16.702 Basic agreements
Source: FAR 16.702 on acquisition.gov
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.
(a) Description. A basic agreement is a written instrument of understanding, negotiated between an agency or contracting activity and a contractor, that (1) contains contract clauses applying to future contracts between the parties during its term and (2) contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the basic agreement. A basic agreement is not a contract.
(b) Application. A basic agreement should be used when a substantial number of separate contracts may be awarded to a contractor during a particular period and significant recurring negotiating problems have been experienced with the contractor. Basic agreements may be used with negotiated fixed-price or cost-reimbursement contracts.
(1) Basic agreements shall contain-
(i) Clauses required for negotiated contracts by statute, executive order, and this regulation; and
(ii) Other clauses prescribed in this regulation or agency acquisition regulations that the parties agree to include in each contract as applicable.
(2) Each basic agreement shall provide for discontinuing its future applicability upon 30 days’ written notice by either party.
(3) Each basic agreement shall be reviewed annually before the anniversary of its effective date and revised as necessary to conform to the requirements of this regulation. Basic agreements may need to be revised before the annual review due to mandatory statutory requirements. A basic agreement may be changed only by modifying the agreement itself and not by a contract incorporating the agreement.
(4) Discontinuing or modifying a basic agreement shall not affect any prior contract incorporating the basic agreement.
(5) Contracting officers of one agency should obtain and use existing basic agreements of another agency to the maximum practical extent.
(c) Limitations. A basic agreement shall not-
(1) Cite appropriations or obligate funds;
(2) State or imply any agreement by the Government to place future contracts or orders with the contractor; or
(3) Be used in any manner to restrict competition.
(d) Contracts incorporating basic agreements.
(1) Each contract incorporating a basic agreement shall include a scope of work and price, delivery, and other appropriate terms that apply to the particular contract. The basic agreement shall be incorporated into the contract by specific reference (including reference to each amendment) or by attachment.
(2) The contracting officer shall include clauses pertaining to subjects not covered by the basic agreement, but applicable to the contract being negotiated, in the same manner as if there were no basic agreement.
(3) If an existing contract is modified to effect new acquisition, the modification shall incorporate the most recent basic agreement, which shall apply only to work added by the modification, except that this action is not mandatory if the contract or modification includes all clauses required by statute, executive order, and this regulation as of the date of the modification. However, if it is in the Government’s interest and the contractor agrees, the modification may incorporate the most recent basic agreement for application to the entire contract as of the date of the modification.