-placed orders. Any "terminated work" would be on a task/delivery order which would have established new legal obligations above and beyond those in the IDIQ. 

This apparently refers to “Termination Expenses After The Guaranteed Minimum Was Satisfied” as it is discussed under that heading. These expenses weren’t identified in this appeal decision. 

“…We therefore deny appellant’s claim for $3,149,926 in termination for convenience costs.” Those were described earlier in the decision as “its proposed termination for convenience settlement costs ($3,149,926)”. What those costs consisted of was not identified in the decision.

That amount was included in an initial claim/appeal that was denied or dismissed for failure to stated a sum certain of some estimated damages. The same settlement cost expenses were repeated in this appeal decision without explaining what it encompassed.

Edited by joel hoffman
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3 hours ago, Vern Edwards said:

What has me wondering is the next sentence:

"Additionally, any projected costs for terminated work are not recoverable because, when the contracts were terminated, the Government had no further legal obligation under the contracts because the guaranteed minimums had already been met.""

What does that mean?

I found the decision to be hard to comprehend. I thought it was just me. Your comment makes me think it may be the judge who drafted the decision.

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1 hour ago, Vern Edwards said:

What if the government has ordered the minimum, there is a task underway, and the government terminates the contract for convenience?

In that event, the government would have other obligations for tasks underway when the contract was terminated.

Unfortunately, the Decision didn’t explain the context of the contract termination.

Not explained was whether all awarded task orders were completed or were there still active task orders.

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