16.702
Basic agreements
Basic agreements set pre-negotiated contract terms for future contracts but do not obligate funds or guarantee work, requiring annual review and careful incorporation into each contract.
Overview
FAR 16.702 defines and governs the use of basic agreements in federal contracting. A basic agreement is a written understanding between an agency and a contractor that sets forth contract clauses for future contracts but is not itself a contract. It is intended for situations where multiple contracts are expected with a contractor and recurring negotiation issues exist. The regulation outlines requirements for content, review, modification, and limitations of basic agreements, as well as procedures for incorporating them into actual contracts.
Key Rules
- Definition and Use
- Basic agreements are not contracts but set terms for future contracts and are used when multiple contracts with a contractor are anticipated.
- Required Clauses and Review
- Must include all required statutory, regulatory, and agreed-upon clauses; must be reviewed annually and revised as needed.
- Modification and Discontinuation
- Can be discontinued with 30 days’ notice and modified only by amending the agreement itself; changes do not affect prior contracts.
- Limitations
- Cannot obligate funds, guarantee future contracts, or restrict competition.
- Incorporation into Contracts
- Each contract must specify scope, price, and terms, and reference or attach the basic agreement; additional applicable clauses must be included as needed.
Responsibilities
- Contracting Officers: Ensure proper use, content, review, and incorporation of basic agreements; do not use them to obligate funds or restrict competition.
- Contractors: Comply with agreed clauses and understand that basic agreements do not guarantee future contracts.
- Agencies: Review and revise agreements annually; share agreements across agencies when practical.
Practical Implications
- Basic agreements streamline recurring negotiations but require careful management to ensure compliance and avoid misuse. They do not commit funds or guarantee work, and must be kept current with regulations. Failure to review or improperly incorporate agreements can lead to compliance issues or disputes.