16.703 Basic ordering agreements
Source: FAR 16.703 on acquisition.gov
Basic ordering agreements provide a flexible framework for recurring but uncertain government needs, but require strict adherence to FAR rules for content, competition, and order issuance to ensure compliance and avoid improper commitments.
Overview
FAR 16.703 establishes the rules and procedures for using Basic Ordering Agreements (BOAs) in federal contracting. A BOA is a written understanding between a government agency and a contractor that sets terms and conditions for future orders, describes the supplies or services involved, and outlines pricing and ordering methods. Importantly, a BOA is not a contract itself but a framework to expedite future contracts when requirements are uncertain but recurring. BOAs are used when specific items, quantities, and prices are not known upfront, but a substantial volume of purchases is anticipated. The regulation details the required content of BOAs, annual review and revision requirements, and the process for issuing orders under a BOA, including competition, pricing, and documentation obligations.
Key Rules
- Definition and Use of BOAs
- BOAs are not contracts but set terms for future orders when requirements are uncertain but recurring.
- Required Content
- BOAs must specify pricing methods, delivery terms, authorized ordering activities, order binding points, dispute resolution, and fast payment data if applicable.
- Annual Review and Modification
- BOAs must be reviewed annually and revised as needed, with changes made only by modifying the agreement itself.
- Order Issuance and Competition
- Orders must follow competition requirements, use appropriate forms, reference the BOA, and comply with synopsis and justification rules.
- Pricing and Commitment
- No final commitment or work authorization until prices are set, unless a ceiling price is established and urgent need or timely pricing procedures are in place.
Responsibilities
- Contracting Officers: Must ensure BOAs meet content requirements, conduct annual reviews, obtain competition, issue orders properly, and establish pricing before work begins (with limited exceptions).
- Contractors: Must comply with BOA terms, provide supplies/services as ordered, and adhere to pricing and delivery requirements.
- Agencies: Oversee BOA use, ensure compliance with FAR, and review/revise agreements as needed.
Practical Implications
- BOAs streamline procurement for recurring but uncertain needs, reducing administrative burden and lead time. However, they require careful management to avoid improper commitments, ensure competition, and maintain compliance with FAR. Common pitfalls include treating BOAs as contracts, failing to review annually, or issuing orders without proper pricing or competition.
(a) Description. A basic ordering agreement is a written instrument of understanding, negotiated between an agency, contracting activity, or contracting office and a contractor, that contains (1) terms and clauses applying to future contracts (orders) between the parties during its term, (2)a description, as specific as practicable, of supplies or services to be provided, and (3) methods for pricing, issuing, and delivering future orders under the basic ordering agreement. A basic ordering agreement is not a contract.
(b) Application. A basic ordering agreement may be used to expedite contracting for uncertain requirements for supplies or services when specific items, quantities, and prices are not known at the time the agreement is executed, but a substantial number of requirements for the type of supplies or services covered by the agreement are anticipated to be purchased from the contractor. Under proper circumstances, the use of these procedures can result in economies in ordering parts for equipment support by reducing administrative lead-time, inventory investment, and inventory obsolescence due to design changes.
(c) Limitations. A basic ordering agreement shall not state or imply any agreement by the Government to place future contracts or orders with the contractor or be used in any manner to restrict competition.
(1) Each basic ordering agreement shall-
(i) Describe the method for determining prices to be paid to the contractor for the supplies or services;
(ii) Include delivery terms and conditions or specify how they will be determined;
(iii) List one or more Government activities authorized to issue orders under the agreement;
(iv) Specify the point at which each order becomes a binding contract (e.g., issuance of the order, acceptance of the order in a specified manner, or failure to reject the order within a specified number of days);
(v) Provide that failure to reach agreement on price for any order issued before its price is established (see paragraph (d)(3) of this section) is a dispute under the Disputes clause included in the basic ordering agreement; and
(vi) If fast payment procedures will apply to orders, include the special data required by 13.403.
(2) Each basic ordering 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 ordering agreements may need to be revised before the annual review due to mandatory statutory requirements. A basic ordering agreement shall be changed only by modifying the agreement itself and not by individual orders issued under it. Modifying a basic ordering agreement shall not retroactively affect orders previously issued under it.
(d) Orders. A contracting officer representing any Government activity listed in a basic ordering agreement may issue orders for required supplies or services covered by that agreement.
(1) Before issuing an order under a basic ordering agreement, the contracting officer shall-
(i) Obtain competition in accordance with part 6;
(ii) If the order is being placed after competition, ensure that use of the basic ordering agreement is not prejudicial to other offerors; and
(iii) Sign or obtain any applicable justifications and approvals, and any determination and findings, and comply with other requirements in accordance with 1.602-1(b), as if the order were a contract awarded independently of a basic ordering agreement.
(2) Contracting officers shall-
(i) Issue orders under basic ordering agreements on https://www.gsa.gov/forms-library/order-supplies-and-services-0" target="_blank">Optional Form (OF) 347, Order for Supplies or Services, or on any other appropriate contractual instrument;
(ii) Incorporate by reference the provisions of the basic ordering agreement;
(iii) If applicable, cite the authority under 6.302 in each order; and
(iv) Comply with 5.203 when synopsis is required by 5.201.
(3) The contracting officer shall neither make any final commitment nor authorize the contractor to begin work on an order under a basic ordering agreement until prices have been established, unless the order establishes a ceiling price limiting the Government’s obligation and either-
(i) The basic ordering agreement provides adequate procedures for timely pricing of the order early in its performance period; or
(ii) The need for the supplies or services is compelling and unusually urgent (i.e., when the Government would be seriously injured, financially or otherwise, if the requirement is not met sooner than would be possible if prices were established before the work began). The contracting officer shall proceed with pricing as soon as practical. In no event shall an entire order be priced retroactively.