Technical Assistance International, Inc. v. United States

150 F.3d 1369 (1998)

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Nature of the Case

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Facts

The Interagency Fleet Management System is a federal agency service program under which the General Services Administration (GSA) assumes ownership of and maintenance responsibilities for fleets of vehicles formerly owned and maintained by various federal agencies. The purpose was to achieve economies of scale in the purchasing, management, and servicing of such fleets. One of the Army's goals in consolidating its fleet into the GSA program was to bring the fleet up to GSA standards, which call for vehicles to be replaced after three to six years of use. GSA and the Army agreed that during the first year of consolidation, GSA would replace at least 30% of the vehicles eligible for replacement, and perhaps a higher percentage if it had the resources to do so. GSA hires on-site contractors to perform repair services. GSA awarded the White Sands service contract to P on March 30, 1992. The contract term began on May 1, 1992, and was to run for one year, with two one-year options to renew at the government's discretion. Within two months of beginning performance, P projected that the work required for the White Sands fleet was going to fall considerably short of GSA's estimate. During the first year of consolidation, GSA replaced more than twice the number of vehicles it had expected to replace. P submitted a request for an equitable adjustment based on the projected shortfall, as well as a certified claim for compensation based on a charge that GSA's contract estimate was prepared negligently. GSA denied relief. P filed suit in the Court of Federal Claims. The trial court ruled that D had not been negligent in the preparation of its estimate, but the court nonetheless held that the government had breached its obligations under the contract, and P was entitled to relief. The court held that when a contractor enters into a requirements contract, it assumes only the risk of a change in requirements caused by the 'vagaries of user demand.' P had not assumed the risk that GSA would increase the rate of replacement of the White Sands fleet in the event other GSA fleets developed a surplus. When D reduced its requirements by increasing the replacement rate for the White Sands fleet, D effected a constructive change in the contract and breached its contractual obligations. D appealed.