The agency issued the solicitation on
May 20, 2009, contemplating the award of a
firm-fixed-price requirements-type contract with a base
period of one year and four option years. The solicitation
states in relevant part as follows:
It is the intent of the
government to make a single award for the services
required in this solicitation (Dental Assistants (4) and
Pharmacy Technicians (2)). However, the government
reserves the right to make two (2) awards for the
requested services if advantageous to the government. If
two awardees are selected, it will result in separate
indefinite delivery/requirements type contracts for each
service (e.g. one award to a sole provider for the
provision of Dental Assistant Services, and one award to
a sole provider for the provision of Pharmacy Technician
Services).
Solicitation, Amendment 3,
at 1.
A requirements contract provides for filling all actual
purchase requirements of designated government activities
for supplies or services during a specified contract
period, with deliveries or performance to be scheduled by
placing orders with the contractor. Federal Acquisition
Regulation (FAR) sect. 16.503(a). A requirements contract
is formed when the seller has the exclusive right and
legal obligation to fill all of the buyer's needs for the
goods or services described in the contract. Modern Sys.
Tech. Corp. v. United States, 979 F.2d 200, 205 (Fed. Cir.
1992). The promise by the buyer to purchase the subject
matter of the contract exclusively from the seller is an
essential element of a requirements contract. Id. A
solicitation will not result in the award of an
enforceable requirements contract where a solicitation
provision disclaims the government's obligation to order
its requirements from the contractor and therefore renders
illusory the consideration necessary to enforce the
contract. See Sea-Land Serv., Inc., B-266238, Feb. 8,
1996, 96-1 CPD para. 49 at 5.
The solicitation challenged in this case in no way
disclaims the government's obligation to order its
requirements from the eventual awardee or awardees, whose
contract, or contracts, will quite clearly provide the
consideration required for enforceability. Specifically,
should the agency determine that it is in the best
interest of the government to award two requirements
contracts pursuant to this solicitation, one requirements
contract for dental assistant services and one
requirements contract for pharmacy technician services,
the requisite consideration will be provided in each case
by the agency's promise to purchase all of the subject
matter of each contract solely from the respective
contract holder. (JRS
Management, B-401524.2, January 12, 2010) (pdf)
The promise
by the buyer to purchase the subject matter of the
contract exclusively from the seller is an essential
element of a requirements contract. Modern Sys. Tech.
Corp. v. United States, 979 F.2d 200, 205 (Fed. Cir.
1992). A solicitation will not result in the award of an
enforceable requirements contract where a solicitation
provision disclaims the government's obligation to order
its requirements from the contractor and therefore
renders illusory the consideration necessary to enforce
the contract. See Sea-Land Serv., Inc., B-266238, Feb.
8, 1996, 96-1 CPD para. 49 at 5.
With regard to any
individual contractor, however, there is no obligation
to procure all of the agency's needs from that
contractor, or to procure all of its needs within a
designated price range or at a designated location from
that contractor, or even to order any work at all from
the contractor. Further, the agency's obligations to the
contractors as a whole are limited by the RFP provisions
allowing the contracting officer to exclude
"unique" projects--and, more important,
allowing the contracting officer to deny the task order
contractors the right to compete--the very right that
the agency argues they have bargained for--"when
otherwise determined to be in the best interest of the
Government." A party may not by such means reserve
to itself a method of unlimited exculpation without
rendering the promises illusory and the contract void.
Torncello v. United States, 681 F.2d 756, 760 (Ct. Cl.
1982). As the court stated in Torncello, it is specious
to argue that the agency's power to avoid its
obligations is limited by requiring that it can only do
so in the best interest of the government or in the
exercise of its discretion. Id. at 770 ("it seems
hardly sufficient for the government to promise not to
do anything that would be against its own interest. This
merely is promising only to do whatever suits
it.").
In other words, an
obligation that is avoidable in the government's
discretion, or whenever it is in the government's
interest, is no limit on the agency's actions. Where the
agency has such discretion, it is impossible to
ascertain any definite amount of work to which a
contractor is entitled, no guidance for a court or board
to determine if and when a breach has occurred, and no
means of enforcing the contract against the government.
See Modern Sys. Tech. Corp. v. United States, supra, at
206. (Satellite
Services, Inc., B-280945; B-280945.2; B-280945.3,
December 4, 1998) |