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Calculation for Business Loss Involving IDIQ K


charles

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Does anyone know of any references or seminole cases related to business loss calculations for IDIQ contracts. Specifically, how damages are determined when the Government breaches an Umbrella/MAC IDIQ contract. I found cases involving Requirements contracts but I have not found anything on point dealing with IDIQs. I am still searching but would appreciate an assist.

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Does anyone know of any references or seminole cases related to business loss calculations for IDIQ contracts. Specifically, how damages are determined when the Government breaches an Umbrella/MAC IDIQ contract. I found cases involving Requirements contracts but I have not found anything on point dealing with IDIQs. I am still searching but would appreciate an assist.

Here is an extract from a 2001 decision of the United States Court of Appeals for the Federal Circuit.

http://ftp.resource.org/courts.gov/c/F3/23...26.00-1054.html

B. Entitlement and Damages

Both requirements contracts and IDIQ contracts provide the government purchasing flexibility for requirements that it cannot accurately anticipate. See Stratos Mobile Networks U.S.A. v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000). A requirements contract requires the contracting government entity to fill all of its actual requirements for supplies or services that are specified in the contract, during the contract period, by purchases from the contract awardee. 48 C.F.R. ? 16.503(a) (2000). See also Medart, Inc. v. Austin, 967 F.2d 579, 581 (Fed. Cir. 1992). Conversely, while an IDIQ contract provides that the government will purchase an indefinite quantity of supplies or services from a contractor during a fixed period of time, it requires the government to order only a stated minimum quantity of supplies or services. 48 C.F.R.? 16.504(a) (2000). See also Dot Sys., Inc. v. United States, 231 Ct. Cl. 765 (1982). That is, under an IDIQ contract, the government is required to purchase the minimum quantity stated in the contract, but when the government makes that purchase its legal obligation under the contract is satisfied. See, e.g., Mason v. United States, 615 F.2d 1343, 1346 (Ct. Cl. 1980). Moreover, once the government has purchased the minimum quantity stated in an IDIQ contract from the contractor, it is free to purchase additional supplies or services from any other source it chooses. An IDIQ contract does not provide any exclusivity to the contractor. The government may, at its discretion and for its benefit, make its purchases for similar supplies and/or services from other sources.

Travel Centre entered into a contract with GSA that explicitly stated, within its four corners, that it was an IDIQ contract and that Travel Centre was guaranteed no more than $100 of revenue. Travel Centre admitted, in response to an interrogatory question, that it understood prior to being awarded the contract that federal agencies identified in the solicitation were not required to use its services under the contract.

Further, the contract unambiguously stated that Travel Centre was "a preferred source" of travel agency services in Maine and New Hampshire. The language "a preferred source" is not equivalent to "the exclusive source" or even to "the preferred source." Rather, the language "a preferred source" indicates that governmental agencies could, but are not required to, use Travel Centre for its travel management services needs. That is, the federal agencies in the areas covered by the IDIQ contract were free to purchase travel management services from sources other than Travel Centre.

Regardless of the accuracy of the estimates delineated in the solicitation, based on the language of the solicitation for the IDIQ contract, Travel Centre could not have had a reasonable expectation that any of the government's needs beyond the minimum contract price would necessarily be satisfied under this contract.1

In sum, when an IDIQ contract between a contracting party and the government clearly indicates that the contracting party is guaranteed no more than a non-nominal minimum amount of sales, purchases exceeding that minimum amount satisfy the government's legal obligation under the contract. Accordingly, under the terms of the IDIQ contract at issue, GSA was only required to purchase the minimum quantity stated in the contract - sales that would lead to $100 in revenue. Prior to the termination of the contract, Travel Centre realized over $500,000 of gross sales under the contract. Sales of more than $500,000 netted Travel Centre over $100 of revenue.2 Therefore, GSA satisfied its obligation under the contract. Because GSA met the legal requirements of the contract at issue, its less than ideal contracting tactics fail to constitute a breach. Therefore, Travel Centre is not entitled to any legal relief, including damages.

http://ftp.resource.org/courts.gov/c/F3/23...26.00-1054.html

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Does anyone know of any references or seminole cases related to business loss calculations for IDIQ contracts. Specifically, how damages are determined when the Government breaches an Umbrella/MAC IDIQ contract. I found cases involving Requirements contracts but I have not found anything on point dealing with IDIQs. I am still searching but would appreciate an assist.

Charles, what does the breach involve - the minimum order guarantee? Please advise.

Obviously, there is case law on this. At least one resulted in recovery of no more than an anticipated or reasonable profit and maybe included G&A. Others seem to have resulted in payment of the minimum amount. I dont have them handy but we need to know what the breach concerns, first. Thanks.

Just GOOGLED this topic ("damages case law ID/IQ minimum guarantee") and an Ask The Professor question and answer appeared.

See: https://akss.dau.mil/askaprof-akss/qdetail2...uestionID=27930

Here is the answer provided:

"...However the case of Thomas E. White, Secretary of the Army, v. Delta Construction International, Inc. from the United States Court of Appeals for the Federal Circuit (01-1253) dated 12 March 2002 with very similar circumstances provides much information which is relevant to your question.

In the above cited case, the contracting officer's decision regarding the contractor's entitlement when the government failed to meet the minimum order on an ID/IQ contract was upheld by the court in principle (while not necessarily in the settlement amount) when the contracting officer ruled the Government did not order the guarantee minimum, nevertheless, the contractor is not entitled to be put in a better position than it would have been if it had performed and had to bear the expense of full performance. It is my decision that the contractor is entitled to recover a reasonable profit which it would have earned had he performed, based on the guarantee minimum, the overhead costs incurred on the guarantee minimum, and any reasonable, allocable, and allowable cost incurred based on guarantee minimum.

The court states The primary objective of damages for breach of contract is to place the non-breaching party in as good a position pecuniarily as he would have been by performance of the contract. Miller v. Robertson, 266 U.S. 243, 257 (1924). As this court has stated, [t]he general rule is that damages for breach of contract shall place the wronged party in as good a position as it would have been in, had the breaching party fully performed its obligation. Mass. Bay Transp. Auth. v. United States, 129 F.3d 1226, 1232 (Fed. Cir. 1997) (citing prior cases of this court and its predecessor, the Court of Claims).

It further states A corollary of that principle is that the non-breaching party is not entitled to be put in a better position by the recovery than if the [other party] had fully performed the contract. Miller, 266 U.S. at 260. As the First Circuit stated the rule, the non-breaching party should on no account get more than would have accrued if the contract had been performed. DPJ Co. v. FDIC, 30 F.3d 247, 250 (1st Cir. 1994)."

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Guest Vern Edwards
Does anyone know of any references or seminole cases related to business loss calculations for IDIQ contracts. Specifically, how damages are determined when the Government breaches an Umbrella/MAC IDIQ contract.

I hope everybody understands that there is no way to answer that question, because, as Joel pointed out, its author did not describe the nature of the breach. The breach could take many different forms and the measurement of damages will vary.

People who post questions must understand that the answers will depend on facts. If you will not provide information, then why bother with a question? As for private emails, free information from people you know little if anything about is worth guess how much. Hopefully, no one will try to practice law without a license.

By the way, the person who penned that Ask A Professor (AAP) response didn't know what he or she was talking about. Joel's post is a little misleading, because he did not quote the question to which AAP responded. The question was:

Do we owe the Contractor any money for the Minimum Guarantee in the Base Period when we did not award any Task Orders since we awarded Task Orders in Option Period One for $1,000,000.00, which exceeds the Minimum Guarantee of all three years of the contract combined?

AAP's answer was not responsive to the questioner's facts, was not responsive to the question itself, and, therefor, was typically irresponsible. It ignored the fact that in the questioner's case the government actually ordered an amount that exceeded the minimum, albeit not during the base year. The White v. Delta decision (285 F.3d 1040) was about a case in which the government made some purchases, but did not order the entire minimum. The two situations must be distinguished. Anyone who relies on AAP is foolish. I like to think that if Joel had read White v. Delta he would have recognized that the AAP post was worthless and should not have been quoted. In any event, as he has said, he does not know the facts of your case.

Charles, I don't know what you think you are going to Shepardize from the information that has been given to you. If you have a breach issue, do yourself a favor and consult with a government contracts attorney, not with the denizens of Wifcon Forum.

And I think you meant seminal, not "seminole."

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I hope everybody understands that there is no way to answer that question, because, as Joel pointed out, its author did not describe the nature of the breach. The breach could take many different forms and the measurement of damages will vary.

People who post questions must understand that the answers will depend on facts. If you will not provide information, then why bother with a question? As for private emails, free information from people you know little if anything about is worth guess how much. Hopefully, no one will try to practice law without a license.

By the way, the person who penned that Ask A Professor (AAP) response didn't know what he or she was talking about. Joel's post is a little misleading, because he did not quote the question to which AAP responded. The question was:

AAP's answer was not responsive to the questioner's facts, was not responsive to the question itself, and, therefor, was typically irresponsible. It ignored the fact that in the questioner's case the government actually ordered an amount that exceeded the minimum, albeit not during the base year. The White v. Delta decision (285 F.3d 1040) was about a case in which the government made some purchases, but did not order the entire minimum. The two situations must be distinguished. Anyone who relies on AAP is foolish. I like to think that if Joel had read White v. Delta he would have recognized that the AAP post was worthless and should not have been quoted. In any event, as he has said, he does not know the facts of your case.

Charles, I don't know what you think you are going to Shepardize from the information that has been given to you. If you have a breach issue, do yourself a favor and consult with a government contracts attorney, not with the denizens of Wifcon Forum.

And I think you meant seminal, not "seminole."

I only quoted the AAP answer because of the principle that was expressed regarding damages for failure to order the minimum guarantee in an ID/IQ. Charles may intend to Shepardize the case to see how it might apply to his situation, if that is the problem (I don't know what his problem is) and to see if it is still good law, superseded, or whatever. That case is just a sample or starting place to research from. One must always distinguish between the facts of one case versus another. Contracting 101.

I provided a GOOGLE search result for him to follow some links if he is interested or if applicable.

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Vern,

Yes, I meant seminal not seminole. As a defense, I was working a NAGPRA issue (LOL). My question was asked and answered. I was seeking an azimuth not a 10 digit coordinate.

You stated, ?As for private emails, free information from people you know little if anything about is worth guess how much. Hopefully, no one will try to practice law without a license.? I may not know Joel well, and he may not remember me, but I have corresponded with him on a few occasions for several years. I lost his email address and it?s his choice whether he wants to resend it.

You stated, ?Charles, I don't know what you think you are going to Shepardize from the information that has been given to you.? I accomplished the following: (1) looked up the case, (2) reviewed all secondary materials (i.e. restatements, AMJURs), (3) cross referenced any cases citing its holding or dicta, (4) found cases on point, (5) reviewed pleadings and appellate briefs.

Joel,

Your original post was helpful. I agree I needed more facts for a specific answer, but, I did not want one. And you cant make me (LOL).

Sincerely,

Charles

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