Contractor Could Not Have Had Reasonable Expectation that Agency Word Order Over the Minimum Amount Prescribed by IDIQ Contract; Future Forest, LLC v. Department of Agriculture, CBCA 5863

TrotzOlga | Shutterstock

Government’s motion for summary judgment on contractor’s claim is granted. The contractor claimed the agency had breached the duty of good faith and fair dealing by (1) indicating it would order work above the contract minimum, (2) creating a reasonable expectation of more work, and (3) thwarting that expectation by not ordering the additional work. The contractor, however, was performing under an IDIQ contract, which only guaranteed a minimum amount of work. Thus, the contractor could not have reasonably expected that the agency would order work in excess of the contract minimum.

Future Forest, LLC had an IDIQ contract with the Forest Service to remove trees in a National Forest in Arizona. The contract expressly guaranteed that Future Forest would remove a minimum of 5,000 acres of trees a year for a total of 50,000 acres over the ten year term of the contract.

Despite this minimum guarantee, Future Forest submitted a claim to the Forest Service, alleging that the agency breached the implied duty of good faith and fair dealing by not releasing over 150,000 acres for clearing during the term of the contract. Future Forest claimed that agency officials had made statements to offerors that the contractor could expect to perform work on 150,000 acres. Future Forest alleged that these statements created a reasonable expectation that it would perform work on 150,000 acres. The company sought over $14 million in lost profits for this work.

The Forest Service denied the claim. Future Forest appealed to the CBCA. The agency then moved for summary judgment.

The board granted the motion for summary judgment. Future Forest had an IDIQ contract with the government. A contractor in an IDIQ contract is only guaranteed to receive the minimum quantity set forth in the contract. Accordingly, Future Forest could not have had a reasonable expectation based on the implied duty of good faith and fair dealing that the Forest Service would order more than the contract minimum. The government’s obligations regarding quantity were defined by the contract minimum. Future Forest could not have had a reasonable expectation that reformed the contract into something other than an IDIQ contract.

Future Forest attempted to argue that there were two phases to the contract: (1) a minimum guarantee ordering phase and (2) a discretionary ordering phase where the government would order the 150,000 acres of work. The board found that this argument improperly relied on parole evidence. The expressed expectations of agency officials could not alter the written terms of the contract.

Future Forest is represented by Alan I. Saltman, Jacob W. Scott, and Alexander Gorelik of Smith, Currie & Hancock LLP. The government is represented by Lori Polin Jones and Andrew Jones of the Department of Agriculture.

CBCA - Future Forest