## Facts

- HUD, acting through the SBA, awarded Coyle’s Pest Control, Inc. a contract to provide termite inspection and subterranean treatment services for HUD-owned properties in 34 Texas counties.
- The contract required Coyle’s to furnish all labor, materials, and equipment to perform services on properties “assigned on an as-needed basis.”
- The contract had a one-year base term with two one-year option periods, fixed pricing for inspections, and fixed unit pricing tiers for treatments tied to ranges of monthly property counts.
- The contract estimated a total value of about $1.93 million and described itself as a “fixed unit rate-indefinite quantity contract.”
- The contract did not state any minimum quantity (or minimum dollar value) of services or properties that HUD was obligated to assign or order.
- The contract also omitted the standard FAR indefinite-quantity clause then required for indefinite-quantity contracts.
- HUD assigned substantially fewer properties than Coyle’s expected based on the estimate and pricing structure.
- Coyle’s filed a breach-of-contract claim seeking $1,525,170.74 in damages, asserting HUD was obligated to provide all or a substantial share of its needs in the covered area.
- The HUD Board of Contract Appeals granted summary judgment to HUD, concluding the contract was invalid and unenforceable; Coyle’s appealed.

## Issues

1. Whether the agreement was enforceable as a requirements contract despite “as-needed” ordering language and no commitment that HUD would obtain all of its requirements from Coyle’s.
2. Whether the agreement was enforceable as an indefinite-quantity contract despite the absence of a stated or ascertainable minimum quantity and omission of the required indefinite-quantity clause.
3. If enforceable, whether HUD breached by assigning substantially less work than Coyle’s expected from the estimate and pricing tiers.

## Decision

- The Federal Circuit affirmed the Board’s summary judgment for HUD.
- The court held the agreement was invalid and unenforceable whether characterized as a requirements contract or an indefinite-quantity contract.
- Because HUD made no binding commitment to order any minimum quantity of services, Coyle’s could not maintain a breach-of-contract claim based on HUD’s low level of assignments.

## Legal Principles

- A valid requirements contract requires a promise by the buyer to obtain all of its actual requirements of specified goods or services from the seller; “as-needed” language that permits ordering none does not create an enforceable requirements obligation.
- A valid indefinite-quantity government contract must include at least a stated or reasonably ascertainable minimum quantity (or minimum dollar amount) that the government is bound to order; without a minimum, the agreement fails for lack of consideration and mutuality.
- Contract labels do not control; enforceability turns on the operative terms that create (or fail to create) a binding ordering obligation.
- Government estimates and pricing structures are not enforceable minimum guarantees unless the contract terms convert them into a binding minimum commitment.
- Where the government retains complete discretion to order nothing, the government’s promise is illusory and the arrangement is unenforceable as a bilateral contract.

## Conclusion

The Federal Circuit held that a federal services contract that allows ordering solely on an “as-needed” basis, without a stated or ascertainable minimum quantity and required indefinite-quantity terms, imposes no binding ordering obligation on the government and is unenforceable, defeating the contractor’s breach claim.


Coyle’s Pest Control, Inc. v. Cuomo, 154 F.3d 1302 (Fed. Cir. 1998)