Chapter 7
Obligation of Appropriations
provides that “[t]he contract shall state, if feasible, the maximum limit of
the contractor’s obligation to deliver and the Government’s obligation to
order.” 48 C.F.R. § 16.503(a)(2). Needs must relate to the contract period.
21 Comp. Gen. 961, 964 (1942).
If, in the exercise of good faith, the anticipated requirements simply do not
materialize, the government is not obligated to purchase the stated
estimate or indeed, if no requirements arise, to place any orders with the
contractor beyond any required minimum.
47 Comp. Gen. 365, 370 (1968).
See also Appeal of Shepard Printing, GPOBCA No. 37-92 (1994); AGS-
Genesys Corp., ASBCA No. 35302, 89-2 BCA ¶ 21,702 (1989); World
Contractors, Inc., ASBCA No. 20354, 75-2 BCA ¶ 11,536 (1975). The
contractor assumes the risk that nonguaranteed requirements may fall
short of expectations, and has no claim for a price adjustment if they do.
Medart, Inc. v. Austin, 967 F.2d 579 (Fed. Cir. 1992);
37 Comp. Gen. 688
(1958). If, however, the government attempts to meet its requirements
elsewhere, including the development of in-house capability, or if failure to
place orders with the contractor for valid needs is otherwise found to
evidence lack of good faith, liability will result. E.g., Rumsfeld v. Applied
Companies, Inc., 325 F.3d 1328 (Fed. Cir), cert. denied, 540 U.S. 981 (2003);
Torncello, 681 F.2d at 768–69; Cleek Aviation v. United States, 19 Cl. Ct. 552
(1990); Appeal of MDP Construction, Inc., ASBCA No. 49527, 96-2 BCA
¶ 28,525 (1996); Viktoria Transport GmbH & Co., ASBCA No. 30371,
88-3 BCA ¶ 20,921 (1988); California Bus Lines, ASBCA No. 19732,
75-2 BCA ¶ 11,601 (1975); Henry Angelo & Sons, Inc., ASBCA No. 15082,
72-1 BCA ¶ 9356 (1972);
B-182266, Apr. 1, 1975.
An indefinite-quantity contract, under current regulations, must include a
minimum purchase requirement which must be more than nominal. FAR,
48 C.F.R. § 16.504(a)(2);
B-302358, Dec. 27, 2004. An indefinite-quantity
contract without a minimum purchase requirement is regarded as illusory
and unenforceable. It is no contract at all. Torncello, 681 F.2d at 761;
Mason, 615 F.2d at 1346 n.5; Howell v. United States, 51 Fed. Cl. 516 (2002);
Rice Lake Contracting, Inc. v. United States, 33 Fed. Cl. 144, 152–53
(1995); Modern Systems Technology Corp. v. United States, 24 Cl. Ct. 360
(1991). Apart from the specified minimum, the government is free to obtain
its requirements from other contractors. Government Contract Services,
Inc., GSBCA No. 8447, 88-1 BCA ¶ 20,255 (1987); Alta Construction Co.,
PSBCA No. 1395, 87-2 BCA ¶ 19,720 (1987).
An indefinite-delivery, indefinite-quantity (IDIQ) contract is a form of an
indefinite-quantity contract. As with other indefinite quantity contracts, an
Page 7-20 GAO-06-382SP Appropriations Law—Vol. II