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    Should you or is it necessary to amend the post negotiation business clearance for a requirements contract for a commercial item, estimated quantity and dollar value. The Government forecasted demand and estimate were grossly under the actual quantities necessary. Do you need to amend the post negotiation business clearance to reflect more realistic quantities. There is no ceiling quantity (estimated quantity only) and we are in the fifth and final year of the Requirements Contract.


    Answer

    All of the discussion on Requirements Contracts in the regulations can be found at FAR 16.503 with no additional implementing or supplementing information contained in the DFARS.  Of importance here, is the requirement in the at FAR 16.503(a)(1), where it is explained that the government is required to provide a realistic estimate of the requirements based on the most current information available. For whatever reason, in your scenario, it seems as if the information on which the original estimate was based was not correct or circumstances have changed calling for much larger quantities than had originally been intended. Instead of revising the internal PNM and originally estimated quantities, I would take caution if a follow-on requirements contract will be issued, to use the lessons learned here to ensure a more realistic estimate of requirements are forecasted.  As addressed in prior AAP question responses, “while the order limitation clauses reduce the potential risk to the contractor, they create new problems when, as in your circumstance, the Government wants to exceed the maximum.  When the clauses are present, the contractor can legally decline to exceed the maximum.  But when the clauses are present and the contractor and the Government mutually desire to exceed the maximum via an option, then competition and business judgment considerations arise.” In addition, Nash and Cibinic’s Formation of Government Contracts (3rd ed.) has a robust discussion on the administration of Requirements contracts and the handling of orders under Requirements contracts as it pertains to estimated quantities and liabilities of the parties (p.1196 and p. 1200-1205).
     
    As always, for information relative to your specific action, be sure to consult with the cognizant Contracting Officer and your program or agency attorney.


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