Ricoh USA, Inc.
ASBCA No. 59408
| A.S.B.C.A. | Dec 5, 2016Background
- Fort Stewart/3rd Infantry Division issued an RFQ for a requirements contract to lease and service multifunction devices (MFDs) with a one‑year base and four 12‑month options; RFQ expressly stated quantities were estimates, government could add/remove devices, and "there is no early termination fee, penalty or cost associated with not exercising option years."
- RFQ included standard FAR ordering/requirements/option clauses (FAR 52.216‑21, 52.217‑6, 52.217‑9, etc.) and required quotes (not technical proposals) for pricing.
- Ricoh submitted pricing and, separately, an unsolicited technical proposal that sought to add an "Early Termination Charges" clause and a 60‑month performance term; the government awarded a contract that incorporated only Ricoh’s price schedule and the RFQ/FAR clauses (not Ricoh’s technical proposal).
- During the first option year sequestration budget cuts led the Army to reduce ordered MFDs; Ricoh claimed the reduction (208 devices) amounted to a partial termination for convenience or a unilateral deductive change, seeking $771,131.03.
- Contract modifications exercising options contained a release clause limited to "changes incorporated herein"; Ricoh signed those modifications. The CO denied Ricoh’s certified claim and Ricoh appealed to the ASBCA.
Issues
| Issue | Ricoh's Argument | Government's Argument | Held |
|---|---|---|---|
| Whether Ricoh's unsolicited technical proposal (including an early‑termination‑charges clause) became part of the contract | Ricoh: government accepted the proposal by awarding the contract and by later conduct; thus termination charges apply | Gov: award accepted only Ricoh’s price schedule; technical proposal was nonresponsive and not incorporated | Held: Ricoh’s technical proposal was not incorporated into the contract; award accepted only the price schedule and RFQ terms. |
| Whether the removal/reduction of MFDs during the option period constituted a partial termination for convenience entitling Ricoh to termination charges | Ricoh: reduction was effectively a partial termination for convenience and triggered termination payments under FAR 52.212‑4(1) and its proposed termination clause | Gov: the contract was a requirements contract with explicit terms allowing increases/decreases in quantities, 30‑day notices, and an express statement of no early termination fee for not exercising option years; thus no termination for convenience occurred | Held: No termination for convenience. The requirements character of the contract and explicit RFQ/contract language allowed quantity reductions without termination charges. |
| Whether the exercised option modifications and their "release of claims" bars Ricoh's claim | Ricoh: signing option modifications did not waive claims for discontinuances unrelated to the modifications | Gov: modifications included releases applicable to changes incorporated by those mods | Held: The release language applied only to "changes incorporated herein" (the option exercise); it did not bar claims arising from subsequent delivery orders or quantity reductions. |
| Whether the Army issued a unilateral deductive change requiring compensation | Ricoh: reductions were a unilateral change (deductive) to the delivery orders and required equitable adjustment | Gov: reductions were consistent with the requirements contract, SOW, and ordering clauses permitting decreases; no compensable change | Held: No compensable unilateral deductive change; the reductions fell within the contract’s contemplated ordering flexibility. |
Key Cases Cited
- ADT Construction Group, Inc. v. United States, [citation="259 F. App'x 310"] (Fed. Cir. 2007) (contractor’s continued performance after receipt of delivery orders may indicate acceptance of contract scope and limits reliance on extraneous submissions)