Wednesday, May 18, 2016

Estimates Used for ID/IQ Contracts are not Guaranteed

In 2008, Evie's Catering entered into an indefinite delivery-indefinite quantity (IDIQ) contract with the National Guard to provide food and other catering services to personnel for the Washington Army National Guard and other DoD agencies at the Yakima facility in Washington State. Ultimately that contract lasted more than five years, ending in March 2013.

An IDIQ contract serves as a master contract setting forth the estimated number of meals and prices. The actual number of meals would be provided by individual task orders. In 2011, an active duty unit from Texas approached Evie's to provide meal and catering services for a training exercise at the Yakima Center. Because the Texas unit was not approved to use the IDIQ contract, it was negotiating directly with Evie's Catering. After Evie's initial proposal for $483 thousand, the Texas unit received authorization to use the IDIQ contract so the National Guard took over as the contracting agent and Evie's ceased its direct negotiations with the Texas Battalion.

Using Evie's initial proposal, it authorized the National Guard to spend a maxim amount of $483 thousand on its behalf. However, the National Guard was only to pay Evie's for services actually provided during the Battalion's exercise. The Battalion provided daily meal requirements to the National Guard and the National Guard calculated a cost of $317 thousand, $166 thousand less than the estimated costs.

In 2012, the National Guard issued Task Order 112 for the Yakima catering services. The task order total award amount stated $483 thousand "EST" while also containing spreadsheets showing $317 thousand. Evie's provided the catering and afterwards, the National Guard paid Evie's $317 thousand for the services rendered.

Evie's contended that the $483 thousand was not an estimate but a guaranteed payment amount and filed a claim with the National Guard. The National Guard contracting officer denied the claim so Evie's filed a complaint with the U.S. Court of Federal Claims for the difference between the estimate and the amount actually paid, $166 thousand.

The Court sided with the Government in this case. It stated that the plain meaning of "$483,061 EST" supports only one reading and was not ambiguous. It is an estimate. Contract terms that are qualified as an estimate are unambiguous and non-binding. To conclude that the $483 thousand was a guaranteed payment would require the Court to ignore the "EST" annotation and three pages of detailed spreadsheets included int he task order.

You can read the entire decision here.

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