Skip to content

Brought to you by

Dentons logo

Government Contracts Advisor

Industry insight & analysis

open menu close menu

Government Contracts Advisor

  • Home
  • About us

ASBCA Provides Refresher on Negligent Estimate Claims

By Dentons Government Contracts Group
May 23, 2014
  • Claims and Terminations
  • Costs, Pricing, Business Systems and Appropriations Law
  • Government Contracts
Share on Facebook Share on Twitter Share via email Share on LinkedIn

The Armed Services Board of Contract Appeals (ASBCA) recently issued an interesting decision about a negligent estimate claim.  In American General Trading & Contracting, WLL, ASBCA No. 56758, the contractor (AGT) argued that the Army breached the parties’ contract because it “negligently estimated its laundry needs in . . . [five military] camps [in Kuwait], which virtually emptied shortly after award due to the [2003] invasion [Iraq].”  Judge Melnick first commented that the parties’ contract (a firm-fixed unit-priced contract with total item numbers adjustment, and which contained a volume estimate) was neither an indefinite quantity contract nor a requirements contract. (The former contract-type cannot be the subject to a negligent estimate claim, while the letter can.)  And because the contract contained “neither a minimum quantity clause nor a requirements clause, it was not enforceable at its inception since the government was not obligated to take any ascertainable quantity of laundry services.” However, the contract became “definite and binding” as a result of the “conduct and performance of the parties” – AGT performed services pursuant to the contract and the Amy remitted payment. Judge Melnick then found that the volume estimates were material to the parties’ contract and could support a breach claim: “AGT has presented evidence that it relied on the government’s estimates to establish its item rates, indicating that the prices ultimately paid to it under the binding contract that was formed were driven by those representations. To the extent the estimates underlying the . . . contract’s prices were negligently prepared, and that AGT reasonably relied on them, there is no reason AGT cannot pursue a claim based on that negligence.”  This decision is important because it further cements the principal that the underlying viability of a negligent estimate claim is not based solely on the contract type, but rather on whether the estimate was material to the contract.

Share on Facebook Share on Twitter Share via email Share on LinkedIn
Subscribe and stay updated
Receive our latest blog posts by email.
Stay in Touch
Dentons Government Contracts Group

About Dentons Government Contracts Group

Operating at the intersection of law, business and government, the Dentons’ Government Contracts practice delivers creative, flexible and effective business and litigation solutions and strategies, relying not only on our breadth and depth of experience, but also on our proven history of succeeding in the most complex and difficult circumstances.

All posts Full bio

RELATED POSTS

  • Government Contracts

Federal Contracting Implications of President Trump’s National Emergency Declaration In Response to the Coronavirus (COVID-19) Pandemic

By Steven Masiello and Gale Monahan
  • Export Controls
  • Government Contracts

Commerce Department Imposes New Restrictions on Exports to Venezuela

By Jason Silverman
  • Data and Software Rights, Patent Rights and Cybersecurity
  • Government Contracts

2015–2016 Cybersecurity Compliance and New Developments Series

By Dentons Government Contracts Group

About Dentons

Redefining possibilities. Together, everywhere. For more information visit dentons.com

Grow, Protect, Operate, Finance. Dentons, the law firm of the future is here. Copyright 2023 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. Please see dentons.com for Legal notices.

Categories

Subscribe and stay updated

Receive our latest blog posts by email.

Stay in Touch

Dentons logo

© 2025 Dentons

  • Legal notices
  • Privacy policy
  • Terms of use
  • Cookies on this site