## Facts

- The Army contracted with Technical Assistance International, Inc. (TAI) to provide maintenance and repair services for the general-purpose vehicle fleet at White Sands Missile Range under a requirements-type contract.
- Before award, the Army and GSA consolidated the fleet into GSA’s Interagency Fleet Management System and planned to replace older vehicles over time to meet GSA replacement standards.
- The solicitation included estimates of expected maintenance workload, derived in part from assumptions about the fleet’s age and anticipated replacement rate.
- TAI priced its bid in reliance on the estimates; faster vehicle replacement would predictably reduce maintenance needs.
- After performance began, the government replaced vehicles more quickly than projected due to fleet-management and budget considerations, including availability of surplus vehicles.
- The accelerated replacements substantially reduced the government’s maintenance and repair requirements, decreasing TAI’s expected workload and revenue.
- TAI sued for breach, asserting it assumed only the risk of changes in on-site operational needs, not reductions caused by broader fleet-management choices.
- The Court of Federal Claims found a breach and awarded damages; the government appealed.

## Issues

1. Whether the government breached a requirements contract by accelerating vehicle replacement in a way that materially reduced maintenance requirements below estimates.
2. Whether a contractor can recover when reduced requirements stem from system-wide management decisions rather than changes in the buyer’s localized operational demand.
3. What showing is required to treat requirements-contract estimates as actionable misrepresentations (e.g., bad faith or gross unreasonableness).

## Decision

- The Federal Circuit reversed the judgment for TAI and vacated the damages award.
- The court held the government did not breach because its reduced requirements resulted from good-faith operational and business decisions, not an effort to evade the contract.
- The court rejected the trial court’s distinction between “indigenous needs” and other influences on requirements, holding that good-faith fleet-management decisions may define actual requirements.

## Legal Principles

- In a requirements contract, the buyer’s obligation is to purchase its actual requirements from the seller; quantities may vary substantially from estimates.
- Estimates in requirements contracts are not guarantees; liability based on estimates generally requires proof the estimates were prepared in bad faith or were grossly unreasonable when made.
- A buyer may reduce requirements for legitimate business or operational reasons without breaching, absent bad faith manipulation designed to avoid contractual obligations.
- The contractor bears the risk that good-faith changes in the buyer’s operations or management decisions will increase or decrease actual requirements.

## Conclusion

The Federal Circuit held that the government’s acceleration of vehicle replacement, which reduced maintenance needs below estimated levels, did not breach the requirements contract because the change reflected good-faith fleet-management decisions and TAI failed to prove bad faith or unreasonable estimating.


Tech. Assistance Int’l, Inc. v. United States, 150 F.3d 1369 (Fed. Cir. 1998)