There is no "magic number" that the FAR or our decisions set as
adequate consideration for a contract; instead, the
determination of whether a stated minimum quantity is "nominal"
must consider the nature of the acquisition as a whole. Carr's
Wild Horse Ctr. , B-285833, Oct. 3, 2000, 2000 CPD 210 at 3; ABF
Freight Sys., Inc. , et al. , B-291185, Nov. 8, 2002, 2002 CPD
201 at 4; Sea-Land Serv., Inc. , B-278404, et al. , Feb. 9,
1998, 98-1 CPD 47 at 12. CWGTI argues that the $2,500 guaranteed
minimum amount here is unreasonable because it is so far out of
line with the $15,000,000 minimum order amount. CWGTI, however,
cites no authority for the proposition that a contract's minimum
order amount has to have a specific relationship to the required
minimum guarantee, or that a minimum order amount forms the
floor for a minimum guarantee. In light of the purpose of FAR
16.504(a) to establish a binding minimum--in effect,
consideration for the ID/IQ contract--we do not believe that a
contract's minimum order establishes the minimum guarantee or
serves as a firm target against which the reasonableness of the
minimum guarantee must be evaluated. Instead, the minimum
guarantee must be evaluated in the context of all of the
specific facts and circumstances of the procurement. ABF Freight
Sys., Inc. , supra. Our Office requested that the agency and
CWGTI provide, for comparison purposes, data regarding average
or representative fees for similar travel transactions based on
the agency's current contracts and the protester's work as an
incumbent on other travel contracts. The agency provided the
data from an existing travel contract which "represents the
agency's best estimate of the likely costs for transactions
under the proposed contract because it is the only contract
known to the agency to have a similar pricing scheme." Agency
Response to Questions at 2. This contract has transaction fees
ranging from $5 to $16 and, thus, the agency contends that the
$2,500 guaranteed minimum here could represent up to several
hundred transactions. We consider the transaction fees here to
be comparable to the actual transactions that formed the basis
for the minimum guarantees in our decisions in Aalco Forwarding,
Inc. , Sea-Land Services, Inc. , and ABF Freight Systems, Inc.
Because the guaranteed minimum amount here potentially
represents several hundred potential transactions (for example,
at $5 per transaction, the $2,500 guaranteed minimum amount
would represent 500 transactions), we cannot conclude that this
guaranteed minimum amount is so small as to be nominal, and thus
insufficient consideration to bind the parties. (CW
Government Travel, Inc., B-295530, March 7, 2005) (pdf)
Here, like the situation presented in Aalco Forwarding, Inc. et al., supra, the solicitation provided for multiple awards to transport cargo for each lane and provided for a best-value basis for selecting among the contractors once all the contractors' minimum quantities have been ordered. See also Sea-Land Serv., Inc., supra (award of multiple contracts for same routes or zones affects the amount the government is certain to order from each contractor). Thus, for each lane, the agency may have multiple choices of contractors to perform the transportation services. It is not possible to know, after the minimums are satisfied, whether a given contractor will be used under the best-value scheme for any orders until individual orders arise. For this reason, it is uncertain that a given contractor will carry more than the minimum specified for a lane during the life of the contract. Given this uncertainty and that the minimum quantity on any one contract may not exceed the amount the government is fairly certain to order, see FAR § 16.504(a)(2), we find no basis to object to the stated minimum quantities here. We also find here that the minimum quantity guaranteed for each lane, even if it amounts to only a few hundred dollars, is sufficient consideration to form a binding contract. Although it may be true that the guaranteed minimum quantity for certain lanes appears low (particularly as compared to the minimums guaranteed for other lanes), this does not alone demonstrate that the guaranteed quantity is insufficient to support a contract. See Sunbelt Props., Inc., B-249307, Oct. 30, 1992, 92-2 CPD ¶ 309 at 3 n.3.
(ABF Freight System, Inc.; Old Dominion Freight Line, Inc.;
Overnite, B-291185, November 8, 2002) (pdf)
Since the prohibition against a
nominal minimum quantity is designed to ensure that the intent
to form a binding contract is present, the determination whether
a stated minimum quantity is nominal must consider the nature of
the acquisition as a whole. The record shows that BLM has a
recurring need for animal adoptions and that the 100-animal
minimum guarantee is not out of line with the numbers handled at
previous adoption events. Here, multiple awards are contemplated
and there is no certainty that individual contractors will
assist and handle more than the minimum guaranteed quantity of
100 animals. Considering all of the circumstances here and the
historical data, we cannot conclude that the stated minimum
quantity for the life of the contract represents insufficient
consideration to form a binding contract. (Carr's
Wild Horse Center, B-285833, October 3, 2000)
The FAR reflects the rule that,
without an obligatory minimum quantity, the government-buyer
under an indefinite-quantity contract would be allowed to order
nothing, rendering its obligations illusory and, therefore,
unenforceable. Rice Lake Contracting, Inc. v. United States, 33
Fed.Cl. 144, 153 (1995); Aalco Forwarding, Inc., et al.,
B-277241.15, Mar. 11, 1998, 98-1 CPD para. 87 at 6. Since the
RFP here contains no stated minimum, it does not meet the test
for formation of a valid indefinite-quantity contract. (Satellite
Services, Inc., B-280945; B-280945.2; B-280945.3, December
4, 1998) |
