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GRANTED AS TO ENTITLEMENT: November 26, 1997
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GSBCA 14057
TRAVEL CENTRE,
Appellant,
v.
GENERAL SERVICES ADMINISTRATION,
Respondent.
O. Kevin Vincent of Baker & Botts, Washington, DC, counsel
for Appellant.
Wendy Nevett Bazil and Michael D. Tully, Office of General
Counsel, General Services Administration, Washington, DC, counsel
for Respondent.
Before Board Judges PARKER, HYATT, and VERGILIO.
PARKER, Board Judge.
Travel Centre, appellant, maintains that the General
Services Administration (GSA), respondent, breached a contract
under which Travel Centre was to provide travel management
services to federal agencies in the states of Maine and New
Hampshire. The contract was breached, according to appellant,
because GSA knew at the time the contract was awarded that the
estimates provided by GSA of the amount of business which could
be expected under the contract, and upon which offerors were
required to base their proposals, were vastly overstated. Thus,
appellant argues, GSA knowingly misled Travel Centre into
entering into a contract under which Travel Centre was certain to
lose money. As discussed below, we agree with Travel Centre that
GSA breached the contract.
Findings of Fact
The Solicitation
On April 21, 1995, GSA issued a solicitation for the
establishment and operation of a travel management center for
federal agencies located in Maine, New Hampshire and Vermont for
the period from October 1, 1995 through September 30, 1996, with
four one-year option periods. The solicitation contemplated
award of an indefinite quantity, indefinite delivery type
contract, with a guaranteed minimum revenue of $100. Appeal
File, Exhibit 2. Essentially, the winning contractor would serve
as a preferred, but not mandatory, source for federal agencies
that required airline tickets, lodging, rental vehicles, etc. for
their employees. The winning contractor would not be paid by the
Government to perform these services, however; compensation under
the contract would be in the form of commissions received by the
contractor from the carriers, hotels and car rental companies
from which the services were procured. Id. at 27. The winning
contractor would be required to rebate a percentage of these
commissions to the Government. Id. at 30.
Section B-2 of the solicitation offered the following
caution to prospective offerors:
IMPACT OF NON-MANDATORY USE ON SALES
ESTIMATES:
Sales estimates, agency names, and any other
information in Section H, is provided solely
for informational purposes, and does not
represent any guaranty of sales. It is not
known how many Federal agencies will choose
to utilize this contract, and it is not known
how much business this contract will generate
for the Contractor.
Appeal File, Exhibit 2 at 8.
Section H of the solicitation provided the following
information:
ITEM 1: STATE OF MAINE
. . . .
FY94 DATA: 4,156 TICKETS
$1,861,700 ANNUAL DOLLAR
AMOUNT
(Sources: GSA forms 3531 and current agency
customer list)
Offerors shall base their offer[s] on the
above illustrated FY94 figures.
The following table is for information
purposes only and it does not represent any
guaranty of sales, it does not list all of
the Federal agencies located in the state,
and it does not reflect any commitments
received by GSA from the Federal agencies
(listed below or otherwise) to utilize any
contract resulting from this solicitation.
[A table of requirements, broken down by
individual agency, followed. There were
numerous errors contained in the table.]
Appeal File, Exhibit 2 at 30a. The parties agree that 2,186 of
the tickets and $992,900 of the annual dollar amount were
attributable to Maine Air and Army National Guard (MEANG) and
Department of Defense (DoD) agencies.
GSA's Knowledge of Expected Business
In December 1994, GSA received a "Monthly Narrative" report
from Dube Travel, the incumbent contractor for the state of
Maine.[foot#] 1 The narrative informed GSA that
The Department of the Army has solicited bids
for 19 states including Maine, which
encompasses all of the National Guards' units
worth $121,000,000.00 It has been won by
Carlson Travel, along with it's [sic] other
five contracts. They are due to take over
the Army National Guard account in February
1995.
Appeal File, Exhibit 55. The information was repeated in Dube's
monthly reports received by GSA in January and February. Id.,
Exhibits 56, 57.
In preparing for the current solicitation, respondent
contends that it conducted a telephone survey during February-
March 1995 of potential federal customers for the new contract.
Appeal File, Exhibit 67. Telephone records for the relevant
period, however, show at most one call, on April 6, 1995, which
could possibly have been made in connection with a telephone
survey. The forty-four other agencies which were customers for
the predecessor contract apparently were not contacted at all.
Id., Exhibit 78. GSA has stipulated that its "limited telephone
survey of potential customers prior to issuance of the 1995 RFP
[request for proposals] was inadequate to properly update the
survey data used in the 1994 solicitation." Stipulation 8.
Travel Centre submitted its proposal on May 24, 1995.
Stipulation 21. On June 27, the agent for MEANG issued a notice
----------- FOOTNOTE BEGINS ---------
[foot #] 1 During the predecessor contract, most federal agencies
were required to use GSA contracts as mandatory sources for their
travel agency requirements. This situation changed between the
award of the predecessor contract and the contract at issue in
this appeal; GSA became a "preferred provider" instead of a
"mandatory source." Appeal File, Exhibit 100.
of termination of travel services, effective August 20, to Dube
Travel. On August 15, Travel Centre submitted a best and final
offer. On September 18, GSA received a Monthly Narrative from
Dube Travel that stated:
With the Camp Keyes being taken over by
another larger out-of-state agency on August
20, 1995, we are no longer servicing the Camp
Keyes accounts which includes Maine Air
National Guard units, and the U.S. Army
Battalion and Recruiting units.
----------- FOOTNOTE ENDS ---------
Appeal File, Exhibit 59. On October 10, GSA requested a second
best and final offer from Travel Centre. Id., Exhibit 7. Travel
Centre submitted an amended best and final offer the same day.
Stipulation 25.
During this whole process, GSA never said a word about the
information that it had received about the MEANG and DoD units,
notwithstanding the fact that these units generated more than
half of the expected business in Maine. GSA has stipulated that
"the incumbent contractor's notification of a competing source of
supply should have prompted GSA to make further inquiry into the
matter." Stipulation 24.
Contract Award and Subsequent Events
On October 25, 1995, GSA awarded to Travel Centre a contract
for travel management services for the states of Maine and New
Hampshire (appellant was not awarded the contract for Vermont).
Shortly after it began performance of the contract, Travel Centre
learned that the MEANG and DoD agencies would not be
participating in the contract. Appeal File, Exhibit 66.[foot #]2
When expected revenues did not materialize, Travel Centre closed
its business. Appellant's Record Submission and Brief, Exhibit A.
On June 21, 1996, GSA terminated the contract for default. GSA
changed the default termination to one for the convenience of the
Government on April 30, 1997. Stipulation 35. Travel Centre
filed its claim for breach of contract on October 21, 1996 and,
on January 2, 1997, appealed the GSA contracting officer's denial
of that claim. The parties have requested that the Board decide
only the issue of entitlement.
Discussion
----------- FOOTNOTE BEGINS ---------
[foot #]2 Although GSA maintains that Travel Centre knew about
the Carlson Travel contract prior to contract award, this
contention is not supported in the record. Travel Centre admits
to hearing about a large contract award to Carlson Travel, but
maintains that it had no idea that Carlson's contract covered the
same agencies covered by GSA's solicitation. Appeal File,
Exhibit 66 at 25-28. There is no evidence to the contrary.
----------- FOOTNOTE ENDS ---------
Travel Centre contends that GSA breached the contract for
travel services because GSA knew or should have known at the time
of award that the estimates provided by GSA of the amount of
business which could be expected under the contract, and upon
which offerors were required to base their proposals, were vastly
overstated. We agree.
There are many factors which enter into the assignment of
risk of a bad Government estimate. Among these are the potential
for economic injury to the contractor, the form of contract
chosen and the degree to which the estimating process itself was
defective. S & W Tire Services, Inc., GSBCA 6376, 82-2 BCA
16,048.
An estimate as to a material matter in a
bidding invitation is an expedient.
Ordinarily it is only used where there is a
recognized need for guidance to bidders on a
particular point but specific information is
not readily available. Intrinsically, the
estimate that is made in such circumstances
must be the product of such relevant
underlying information as is available to the
author of the invitation. If the bidder were
not entitled to so regard it, its inclusion
in the invitation would be surplusage at best
or deception at worst. Assuming that the
bidder acts reasonably, he is entitled to
rely on Government estimates as representing
honest and informed conclusions. In short,
in promulgating an estimate for bidding-
invitation purposes, the government is not
required to be clairvoyant but it is obliged
to base that estimate on all relevant
information that is reasonably available to
it.
Womack v. United States, 389 F.2d 793, 801 (Ct. Cl. 1968).
To GSA's credit, the agency has not attempted to defend
either the accuracy of its estimate or the manner in which the
estimate was constructed. GSA argues that, although the agency
was negligent in preparing the estimate, it was not guilty of the
"bad faith" necessary to constitute a breach of contract.
According to GSA, a termination for the convenience of the
Government is the appropriate remedy.
Courts and boards of contract appeals have struggled
mightily with the question of where to draw the line between a
breach of contract by the Government and a legitimate use of the
Government's power to terminate a contract for convenience.
Prior to 1982, courts consistently held that terminations for
convenience would be overturned only in cases of "bad faith" or
"abuse of discretion" on the part of the Government. John Reiner
& Co. v. United States, 325 F.2d 438 (Ct. Cl. 1963), cert.
denied, 377 U.S. 931 (1964). In some cases, the required "bad
faith" was equated with a specific intent on the part of the
Government to injure the contractor. Kalvar Corp. v. United
States, 543 F.2d 1298 (Ct. Cl. 1976), cert. denied, 434 U.S. 830
(1977).
The field was muddied somewhat with the Court of Claims'
decision in Torncello v. United States, 681 F.2d 756 (Ct. Cl.
1982). Torncello involved a requirements contract for various
janitorial services. The Navy, believing that one of the items
was overpriced, performed the work in-house. In a plurality
opinion, the court held that the Navy's failure to order the work
constituted a breach of contract, not because of bad faith or
abuse of discretion on the part of the Navy, but because a
termination for convenience could only be justified where
circumstances had changed after the contract was awarded. Id. at
772. Since circumstances had not changed after award, the Navy
could not rely on the termination for convenience clause to avoid
a breach.
The limit on the Government's power to terminate a contract
for convenience established in Torncello has been substantially
eroded in subsequent cases, most significantly by the Court of
Appeals for the Federal Circuit in Krygoski Construction Co. v.
United States, 94 F.3d 1537 (Fed. Cir. 1996). In Krygoski, the
U.S. Army Corps of Engineers terminated for convenience a
contract to demolish two buildings when it found that the amount
of asbestos which needed to be removed was far in excess of the
amount which had been estimated. The Corps considered the
proposed price increase of about thirty-three percent to be a
cardinal change and decided to terminate the contract and
resolicit based upon the new requirements. In reversing the
Court of Federal Claims' award of breach damages, the Federal
Circuit rejected the Torncello "changed circumstances" test,
holding that Torncello applies "only when the Government enters a
contract with no intention of fulfilling its promises." 94 F.3d
at 1545. The Federal Circuit determined that the contracting
officer, by terminating the contract for convenience to avoid a
cardinal change, did not act in bad faith or abuse his
discretion.
Given the current state of the law, which seems to be about
the same as it was prior to 1982, we must determine whether GSA's
termination for convenience of Travel Centre's contract as a
result of a severely deficient estimate was in bad faith or
constituted an abuse of discretion. As discussed below, we think
that GSA did breach the contract -- GSA's actions in connection
with the award of the contract demonstrated bad faith.
Boards of contract appeals have been deciding faulty
estimate cases for a long time. Of the many confusing and
seemingly conflicting cases, the one that makes the most sense to
us in terms of application to the instant case is Atlantic
Garages, Inc., GSBCA 5891, 82-1 BCA 15,479. In Atlantic
Garages, a faulty estimate of the number of vehicles that would
need to be repaired during the year suffered from the same basic
defect as the faulty estimate here -- the Government's actions
were sufficiently irrational as to support a finding that it knew
or should have known that the estimate was not based on all
relevant information. Also, as here, the irrationally-arrived-at
estimate (and the resulting lack of income) caused the contractor
to lose money and fail to meet its financial obligations.
The Board held that the Government's actions in arriving at
such an irrational estimate constituted a breach of contract:
The decisions establish that an estimate
on which a prospective contractor must
necessarily base its prices is an estimate to
which the Government will be closely held.
Although they use the rubric "due care" or
"good faith," which appears at times to be
the sole basis for the decision, cases such
as Womack would probably have reached the
same result regardless of the degree of care
of the procuring personnel. But Pied Piper
[Pied Piper Ice Cream, Inc., ASBCA 20605, 76-
2 BCA 12,148] shows that other elements can
also affect the result, such as the extent of
the estimating error, the potential injury to
the contractor, and the degree of care
exercised by the procuring personnel in
carrying out their responsibilities for
formulating accurate estimates.
. . . .
Whatever risks a contractor takes should
not include the risk that the contract will
be based on an irrationally contrived
estimate.
Atlantic Garages, 82-1 BCA at 76,710. We think that this
analysis makes good sense and is not inconsistent with more
recent cases such as Krygoski.
Here, GSA's irrationally-arrived-at estimate was not merely
the result of a run-of-the-mill mistake. GSA awarded a contract
to Travel Centre knowing (or recklessly disregarding information
that gave GSA every reason to know) that the estimate was vastly
overstated and knowing that Travel Centre, in accordance with
GSA's direction, had based its offer upon the estimate. By not
telling offerors that half of the estimated sales for Maine would
not be attainable, GSA withheld crucial information material to
an offeror's decision whether to submit a proposal at all and, if
so, how to structure it. Under such circumstances, whether GSA
actually knew about important additional relevant information, or
recklessly disregarded it (an explanation which we do not find
credible but, in any event, amounts to the same thing), potential
injury to Travel Centre was present from the outset. We reject
GSA's argument that such behavior lacks the bad faith element
necessary to sustain a finding of breach.
GSA argues that, since (1) the contract was for an
indefinite quantity, with a minimum guaranteed revenue of only
$100, (2) there was no guarantee that any of the listed agencies
would actually use the contract, and (3) Travel Centre actually
received more than $100 in revenue, there was no breach. We
disagree. First, we have serious doubts that, even in the case
of a true indefinite quantity contract, the contractor accepts
the risk that the Government has misled him as to the amount of
business which he might reasonably expect. In normal
circumstances, a contractor assumes that the Government has
prepared its estimate in good faith and accepts the risk that he
may not achieve the level of sales estimated. However, where the
Government knows or has reason to know that the contractor has no
chance of achieving the estimated quantity of sales, and fails to
disclose that fact prior to entering into the contract, the term
"risk" is a misnomer. The impossibility of reward for which the
contractor accepts the risks of an indefinite quantity contract
is a certainty known only to the Government. In this situation,
for the Government to argue that the contractor assumed this risk
is absurd.3
GSA's argument also overlooks a crucial fact: this was no
ordinary indefinite quantity contact in which the Government
promises nothing more than to purchase the minimum quantity. The
solicitation told offerors that the winning contractor would be
the preferred source for federal agencies in the region and
required offerors to base their offers on the estimates provided.
Thus, although there was no guarantee of a certain amount of
business beyond the $100 minimum, the solicitation, unlike the
typical indefinite quantity contract, set up a situation in which
the likelihood of economic injury to the contractor was
considerable if GSA's estimate was defective. By inducing Travel
Centre to base its proposal on quantities that GSA knew or should
have known were overstated, GSA breached its duty to deal with
----------- FOOTNOTE BEGINS ---------
[foot #]3 he situation here is analogous to one which arises
most often in construction cases in which the Government is
accused of failing to disclose its superior knowledge about a
condition affecting performance. The duty to disclose superior
knowledge applies in situations where (1) a contractor undertakes
to perform without vital knowledge of a fact that affects
performance costs or duration; (2) the respondent was aware the
contractor had no knowledge of and had no reason to obtain such
information; (3) any contract specification supplied misled the
contractor, or did not put it on notice to inquire; and (4) the
respondent failed to provide the relevant information. Petrochem
Services, Inc. v. United States, 837 F.2d 1076 (Fed. Cir. 1988).
Travel Centre fairly and in good faith. In other words, GSA
entered into the contract "with no intention of fulfilling its
promises." Krygoski, 94 F.3d at 1545.[foot #] 4
----------- FOOTNOTE ENDS-------
Finally, GSA argues that the Government is not responsible
for the consequences of the faulty estimate because the
solicitation told offerors that the estimates provided were
"solely for informational purposes." This argument, however,
misses the mark. It is well established that where the
Government requires offerors to base their proposals on
information it provides, it may not absolve itself of risk merely
by labeling data supplied in the solicitation "for information
purposes only." Cherry Hill Construction Corp. v. General
Services Administration, GSBCA 11217, 92-3 BCA 25,179.
The dissent essentially argues that it is acceptable for the
Government to award a contract which permits a contractor to sell
his services within a certain "territory," where the Government
knows prior to the award that the territory is far less vast than
represented in the solicitation, as long as the Government puts
in the contract boilerplate language to the effect that it does
not guarantee any amount of sales beyond a stated minimum. Thus,
according to the dissent, when the contractor incurs the losses
that were a certainty known only to the Government, the
contractor is without recourse because he accepted the "risk"
that this would occur. If a baseball team sold the rights to
sell beer during baseball games, telling the offerors to base
their offers on last year's sales, and then announced after the
fact that the team had previously decided to move to a stadium
half the size next year, would we say that the vendor assumed the
risk that the team owner would withhold this material
information? We should not do so here, either.
----------- FOOTNOTE BEGINS ---------
[foot #]4 Although GSA breached the contract, we do agree with
GSA that calculating the amount of damages may be problematic.
Whether, and if so, to what extent, anticipated profits can be
reasonably foreseeable on an indefinite quantity contract is an
issue which will arise in the quantum phase of this appeal.
----------- FOOTNOTE ENDS ---------
Decision
For the reasons discussed above, the appeal is GRANTED as to
entitlement. The Board will issue an order on further
proceedings for the quantum phase of this appeal after convening
a conference with the parties.
________________________
ROBERT W. PARKER
Board Judge
I concur:
_____________________
CATHERINE B. HYATT
Board Judge
VERGILIO, Board Judge, dissenting.
My view of the underlying facts and case law differs from
that of the majority. I conclude that the contractor is not
entitled to relief under its contract; therefore, I dissent from
the majority's decision.
This offeror obtained work in excess of the guaranteed
minimum. Thereafter, it ceased performance. Rather than leave
the default termination in place, the agency converted it to one
for the convenience of the Government. Apparently this was in
recognition of the possibility that the contractor's failure to
perform may have been attributable, at least in part, to a
failure in communications prior to award. In my view, the
findings do not support a conclusion that agency actions leading
to the termination for convenience constituted a breach of good
faith. Moreover, even if a breach did occur by the agency in the
formation process, the record establishes that the contractor
could not have reasonably relied on the information provided to
now support a demand of entitlement to relief. In fact, the
majority finds entitlement in the absence of proof of actual
reliance on the solicitation figures such that there is no basis
to conclude that the contractor was affected by the alleged
breach.
The majority posits the issue to be resolved as "whether
GSA's termination for convenience of Travel Centre's contract as
a result of a severely deficient estimate was in bad faith or
constituted an abuse of discretion." The contract was terminated
(initially for default and later converted to a termination for
the convenience of the Government) because Travel Centre closed
its business during the contract period, after the Government had
satisfied the minimum guaranteed under the contract. The agency
fulfilled its obligations under the indefinite-delivery,
indefinite-quantity (IDIQ) contract, as awarded. 48 CFR 16.501-
2(b)(3) (1995) ("Indefinite-quantity contracts limit the
Government's obligation to the minimum quantity specified in the
contract"). Faced with a non-performing contractor, a
termination cannot be said to be in bad faith or to constitute an
abuse of discretion, if the agency had fulfilled its obligations
up to that point in time.
A more fundamental question underlies this appeal. The
contractor contends that the agency acted in bad faith by
entering into the contract with pricing based upon solicitation
information which the agency knew or should have known was
inaccurate. The contractor asserts that the solicitation
overstates the potential business attainable under the IDIQ
contract. The contractor maintains that it priced its offer
utilizing the solicitation's figures and that correct figures
would have led to a different contract. As a result, the
contractor concludes that it is entitled to relief for an agency
breach in the formation of the contract.
The findings and record fall short of meeting the standard
of "well-nigh irrefragable proof" required to overcome the
presumption of good faith dealing by the agency. Kalvar Corp. v.
United States, 543 F.2d 1298, 1301-03 (Ct. Cl. 1976).
Presumptions and assumptions unsupported by the record do not
justify a conclusion of bad faith on the part of the agency.
Lacking is an indication of an intentional or deliberate attempt
to mislead or an abuse of discretion.
The information provided to the agency by Dube Travel about
military entities was limited in substance--the reports do not
indicate the type, scope, pricing structure, or duration of the
underlying contract(s) or the potential impact on the contract
here at issue. The majority's findings are not specific as to
who at the agency reviewed the information, and if the
individual(s) had any connection with this IDIQ solicitation and
should have understood the potential impact on the available work
under the IDIQ contract. Moreover, nothing in the reports
suggests that a non-mandatory contract(s) was not awarded, such
that the contractor under the IDIQ contract may have been able to
obtain business despite the other contract(s). While it would
not have been improper for the agency to voluntarily pass on the
information provided or derivable therefrom (and the agency may
have been required to reveal information if a protest was filed
demanding current, realistic data), the findings do not indicate
support for a conclusion of bad faith or an abuse of discretion.
Even if one assumes agency impropriety in withholding
information regarding the military entities (that is, a mis-
statement regarding potentially attainable work), the
contractor's position demanding breach compensation is fatally
flawed in light of the data in section H and the language in the
solicitation. The section H figures are internally inconsistent
and, therefore, patently unreliable. This is so because the
individual entries found in section H associate for specific
agencies or entities a number of official travel tickets, an
annual dollar amount, and other data. The actual sums of the
entries for tickets (3,100) and for dollar amounts ($1,101,891)
are not the totals identified in the solicitation: 4,979 and
$1,601,891, respectively. The contractor submitted its proposal
without seeking clarification of which figures, if any, were
accurate. Further, while the parties may agree that 2,186 of the
tickets and $992,900 of the annual dollar amount were
attributable to military entities, the table for Maine found in
the solicitation reveals subtotals for these entities of 1,285
and $368,379, respectively. At best, the contractor could have
anticipated the work identified in the solicitation, not the
figures now recognized by the parties. Exhibit 2 at 30a-35.
The language of the solicitation further alerts offerors to
the unreliability of the data and figures in the solicitation
(ignoring the inconsistencies explained above) as an indicator of
potentially attainable work. This occurs in section B, where the
solicitation highlights that a mandatory-use contract will no
longer be in place, such that it is unknown how many agencies
will utilize the contract and how much business will be
generated. Exhibit 2 at 8 ( B-2). Given the section B
language, section H contains some mixed guidance. It specifies a
number of tickets and annual dollar amount for fiscal year 1994
(FY94), said to be based upon "current agency customer list," and
directs that "Offerors shall base their offer on the above
illustrated FY94 figures." Also, the section highlights that the
table of figures (discussed in the paragraph above) does not
reflect any commitments received by GSA from agencies to utilize
the IDIQ contract. Id. at 30a.
The direction to prepare proposals utilizing fiscal year
1994 data for an IDIQ contract with a base year of fiscal year
1996 does not say to do so without regard to the other terms and
conditions of the contract. The solicitation contains cautionary
language regarding the figures and estimates. Just as offerors
are directed to price options for evaluation and selection
purposes, the agency's failure to exercise an option does not
result in the repricing of the base contract. While the majority
reads the phrase as an absolute direction establishing the actual
and reasonable reliance on figures, the findings fail to reveal
any reliance in fact. It may be that the contractor obtained
precisely the amount of work it assumed it would obtain under the
contract.
The statement that the solicitation does not reveal
commitments received alerts offerors to the fact that the agency
may not be revealing information it possessed--that is, actual
commitments. Such information would reflect current, relevant
data. However, offerors were content to compete without that
information. The language of the solicitation in sections B and
H make it patently obvious that the information provided was not
necessarily realistic or current at the time of award in terms of
which agencies would (or would not) be utilizing the IDIQ
contract. Objections to terms of a solicitation must be raised
before the submission of offers. Having obtained the award on
the underlying competition, the contractor is not in a position
to object to the lack of information when that lack of
information was plain from the terms of the solicitation.
Because the solicitation contains patently inconsistent
figures and clearly states that sales estimates do not reflect
known commitments of agencies to utilize the IDIQ contract, the
agency's failure to provide that information cannot be challenged
after-the-fact and viewed as a compensable breach. This
competitively awarded IDIQ contract should be viewed as are other
IDIQ contracts when the guaranteed minimum quantity was ordered.
Dot Systems, Inc. v. United States, 231 Ct. Cl. 765 (1982);
C.F.S. Air Cargo, Inc., ASBCA 40694, 91-2 BCA 23,985; DynCorp.,
ASBCA 38862, 91-2 BCA 24,044. I find no reason to depart from
the rationale of these decisions. It is inappropriate to reform
the contract to reallocate risks expressly placed upon the
contractor. The guaranteed minimum did not change because some
entities entered into their own contracts. During the formation
process, this offeror could have sought clarification of the
estimates and up-to-date information on potential users, or could
have decided not to compete without the information. This
contractor, which submitted an offer in light of the expressly
limited amount of information, should not now benefit by shifting
the risks under which it competed.
Some further comments on entitlement
Apart from my finding no agency breach, if one assumes the
asserted breach, I also disagree with the majority's conclusion
that the contractor has demonstrated entitlement to relief. The
information provided by Dube Travel does not reveal the type
(IDIQ, mandatory use, or other), pricing structure, or duration
of the contracts of the Maine Air National Guard and Department
of Defense entities. The majority has not found that Travel
Centre's prices were competitive with pricing under those
contracts. Further, the majority has not made findings which
indicate how Travel Centre priced its offer; thus, it is possible
that it priced its offer based on the level of work actually
ordered under the contract, such that it did not detrimentally
rely on the sales estimates. The majority assumes that an agency
breach entitles a contractor to recover, even in the absence of
detrimental reliance or cause and effect between the agency's
breaching action and the position of the contractor. The
contractor bears the burden of proof in the entitlement phase of
a proceeding, because absent detrimental reliance or harm the
quantum phase should not be reached.
Finally, regarding the New Hampshire portion of the
contract, no findings suggest a breach regarding the award, or
any impropriety in the termination, such that a basis for
entitlement is lacking.
Comments on other statements by the majority
The suggestions of the majority in the final paragraph of
its discussion reveal a misunderstanding of my analysis and
conclusions. The solicitation states that it does not reflect
received commitments of agencies to utilize the IDIQ contract.
That language, with the resulting incompleteness of information,
was an element of the underlying competition. It is too late to
argue a breach by the agency, when the contractor knowingly
competed without information which it says affected its ability
to compete. Thus, while I agree that it is wrong for an agency
to mislead an offeror in pricing its proposal (whether IDIQ or
otherwise), I find that the language of the solicitation should
not have misled the contractor, that the facts do not reveal an
intentional or deliberate attempt to mislead, and that the facts
do not reveal a level of reliance supporting a conclusion of
entitlement. Moreover, nothing in the record suggests that
losses were a certainty, or that the agency should have
anticipated contractor losses, particularly given the IDIQ
contractual vehicle.
What is missing from the hypothetical raised by the majority
is a critical element of the solicitation to parallel that here.
That is, in obtaining a contract for beer sales, the team states
that it is not prepared to state a commitment to remain or not in
the stadium for the year of the contract. If the beer vendors
are willing to compete notwithstanding the absence of such a
commitment, I would find an after-award allegation of entitlement
to relief for breach for not revealing a change of stadiums to be
unsupportable. Further, the attendance at the new stadium may be
the same (or greater) than that at the larger stadium, and beer
sales may actually be greater; unlike the majority, I do not
assume material facts in favor of a party which has the burden of
proof in the entitlement phase of this proceeding.
_________________________
JOSEPH A. VERGILIO
Board Judge