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Standard Contract Was Unenforceable



A complaint asserting the government breached a contract for dental hygienist services by failing to order the estimated quantity of services was summarily dismissed by the Court of Federal Claims because the contract was unenforceable. The contract provided for a maximum of 1,560 one-hour dental hygienist sessions. at a unit price of $32 per session and a fixed price of $49,920. However, one month after contract award, the government decided to obtain the services from an in-house hygienist. The contractor asserted she was entitled to the difference between the compensation received for performing 130 sessions and the compensation she would have received if the government had ordered the maximum quantity indicated by the contract.

No Purchase Obligation


The court first determined the contract was not a requirements contract. Despite incorporating FAR 52.216.21, which designated the contract as a requirements contract, the contract lacked the necessary element of exclusivity. Instead, the contract clearly indicated the government only intended to utilize the contractor for services it could not fulfill in-house, giving the government unqualified discretion to fulfill its requirements in-house. Moreover, the contract was not enforceable as an indefinite quantities contract, because, without including a minimum quantity purchase term as required by FAR 16.504(a)(4)(ii), it did not specifically define the parties' obligations and failed for lack of mutuality and consideration. The court concluded it was "unfortunate that the [g]overnment has continued to use this standard form document that appears to the non-legal reader as a binding contract, but is in fact not." (Horn v. U.S., FedCl, 55 CCF 79,572)
































































































 






 

 

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

     
  
 

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