Agility Defense & Government Services, Inc. v. United States provides hope to contractors that incur higher than anticipated costs on a requirements contract or, alternatively, on construction contracts where line item prices are based on estimated quantities. 

In Agility, the Federal Circuit examined whether the provision of historical workload data satisfied the Government’s responsibility to provide a realistic estimated quantity in a procurement for a requirements contract. The dispute arose out of a fixed-price requirements contract for the disposal of surplus military property. The Government provided historical data and estimated workloads prior to the submission of proposals.

The contractor submitted claims seeking payment based on a theory of negligent workload estimates. After the Government denied those claims, the contractor appealed to the Court of Federal Claims. While the Court of Federal Claims acknowledged that the contractor had experienced higher workloads than in previous years, it ultimately denied the contractor’s claims, reasoning that the Government’s estimates were acceptable because it had provided offerors with historical data.

The Federal Circuit reversed that decision and ruled in favor of the contractor. The Court held that the contractor had satisfied its burden to show that the Government’s estimates were negligent because the historical data provided was not the most current information available. Here, the contractor presented evidence that the Government was aware that there would likely be a surge in workload after contract award, but failed to disclose that information to offerors. In such a case, while the historical data was accurate, the Government’s estimate was negligent because it possessed information that was more current and more accurate than the historical data.

Although the burden of proof is high in these disputes, Agility demonstrates that contractors may prevail where the Government fails to provide the most current information in its possession.

Michael H. Payne is Chair of the Firm’s Federal Contracting Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.

Casey J. McKinnon is an Associate in the Federal Contracting Group and focuses his practice on government contracts and litigation