Overview
A requirements contract is an Indefinite-Delivery contract vehicle used when the government anticipates a recurring need for supplies or services but cannot predetermine precise quantities. It obligates the government to fill all actual purchase requirements of designated activities from one specific contractor for a set period.
Key Rules
- Exclusivity: The government is legally bound to purchase all its actual requirements for the specified supplies or services from the contractor during the contract period.
- Realistic Estimating: The Contracting Officer (CO) must provide a realistic total quantity estimate based on the most current information available; however, this estimate does not constitute a guarantee of the actual workload.
- Obligation Limits: The contract must state the maximum limit of the contractor’s obligation to deliver and should define maximum or minimum quantities for individual orders.
- $150M Threshold: Single-source requirements contracts exceeding $150 million (including options) are prohibited unless a specific determination is executed.
- Advisory and Assistance Services (A&AS): Requirements contracts for A&AS exceeding $20 million and three years are generally restricted to multiple-award formats unless the services are determined to be unique or highly specialized.
- Government Property: In repair or overhaul contracts, the government is not liable for equitable adjustments if it fails to furnish the "estimated" or "maximum" amount of government property for repair.
Practical Implications
- Risk Allocation: While the contractor gains the security of being the sole provider, they bear the risk of demand fluctuations, as the government is only required to order what it "actually" needs.
- Operational Flexibility: This vehicle is ideal for "on-call" services or supplies where the government wants to avoid the administrative burden of multiple competitions but cannot commit to a firm-fixed quantity (as in a Definite-Quantity contract) or a guaranteed minimum (as in an IDIQ).