PART 7

CONTRACT TYPES AND METHODS

# Table of Contents

7.1 CONTRACT TYPES. [1](#contract-types.)

7.1.1 Firm Fixed Price. [3](#firm-fixed-price.)

7.1.2 Fixed Price with Economic Price Adjustment.
[3](#fixed-price-with-economic-price-adjustment.)

7.1.3 Fixed Price Award Fee. [4](#fixed-price-award-fee.)

7.1.4 Time and Materials. [5](#time-and-materials.)

7.1.5 Cost Reimbursement- General. [5](#cost-reimbursement--general.)

7.1.6 Cost and Cost Sharing. [6](#cost-and-cost-sharing.)

7.1.7 Cost Plus Fixed Fee (CPFF). [6](#cost-plus-fixed-fee-cpff.)

7.1.8 Cost Plus Award Fee (CPAF). [7](#cost-plus-award-fee-cpaf.)

7.1.9 Clause Usage Prescriptions. [8](#clause-usage-prescriptions.)

7.2 CONTRACT METHODS. [8](#__RefHeading___Toc20883249)

7.2.1 Long Term Relationships and Methods.
[8](#long-term-relationships-and-methods.)

7.2.2 Partnering. [9](#partnering.)

7.2.3 Systems Contracts. [9](#systems-contracts.)

7.2.4 Paperless Purchasing. [10](#paperless-purchasing.)

7.2.5 Master Contracts and Master Agreements.
[10](#master-contracts-and-master-agreements.)

7.2.5.1 Master Contracts - Indefinite Delivery Contracts.
[10](#master-contracts---indefinite-delivery-contracts.)

7.2.5.1.1 Clause Usage Prescriptions.
[11](#clause-usage-prescriptions.-1)

7.2.5.2 Master Agreements. [14](#master-agreements.)

7.2.5.2.1 Clause Usage Prescriptions.
[15](#clause-usage-prescriptions.-2)

7.2.5.3 Delivery Orders and Task Orders.
[15](#delivery-orders-and-task-orders.)

7.2.6 Task Assignments. [16](#task-assignments.)

7.2.7 Options. [16](#options.)

7.2.7.1 Clause Usage Prescriptions. [16](#clause-usage-prescriptions.-3)

7.2.8 Free Trial Agreements. [16](#__RefHeading___Toc20883263)

7.2.9 Quick Response Contracts. [19](#quick-response-contracts.)

7.2.10 Trade-Ins. [22](#trade-ins.)

7.2.10.1 Clause Usage Prescriptions.
[22](#clause-usage-prescriptions.-4)

7.50 TEXT OF CLAUSES. [22](#text-of-clauses.)

### 7.1 CONTRACT TYPES.

\(a\) ***INFORMATION:*** \"Contract Type\" means the pricing structure
of a contract which is used to allocate risk between the contractor and
BPA. The pricing structure may be used to provide additional incentive
to the contractor to perform faster, more economically, and/or with
higher quality. Contract types typically vary according to the degree of
cost risk to be assumed by the contractor. The amount of profit
appropriately given depends on the degree of risk assumed. For example,
fixed price contracts typically have higher risk and profit than cost
reimbursement contracts.

\(b\) ***POLICY:*** The CO shall select the most appropriate contract
type based on an assessment of the nature of the project and associated
risks. The objective is to select a contract type which results in the
best business approach for BPA, considering contractor risk and
incentives for high performance. The CO shall consider the
administrative costs to both BPA and the contractor when selecting the
appropriate contract type. Exhibit 7A, Contract Types, compares contract
types commonly used at BPA. It is provided for purposes of information
except for portions specifically identified as \"Policy\" or
\"Procedure.\"

\(c\) ***POLICY:*** CO\'s may use variations of the contract types
described in the BPI as well as other contract types, with the following
exception: cost plus percentage of cost contracts may not be entered
into without the approval of the HCA. The HCA will not approve the use
of any cost plus a percentage of cost contract if the contractor has
control over either the quantity or the cost of goods/services being
sold to BPA.

\(d\) ***INFORMATION:*** Contracts may be written in either completion
form or term form.

\(1\) Completion form: the Statement of Work states a definite goal or
target and specifies an end product which the Contractor is required to
provide (e.g., a final report of research accomplishing the goal or
target). In this case, BPA is buying an end product, and the Contractor
carries greater risk regarding whether the goal of the project is met.

\(2\) Term form: the Statement of Work is written in general terms and
obligates the Contractor to devote a specified level of effort (labor
hours, materials, etc.) or assume specific responsibilities for a stated
period of time. In this case, BPA is buying a level of effort, not an
end product, and the Contractor is only obligated to provide a good
faith effort to provide those hours. BPA carries greater risk regarding
whether the goal of the project is met. Contracts where BPA buys a level
of effort may be written as a time-and-material, fixed-price, or cost
plus fixed-fee contract.

**EXHIBIT 7A \-- CONTRACT TYPES**

+---+-----------------------------+------------------------------------+
|   | #                           | #### 7.1.2 Fixed Pri               |
|   | ### 7.1.1 Firm Fixed Price. | ce with Economic Price Adjustment. |
+---+-----------------------------+------------------------------------+
| * | Price not subject to change | Same as fixed price, except        |
| * | regardless of actual costs  | contract price adjusted, upward or |
| D | incurred by contractor      | downward, based on occurrence of   |
| E | after award.                | specific price adjustment          |
| S |                             | conditions specified in contract.  |
| C |                             |                                    |
| R |                             | Price adjustments factors are      |
| I |                             | commonly based upon percent        |
| P |                             | changes in a published index,      |
| T |                             | either for material, commodity, or |
| I |                             | labor, or a combination of these   |
| O |                             | indexes.                           |
| N |                             |                                    |
| * |                             |                                    |
| * |                             |                                    |
+---+-----------------------------+------------------------------------+
| * | Typically used when:        | Typically used when:               |
| * |                             |                                    |
| U | 1\. Performance risk        | 1\. Price risk is high, usually    |
| S | predicted to be minimal     | from unstable market or labor      |
| E | (e.g., readily available    | conditions, either in the short or |
| * | commercial items or repeat  | long term (e.g., commodity item    |
| * | use of BPA detailed         | with high content of precious      |
|   | specification with minimal  | metals or impending labor strike)  |
| * | or no prior performance     |                                    |
| * | problems).                  | 2\. Long term business arrangement |
| W |                             | is advantageous (contract          |
| H | 2\. Price risk is minimal,  | performance period usually greater |
| E | based upon market pricing   | than one year), but price          |
| N | or cost information that    | risk\--upward or downward\--is     |
| * | permits realistic           | unacceptable to either BPA or      |
| * | evaluation of probable      | contractor.                        |
|   | performance cost.           |                                    |
+---+-----------------------------+------------------------------------+
| * | 1\. Price and performance   | 1\. Price risk for contractor and  |
| * | risk for contractor is      | BPA are reduced if contract        |
| C | high, since contractor is   | economic price adjustment          |
| O | responsible for controlling | factor(s) provide a reliable basis |
| N | its costs and associated    | for adjusting contract price to    |
| S | risks of performance within | reflect market price changes.      |
| I | the fixed price.            |                                    |
| D |                             | 2\. Important to ensure that the   |
| E | 2\. Price risk for BPA is   | contingency (typically an index    |
| R | low, since BPA is to        | published by the Bureau Of Labor   |
| A | receive the contract        | Statistics) is an objective        |
| T | deliverable for the fixed   | indicator of the contractor\'s     |
| I | price. However, careful     | probable changes in cost. For      |
| O | evaluation of project       | example, the Employment cost Index |
| N | requirements and the        | (ECI) is generally preferable to   |
| S | offeror\'s price proposal   | the Consumer Price Index (CPI-U)   |
| * | must be made to ensure a    | if labor costs are the primary     |
| * | meeting of the minds and    | component of the contractor's      |
|   | ensure price does not       | price.                             |
|   | include excessive allowance |                                    |
|   | for risk.                   | 3\. ***POLICY:*** If the contract  |
|   |                             | is subject to the Service Contract |
|   |                             | Act and includes BPI Clause 10-4,  |
|   |                             | Labor Standards - Price            |
|   |                             | Adjustment, the CO shall ensure    |
|   |                             | BPA does not duplicate price       |
|   |                             | adjustments allowed under each     |
|   |                             | clause.                            |
|   |                             |                                    |
|   |                             | 4\. ***PROCEDURE:*** See BPI 7.1.9 |
|   |                             | for applicable contract clause.    |
+---+-----------------------------+------------------------------------+

**EXHIBIT 7A \-- CONTRACT TYPES (CONT.)**

+---+-------------------------------------------------------------------+
|   | #### 7.1.3 Fixed Price Award Fee.                                 |
+---+-------------------------------------------------------------------+
| * | Fixed price contract, not subject to any adjustment on the basis  |
| * | of the contractor\'s actual costs in performing the contract. Fee |
| D | consists of an award amount that the contractor may earn in       |
| E | whole, in part, or not at all during performance. Fee must be     |
| S | sufficient to provide motivation for performance excellence per   |
| C | award fee plan (e.g., in such areas as quality, timelines, etc.). |
| R |                                                                   |
| I | The amount of the award fee paid is determined by BPA\'s          |
| P | judgmental evaluation of the contractor\'s performance in terms   |
| T | of the criteria stated in the contract. Fee determination is made |
| I | unilaterally by BPA, not subject to the Disputes clause (although |
| O | impropriety in the determination process is subject to the        |
| N | Disputes clause).                                                 |
| * |                                                                   |
| * |                                                                   |
+---+-------------------------------------------------------------------+
| * | Typically used when:                                              |
| * |                                                                   |
| U | 1\. Work can be well enough defined to permit the use of a fixed  |
| S | price contract, and the CO believes BPA can benefit by providing  |
| E | added incentives to encourage the contractor to perform beyond    |
| * | the minimum contract requirements.                                |
| * |                                                                   |
|   | 2\. Additional administrative effort and cost required to monitor |
| * | and evaluate performance are justified by the expected benefits   |
| * | (typically price exceeding \$2 million).                          |
| W |                                                                   |
| H | 3\. Typically multiple offices or functions will be supported by  |
| E | the contract.                                                     |
| N |                                                                   |
| * |                                                                   |
| * |                                                                   |
+---+-------------------------------------------------------------------+
| * | 1\. ***POLICY:*** CO\'s shall consider the probable profit        |
| * | included in the fixed price when establishing the award fee       |
| C | amount.                                                           |
| O |                                                                   |
| N | 2\. ***POLICY:*** The contract shall contain an award fee         |
| S | determination plan which describes how BPA will determine award   |
| I | fee amount and frequency of payment to contractor. The following  |
| D | topics shall be covered:                                          |
| E |                                                                   |
| R | A. Performance criteria (describes the specific areas of          |
| A | performance to be evaluated, and the weighting given to each      |
| T | area).                                                            |
| I |                                                                   |
| O | B. Frequency of evaluations, total award fee, and amount of fee   |
| N | allocated per performance evaluation period.                      |
| S |                                                                   |
| * | C. Process for making changes to the plan.                        |
| * |                                                                   |
|   | D. Termination (describes how the final period of evaluation will |
|   | be treated should the contract be terminated for convenience).    |
|   |                                                                   |
|   | 3\. ***PROCEDURE:*** See BPI 7.1.9 for applicable contract        |
|   | clause.                                                           |
+---+-------------------------------------------------------------------+

**EXHIBIT 7A \-- CONTRACT TYPES (CONT.)**

+---+-------------------------------+----------------------------------+
|   | #                             | #### 7.                          |
|   | ### 7.1.4 Time and Materials. | 1.5 Cost Reimbursement- General. |
+---+-------------------------------+----------------------------------+
| * | Time and Materials contracts  | Cost reimbursement contracts     |
| * | have characteristics of both  | provide for payment of           |
| D | fixed price contracts (hourly | allowable, allocable, and        |
| E | rates are fixed) and cost     | reasonable costs. They establish |
| S | reimbursement contracts       | an estimate of total cost for    |
| C | (labor hours are estimates    | purposes of setting a contract   |
| R | and payment is based on       | ceiling limitation which the     |
| I | actual hours incurred and the | contractor may not exceed        |
| P | actual cost of materials,     | without approval of BPA.         |
| T | travel, and other incidental  |                                  |
| I | costs.) Time and Materials    | There are several sub-types:     |
| O | contracts include a contract  |                                  |
| N | ceiling limitation which the  | A. Cost                          |
| * | contractor may not exceed     |                                  |
| * | without approval of BPA.      | B. Cost Sharing                  |
|   |                               |                                  |
|   | The specified fixed hourly    | C. Cost Plus Fixed Fee (CPFF)    |
|   | rates include direct wages,   |                                  |
|   | overhead, general &           | D. Cost Plus Award Fee (CPAF)    |
|   | administrative expenses, and  |                                  |
|   | profit. The profit rate may   |                                  |
|   | consider all cost elements,   |                                  |
|   | including labor, materials,   |                                  |
|   | etc.                          |                                  |
+---+-------------------------------+----------------------------------+
| * | Typically used when:          | Typically used when:             |
| * |                               |                                  |
| U | It is not possible to         | 1\. Uncertainties involved in    |
| S | reasonably estimate the level | contract performance do not      |
| E | of effort, but where a cost   | permit costs to be estimated     |
| * | reimbursement contract would  | with sufficient accuracy to use  |
| * | be inappropriate due to       | a fixed price contract, and      |
|   | either relatively high        |                                  |
| * | administrative costs or the   | 2\. Total value of the contract  |
| * | lack of an adequate           | is high enough to justify the    |
| W | accounting system on the part | higher administrative costs when |
| H | of a contractor to accumulate | compared to a Time and Materials |
| E | costs.                        | contract, and                    |
| N |                               |                                  |
| * |                               | 3\. Contractor\'s accounting     |
| * |                               | system is adequate for           |
|   |                               | determining costs.               |
+---+-------------------------------+----------------------------------+
| * | ***POLICY:***                 | ***POLICY :***                   |
| * |                               |                                  |
| C | 1\. All Time & Material       | 1\. All Cost Reimbursement       |
| O | contracts shall include a     | contracts shall include a        |
| N | ceiling price which the       | ceiling price which the          |
| S | contractor may not exceed     | contractor may not exceed        |
| I | without the CO\'s approval.   | without the CO\'s approval.      |
| D |                               |                                  |
| E | 2\. Costs for materials,      | 2\. Costs shall be determined in |
| R | travel, and subcontracts are  | accordance with BPI Part 13,     |
| A | compensable only if the       | Cost Principles and Audit        |
| T | contract specifically         | Considerations.                  |
| I | provides for such costs. Such |                                  |
| O | costs are reimbursable at     | 3\. Contractor\'s accounting     |
| N | cost (excluding profit),      | system must be adequate for      |
| S | except that a material        | determining costs applicable to  |
| * | handling fee is allowed if    | the contract.                    |
| * | materials are being           |                                  |
|   | purchased.                    |                                  |
+---+-------------------------------+----------------------------------+

**EXHIBIT 7A \-- CONTRACT TYPES (CONT.)**

+---+--------------------------+---------------------------------------+
|   | #### 7.1.                | #                                     |
|   | 6 Cost and Cost Sharing. | ### 7.1.7 Cost Plus Fixed Fee (CPFF). |
+---+--------------------------+---------------------------------------+
| * | A cost reimbursement     | A cost reimbursement contract that    |
| * | contract where BPA pays  | provides for payment to the           |
| D | all or a portion of the  | contractor of a negotiated fee that   |
| E | costs, but no fee.       | is fixed at the inception of the      |
| S |                          | contract.                             |
| C | **Cost**: BPA pays       |                                       |
| R | costs, but no fee.       | The fixed fee does not vary with      |
| I |                          | actual cost, but may be adjusted as a |
| P | **Cost sharing**: BPA    | result of changes in the scope of     |
| T | pays a preagreed portion | work to be performed under the        |
| I | of the costs, but no     | contract.                             |
| O | fee.                     |                                       |
| N |                          | CPFF contracts are typically written  |
| * |                          | in either completion form or term     |
| * |                          | form. See BPI 7.1 for additional      |
|   |                          | information.                          |
+---+--------------------------+---------------------------------------+
| * | In addition to the       | In addition to the criteria under     |
| * | criteria under \"Cost    | \"Cost Reimbursement- General\",      |
| U | Reimbursement-           | typically used where                  |
| S | General\", typically     |                                       |
| E | used where profit is not | 1\. Level of effort required is       |
| * | appropriate, e.g., where | unknown, and                          |
| * | both BPA and the         |                                       |
|   | contractor will benefit  | 2\. Extra incentive of a Cost Plus    |
| * | significantly from the   | Award Fee contract is not necessary,  |
| * | contract deliverable     | but payment of profit is still        |
| W | such as research &       | appropriate.                          |
| H | development with         |                                       |
| E | non-profits, educational |                                       |
| N | institutions, etc.       |                                       |
| * |                          |                                       |
| * |                          |                                       |
+---+--------------------------+---------------------------------------+
| * | See the considerations   | In addition to the considerations     |
| * | under \"Cost             | under \"Cost Reimbursement-           |
| C | Reimbursement-           | General\",                            |
| O | General.\"               |                                       |
| N |                          | 1\. CPFF contracts do not provide fee |
| S |                          | incentives for superior performance   |
| I |                          | compared to CPAF contracts.           |
| D |                          |                                       |
| E |                          | 2\. CPFF contracts are generally less |
| R |                          | costly to administer from an          |
| A |                          | administrative standpoint than CPAF   |
| T |                          | contracts.                            |
| I |                          |                                       |
| O |                          | 3\. Completion form is preferable to  |
| N |                          | term form if the work can be          |
| S |                          | adequately defined to permit          |
| * |                          | development of estimates within which |
| * |                          | the contractor can be expected to     |
|   |                          | complete the work. For completion     |
|   |                          | form, failure to complete the work    |
|   |                          | within the estimated cost may result  |
|   |                          | in an increase in the cost ceiling,   |
|   |                          | but not the fixed fee.                |
+---+--------------------------+---------------------------------------+

**EXHIBIT 7A \-- CONTRACT TYPES (CONT.)**

+---+-------------------------------------------------------------------+
|   | #### 7.1.8 Cost Plus Award Fee (CPAF).                            |
+---+-------------------------------------------------------------------+
| * | A cost reimbursement contract that provides for a fee consisting  |
| * | of a base amount fixed at inception of the contract and an award  |
| D | fee amount that the contractor may earn in whole or in part       |
| E | during performance and that is sufficient to provide motivation   |
| S | for excellence.                                                   |
| C |                                                                   |
| R | The amount of the award fee to be paid is based on BPA\'s         |
| I | subjective evaluation of the contractor\'s performance. This      |
| P | determination is made unilaterally by BPA and is not subject to   |
| T | the disputes clause.                                              |
| I |                                                                   |
| O |                                                                   |
| N |                                                                   |
| * |                                                                   |
| * |                                                                   |
+---+-------------------------------------------------------------------+
| * | In addition to the criteria under \"Cost Reimbursement-           |
| * | General\", typically used where                                   |
| U |                                                                   |
| S | 1\. Level of effort cannot be easily estimated,                   |
| E |                                                                   |
| * | 2\. It is important to provide the contractor with a special      |
| * | motivation for excellence, and                                    |
|   |                                                                   |
| * | 3\. Relatively high administrative costs are offset by the        |
| * | anticipated benefits.                                             |
| W |                                                                   |
| H |                                                                   |
| E |                                                                   |
| N |                                                                   |
| * |                                                                   |
| * |                                                                   |
+---+-------------------------------------------------------------------+
| * | In addition to the considerations under \"Cost Reimbursement-     |
| * | General\",                                                        |
| C |                                                                   |
| O | 1\. ***POLICY:*** Contract must include an incentive to control   |
| N | costs as one of the incentive items.                              |
| S |                                                                   |
| I | 2\. ***POLICY:*** Contract shall contain an award fee             |
| D | determination plan which discusses the method BPA will use to     |
| E | determine how much of the award fee will be paid to the           |
| R | contractor. The following topics generally shall be covered:      |
| A |                                                                   |
| T | A. Performance criteria (describes the specific areas of          |
| I | performance to be evaluated, and the weighting given to each      |
| O | area).                                                            |
| N |                                                                   |
| S | B. Frequency of evaluations, total award fee, and amount of fee   |
| * | allocated per performance evaluation period.                      |
| * |                                                                   |
|   | C. Process for making changes to the plan.                        |
|   |                                                                   |
|   | D. Termination (describes how the final period of evaluation will |
|   | be treated should the contract be terminated for convenience).    |
|   |                                                                   |
|   | 3\. ***PROCEDURE:*** See BPI 7.1.9 for applicable contract        |
|   | clause.                                                           |
+---+-------------------------------------------------------------------+

#### 7.1.9 Clause Usage Prescriptions.

\(a\) ***PROCEDURE:*** CO\'s shall include a clause similar to Clause
7-1, Contract Type, in solicitations and contracts over \$50,000, except
fixed price commercial supplies/services.

\(b\) ***PROCEDURE:*** CO\'s may include a clause similar to Clause 7-2,
Price Adjustment, in fixed price or time and materials solicitations and
contracts when they want to adjust the contract price after award based
on an economic price adjustment formula. The references in the clause to
\"option periods\" should be deleted if the clause is used in contracts
without options. If labor costs are the primary component of the
contractor's price, the Employment Cost Index (ECI) is generally
preferable to the Consumer Price Index (CPI-U. However, this clause
should not be used if the contract is subject to the Service Contract
Act and includes BPI clause 10-4, Labor Standards - Price Adjustment,
unless the CO ensures BPA does not duplicate price adjustments allowed
under each clause.

\(c\) ***PROCEDURE:*** CO\'s shall include a clause similar to Clause
7-3, Award Fee and Payment (Fixed-price Award-fee), in Fixed Price Award
Fee contracts. The CO shall substitute paragraph (a) of Alternate I in
Cost-Plus Award Fee Contracts. The CO may modify paragraph (b) to allow
unearned fee to be added to the award fee pool for future periods.

### 7.2 CONTRACT METHODS.

\(a\) ***INFORMATION:*** \"Contract Methods\" are approaches used to
purchase supplies, services, or construction. The following are
examples: leases or purchases; indefinite quantity contracts or definite
quantity contracts; master agreements or master contracts; partnering,
etc.

\(b\) ***POLICY:*** The CO shall select the appropriate method of
contracting based on an assessment of the nature of the project and
inherent risks.

\(c\) ***INFORMATION:*** This subpart describes some commonly used
contract methods. The CO may use variations of the methods described
below or may use methods other than those described below.

#### 7.2.1 Long Term Relationships and Methods.

\(a\) ***POLICY:*** Purchasing teams are encouraged to develop long term
business relationships with suppliers whenever it makes good business
sense. There are many methods of doing so, ranging from commonly used
contract types (such as including options to extend the contract or
combining requirements through an indefinite quantity contract) to
commercial types of business arrangements, typically used with key
suppliers (such as partnering, systems contracts, or joint management).

\(b\) ***INFORMATION:*** Although long term contracts tend to be
relatively long in duration, the words \"long term\" more accurately
refer to the extent to which individual purchase transactions are
\"bundled\" and the contractor\'s ongoing performance is used as a basis
for awarding future work. For example, an indefinite quantity contract
for circuit breakers is long term because it provides an effective
mechanism to \"bundle\" numerous individual orders which would otherwise
have to be made by individual purchase orders or contracts. Under this
concept, a one year master agreement which enables BPA to more
efficiently buy small circuit breakers is considered \"long term\"
because it eliminates the need for perhaps 50 individual purchase orders
during that one year period. Whereas a contract for a single large power
circuit breaker would not be

considered long term even though it may take one and a half years for
the contractor to manufacture and deliver the breaker.

\(c\) ***INFORMATION:*** There are several advantages to long term
business relationships:

\(1\) Administrative costs are generally lower for both BPA and the
contractor.

\(2\) The contractor and BPA have added incentive to track performance,
to improve the quality of performance, and to conduct joint planning.

\(3\) Economies of scale are generally achieved, resulting in higher
quality and lower contract prices.

\(d\) ***INFORMATION:*** Long term business relationships are not an end
in themselves. Because both the business world and most markets are
constantly evolving, the length of individual contracts as well as
contractor relationships should be reexamined on a periodic basis. The
frequency of reexamination may vary according to the market. For
example, contracts for some types of utility services may not need to be
closely reexamined for many years. Contracts for supplies/services in
volatile markets such as computers may warrant more frequent review. It
may not make good business sense to enter into long term contracts or
relationships where:

\(1\) The volume of similar purchases is low or infrequent.

\(2\) The market is particularly volatile, possibly resulting in the
exclusion of a new source with exceptional capability.

#### 7.2.2 Partnering.

***INFORMATION:*** \"Partnering\" is not a precisely defined term. In
general, partnering is a relationship between a buyer and a supplier
which may or may not include a written agreement. The relationship is
characterized by a mutual commitment over an extended period of time,
sharing of information, and sharing of the risks and rewards of the
relationship. This relationship is in contrast to the more traditional,
adversarial approach which emphasizes \"today\'s\" purchase with little
consideration of whether the purchaser may want (or need) to do business
with a particular supplier again. The traditional approach tends to
place heavy emphasis on low purchase price, rather than the total long
term costs and benefits of establishing an ongoing business
relationship. Partnering recognizes that a successful contractual
relationship requires effective communication and problem solving which
continues after award and over multiple contracts.

#### 7.2.3 Systems Contracts.

***INFORMATION:***

\(a\) Systems contracts are contracts which authorize designated
employees of BPA, using a predetermined ordering system, to place orders
directly with the supplier for specified supplies or materials. The
contractual terms of a systems contract may be similar to the terms of
an indefinite delivery contract or a master agreement. However, a
systems contract is distinguished by the fact that the buyer and seller
integrate and simplify as many materials management and administrative
functions as possible. For example, both parties work closely to manage
inventories and simplify the order placement process, the receiving
process, and the payment process.

\(b\) Under a systems contract, joint analysis of inventory levels and
internal demand for particular materials may make it possible to reduce
BPA\'s inventories, yet also expand the variety of materials available
for purchase. Joint analysis of administrative functions may result in
significant savings in BPA\'s administrative costs or improved
efficiency by relying on the supplier to perform some administrative
functions. This cannot effectively be done unless BPA and the seller
establish a mutually beneficial long term relationship and focus on the
efficiencies to be gained by a cooperative effort to manage the entire
purchasing and materials management process. The focus of the
buyer-seller relationship created by the systems contract is to look at
the total costs of acquisition and management of the supply items over
the long-run, not just the purchase price and quality of each item being
purchased.

#### 7.2.4 Paperless Purchasing.

\(a\) ***INFORMATION:*** "Paperless purchasing," as used in this
subpart, means a paperless process using both electronic systems and
processes (such as, electronic mail, electronic bulletin boards,
electronic funds transfer, electronic data interchange) and
non-electronic means (such as, oral orders) and similar techniques to
accomplish requisitioning, purchasing, receiving and purchasing payment
processing transactions.

\(b\) **POLICY:** Paperless purchasing techniques are authorized for use
at BPA whenever practicable or cost-effective. Purchasing Managers shall
establish processes and management oversight to ensure that such
paperless systems are capable of authentication and confidentiality
commensurate with the risk and magnitude of harm from loss, misuse, or
unauthorized access to or modification of information. Commercial orders
of \$100,000 or less may be transmitted via facsimile and task/delivery
orders in an amount specified by the Contracting Officer in a Master
Agreement or master contract may be placed electronically via facsimile
or the Internet without original signature whenever the contractor has
agreed in writing to the terms and conditions for acceptance of such
electronic orders.

#### 7.2.5 Master Contracts and Master Agreements.

\(a\) ***INFORMATION:*** Master contracts or master agreements are used
when the exact times and/or quantities of future deliveries cannot be
specified at the time of award. See Exhibit 7B, Options when
Quantities/Delivery Locations Are Not Known, for a comparison of master
contracts and master agreements.

\(b\) ***INFORMATION:*** \"Master contracts\" are legally binding
contracts. They establish a firm commitment for the contractor to accept
and deliver any order for specific supplies or services ordered within
the terms of the contract. They include definite quantity and indefinite
quantity contracts. See Exhibit 7C, Master Contracts - Indefinite
Delivery Contracts, for a comparison of these methods.

\(c\) ***INFORMATION:*** \"Master agreements\" are not legally binding
contracts. They establish terms and conditions for any future orders.
Their terms and conditions only become binding upon placement of an
order. Master agreements do not obligate BPA to place any orders nor
obligate the supplier to accept any orders. Master agreements replace
what may be known elsewhere as Blanket Purchase Agreements and Basic
Order Agreements.

##### 7.2.5.1 Master Contracts - Indefinite Delivery Contracts.

\(a\) ***INFORMATION:*** Indefinite delivery contracts are used when the
exact times and/or quantities of future deliveries cannot be specified
at the time of award. Indefinite delivery contracts include a commitment
by the buyer to purchase at least a minimum quantity of
supplies/services at time of award. Indefinite delivery contracts are
one method of reducing administrative costs and encouraging long term
relationships by \"bundling\" individual purchases.

\(b\) ***INFORMATION:*** The term \"requirements contract\" is often
used as a synonym for indefinite delivery contract. However, the term
\"requirements contract\' more accurately describes a contract where the
buyer agrees to purchase all of its requirements from a particular
contractor during a specific contract period. Although this contract
method should, in theory, result in more competitive pricing and
assurance that delivery schedules will be met, it is seldom an effective
method in actual practice because it contractually binds both parties to
a long term relationship which may not be appropriate if circumstances
change.

###### 7.2.5.1.1 Clause Usage Prescriptions.

\(a\) ***INFORMATION:*** The two most commonly used indefinite delivery
contracts at BPA are definite quantity and indefinite quantity
contracts. See Exhibit 7C, Master Contracts - Indefinite Delivery
Contracts, for a comparison of these methods.

\(b\) ***PROCEDURE:*** The CO shall include a clause similar to Clause
7-4, Definite Quantity Contract: Ordering, in definite quantity
solicitations and contracts. The CO may eliminate the minimum and
maximum order limitations if acceptable to the Contractor. The CO shall
modify paragraph "(c)" to reflect the terms and conditions that the
Contractor agrees to accept for receipt and confirmation of an order
(release) by means other than writing. The CO and the Contractor may
agree to any one or more or written, oral, facsimile or electronic
Internet order placement and confirmation means that is consistent with
the policy in BPI 7.2.4.

\(c\) ***PROCEDURE:*** The CO shall include a clause similar to Clause
7-5, Indefinite Quantity Contract: Ordering, in indefinite quantity
solicitations and contracts. The CO may eliminate the minimum and
maximum order limitations if acceptable to the Contractor with the
following exception: the CO shall retain the maximum limit for total
orders in order to provide an opportunity to renegotiate contract prices
if BPA\'s orders exceed the amounts originally anticipated. The CO shall
modify paragraph "(b)" to reflect the terms and conditions that the
Contractor agrees to accept for receipt and confirmation of an order
(release) by means other than writing. The CO and the Contractor may
agree to any one or more of written, oral, facsimile or electronic
Internet order placement and confirmation means that is consistent with
the policy in BPI 7.2.4.

**Exhibit 7B**

**OPTIONS WHEN QUANTITIES/DELIVERY LOCATIONS ARE NOT KNOWN**

+---+-----------------------------+------------------------------------+
|   | **MASTER CONTRACTS**        | **MASTER AGREEMENTS**              |
+---+-----------------------------+------------------------------------+
| * | Establishes a firm          | Establishes terms and conditions   |
| * | commitment to accept and    | for any future orders that may be  |
| D | deliver any order for       | placed, but does not require the   |
| E | specific supplies/services  | supplier to accept any orders.     |
| S | ordered within the terms of | (Replaces what may be known        |
| C | the contract.               | elsewhere as Basic Ordering        |
| R |                             | Agreements and Blanket Purchase    |
| I | CO\'s may redelegate        | Agreements.)                       |
| P | authority if prices and     |                                    |
| T | delivery terms have been    | CO\'s may redelegate authority as  |
| I | specified in the contract.  | permitted under 7.2.5.2.           |
| O |                             |                                    |
| N | Includes Definite Quantity  |                                    |
| * | and Indefinite Quantity     |                                    |
| * | contracts.                  |                                    |
+---+-----------------------------+------------------------------------+
| * | 1\. Use when BPA wants a    | 1\. Use to document long term      |
| * | firm commitment from the    | relationships where orders will be |
| U | contractor to accept all    | accepted only with supplier        |
| S | orders placed in accordance | consent.                           |
| E | with the contract terms.    |                                    |
| * |                             | 2\. BPA\'s total requirements are  |
| * | 2\. Market conditions       | unknown and it is inadvisable for  |
|   | indicate it would be in     | BPA to commit itself to any        |
| * | BPA\'s best interest to fix | quantity or orders.                |
| * | contract prices.            |                                    |
| W |                             | 3\. Written orders should be       |
| H |                             | issued when specifications or      |
| E |                             | statements of work are necessary   |
| N |                             | for clear understanding of the     |
| * |                             | requirements or when complicated   |
| * |                             | delivery terms or bid schedules    |
|   |                             | are necessary.                     |
+---+-----------------------------+------------------------------------+
| * | 1\. Competition             | 1\. Competition requirements of    |
| * | requirements of BPI Part 11 | BPI subpart 11.6 must be met.      |
| C | must be met. Competition    |                                    |
| O | occurs prior to contract    | 2\. Prices may or may not be       |
| N | award.                      | included in the master agreement.  |
| S |                             |                                    |
| I | 2\. Prices are negotiated   |                                    |
| D | and remain fixed for the    |                                    |
| E | duration of the contract    |                                    |
| R | unless specific provisions  |                                    |
| A | are included for price      |                                    |
| T | adjustment.                 |                                    |
| I |                             |                                    |
| O |                             |                                    |
| N |                             |                                    |
| S |                             |                                    |
| * |                             |                                    |
| * |                             |                                    |
+---+-----------------------------+------------------------------------+

**Exhibit 7C**

**MASTER CONTRACTS - INDEFINITE DELIVERY CONTRACTS**

+---+-----------------------------+------------------------------------+
|   | **DEFINITE QUANTITY**       | **INDEFINITE QUANTITY**            |
+---+-----------------------------+------------------------------------+
| * | Provides for the delivery   | Provides for the delivery of an    |
| * | of a definite quantity of   | indefinite quantity within stated  |
| D | specific supplies/services  | limits, of specific                |
| E | for a fixed period, with    | supplies/services for a fixed      |
| S | deliveries to be scheduled  | period, with deliveries to be      |
| C | at designated locations     | scheduled by placing orders with   |
| R | upon order.                 | the contractor.                    |
| I |                             |                                    |
| P | Example: Two year contract  | Example: Two year contract for     |
| T | for 2000 personal computers | personal computers; BPA commits to |
| I | to be delivered when        | order at least 100; to be          |
| O | delivery orders are issued. | delivered when delivery orders are |
| N |                             | issued.                            |
| * |                             |                                    |
| * |                             |                                    |
+---+-----------------------------+------------------------------------+
| * | 1\. BPA\'s total            | 1\. BPA\'s total requirements are  |
| * | requirements are known but  | unknown (above a specified         |
| U | the delivery schedule or    | minimum), and                      |
| S | locations are not known in  |                                    |
| E | advance, and                | 2\. It is inadvisable for BPA to   |
| * |                             | commit itself for more than a      |
| * | 2\. The supplies/services   | minimum quantity.                  |
|   | are regularly available or  |                                    |
| * | will be available after a   |                                    |
| * | short lead time.            |                                    |
| W |                             |                                    |
| H |                             |                                    |
| E |                             |                                    |
| N |                             |                                    |
| * |                             |                                    |
| * |                             |                                    |
+---+-----------------------------+------------------------------------+
| * | 1\. Limits BPA\'s and       | ***PROCEDURE:*** In addition to    |
| * | Contractor\'s obligation to | the considerations shown for       |
| C | the quantity specified in   | definite quantity contracts, the   |
| O | the contract.               | Schedule of Items shall include a  |
| N |                             | realistic estimate of total orders |
| S | 2\. Definite quantity       | to be placed during the contract   |
| I | contracts may also contain  | term                               |
| D | provisions to order option  |                                    |
| E | quantities. See BPI 7.2.7   |                                    |
| R |                             |                                    |
| A |                             |                                    |
| T |                             |                                    |
| I |                             |                                    |
| O |                             |                                    |
| N |                             |                                    |
| S |                             |                                    |
| * |                             |                                    |
| * |                             |                                    |
+---+-----------------------------+------------------------------------+

#####   {#section .unnumbered}

##### 7.2.5.2 Master Agreements.

\(a\) ***INFORMATION:*** Master agreements are typically used to
establish an ordering agreement for multiple purchases of items or
services of a similar nature where it is more cost effective to
consolidate order placement procedures, invoicing, payment, etc. into
one written agreement. Specific items, quantities, and prices may or may
not be listed in the agreement.

\(b\) ***POLICY:*** Master Agreements may cover any estimated dollar
value BPA expects to purchase each year. The CO shall include contract
clauses which are applicable to contracts of anticipated value of
purchases each year.

\(c\) ***POLICY:*** Each order placed under master agreements is subject
to the competitive requirements of BPI subpart 11.6. In those instances
where a master agreement has been established non-competitively, no
additional documentation other than that required by BPI 11.7 is
required for orders that are within the scope of the agreement.

\(d\) ***PROCEDURE:*** Master agreements shall be awarded on the
electronic form generated within the Bonneville Enterprise System, or on
the paper form BPA F 4220.40, Master Agreement.

\(e\) ***POLICY:*** The CO may specifically designate BPA employees who
may place orders against the master agreements. The CO shall designate
the dollar limit of authority for each individual within the following
limitations:

\(1\) A requisition is required. The individual shall ensure that funds
are available. In addition, the following limits apply per order:

\(A\) For items that are specifically priced in the master agreement,
CO\'s may authorize individuals to place orders in any dollar amount for
those priced items.

\(B\) For items that are not specifically priced in the master
agreement, the CO may, subject to advance notification and concurrence
of HCA, establish a limited delegation of authority for ordering
officials to issue orders in an amount to exceed the following limits
for any unpriced items:

\(i\) For ordering officials who are also warranted CO\'s, the limit per
order may not exceed their warrant authority.

\(ii\) For ordering officials who are not warranted CO\'s, the limit per
order shall generally not exceed \$5,000 (i.e., the non-competitive
purchase limit). However, the limit per order may be less than \$5,000
if the amount of products or services likely to be purchased would
generally be substantially less than \$5,000. The limit per order may be
greater than \$5,000 if (1) the items being purchased are exempt from
the competitive requirements of BPI 11.6 (e.g., replacement parts from
an original equipment manufacturer); or (2) the ordering officials
obtain and document competition of each order in excess of \$5,000 and
the CO has established appropriate oversight to ensure appropriate use
of the agreement and continued fair and reasonable prices.

\(2\) ***POLICY:*** Daily limits and annual limits:

The CO may choose any limit on the amount of orders placed per day or
per year. However, the CO shall review the volume and amount of orders
not less than annually to ensure the volume of business warrants
renegotiation of the agreed prices, changes to the terms and conditions,
or use of a different contractual instrument.

###### 7.2.5.2.1 Clause Usage Prescriptions.

\(a\) ***PROCEDURE:*** The CO shall include a clause similar to Clause
7-6, Master Agreement: Basic Terms, in master agreements. The CO may add
additional provisions as appropriate, but shall include at least the
following:

\(1\) Delivery terms

\(2\) A description of the point at which each order becomes a binding
contract (upon issuance, upon receipt in a specified manner, etc.)

\(3\) Ordering procedures

\(4\) Applicable terms and conditions. See 7.2.5.2(b), above.

##### 7.2.5.3 Delivery Orders and Task Orders.

\(a\) ***INFORMATION:*** \"Delivery Order\" means an individual order
for supplies placed under the terms of a master contract or master
agreement. \"Task Order\" means an individual order for services placed
under the terms and conditions of a master contract or master agreement.
Delivery orders and task orders are typically used where the scope of
work can be generally defined in the master contract/agreement, but
there is some uncertainty regarding the individual orders to be placed
or tasks to be performed. There are two general categories of orders
commonly used at BPA:

\(1\) Orders where numerous delivery or task orders are contemplated and
each item or task is typically for a small dollar amount. Negotiations
are typically brief and the item is delivered or the task is completed
in a few days or weeks. A requisition is required for each order.

\(2\) All other orders, where items or tasks may be of high dollar
amounts, more complex, and of a longer duration than those described in
(1) above. This level of complexity typically results in more extensive
negotiations before the order is awarded. A requisition is required for
each order.

\(b\) ***PROCEDURE:*** Orders may be placed orally, via facsimile,
electronically, or in writing as agreed to by the Contractor in the
terms of the Master Contract or Master Agreement.

\(1\) Written orders should be issued when specifications or statements
of work are necessary for clear understanding of the requirements or
when complicated delivery terms, bid schedules, etc. are necessary.
Written orders (releases) shall be prepared using the BES generated
order (release) form.

\(2\) Oral or electronic orders to the Contractor may be placed,
provided the terms and conditions for oral or electronic orders are
included in the written bilateral Master Agreement or Master Contract.
Electronic orders may be placed via facsimile or as an unalterable
electronic read-only format document transmitted via the Internet. A
binding order will be formed when the Contracting Officer or his/her
authorized representative transmits to the Contractor a complete and
legible order that includes an order (release) number and the Master
Agreement Number of Master Contract number, and receives from the
Contractor a written or facsimile of electronic Internet confirmation.
An order or confirmation transmitted via facsimile or the Internet will
be deemed "writings"

#### 7.2.6 Task Assignments.

\(a\) ***INFORMATION:*** Task Assignments may be issued where a time and
materials, fixed-price, or cost-plus-fixed-fee contract is awarded on a
level of effort basis and includes a limit on total authorized labor
hours (level of effort)(see also BPI 7.1.(d)(2)). Generally tasks should
be identified in the contract\'s Statement of Work, but the sequence of
performance of those tasks may change after award. For this reason,
tasks are assigned after award of the contract as the sequence of tasks
becomes more clear.

\(b\) ***PROCEDURE:*** Because the scope of the project and individual
tasks can be adequately defined at the time the contract is awarded, the
total budget is committed at the time of award and no additional
Requisitions or CO signatures are necessary to order the sequence of
work. Task Assignments are typically signed by the COTR, with a copy
provided to the CO.

\(c\) **POLICY:** CO\'s shall provide adequate oversight to ensure
proper usage.

#### 7.2.7 Options.

\(a\) ***INFORMATION:*** The use of options in contracts can be an
effective method of managing risk, reducing the administrative costs of
resoliciting for recurring requirements, and encouraging high
quality/long term performance.

\(b\) ***POLICY:*** Options shall be pre-priced. Pre-priced options may
contain specific option pricing or an appropriate economic price
adjustment index.

\(c\) ***INFORMATION:*** Pre-priced options give BPA the unilateral
right to purchase additional supplies/services or extend the term of the
contract at pre-agreed prices and/or terms. Pre-priced options may be
appropriate where the market is relatively stable, price inflation is
fairly predictable, the nature of the contract is not likely to change
significantly between award and the time the option is exercised, or
where it may be difficult to test the market at a future date.

##### 7.2.7.1 Clause Usage Prescriptions.

\(a\) ***PROCEDURE:*** CO\'s shall include a clause similar to Clause
7-7, Performance Period And Options, in solicitations and contracts
where an option is appropriate to add to the term of the contract.

\(b\) ***PROCEDURE:*** CO\'s shall include a clause similar to Clause
7-8, Option For Increased Quantity, in solicitations and contracts where
an option is appropriate to increase the quantities of supplies or
services being purchased.

#### 7.2.8 Free Trial Agreements.

\(a\) ***INFORMATION:*** \"Free Trial\" is the use of a product offered
by a vendor without obligation or consideration (i.e. no fees, reports,
technical advice, shipping, supplies, or any other costs) for a
specified time period, with the ability to return the product at any
time during the trial period without explanation. Free Trial Agreements
are an effective method of evaluating the characteristics of software,
supplies, or equipment while protecting the rights of the offeror and
BPA in case of loss, damage, or release of proprietary information. More
informal arrangements may be appropriate for consumable and/or
non-returnable items.

\(b\) ***POLICY:*** Free Trial Agreements are required for items only
when property or proprietary data rights must be protected. The
following restrictions apply when a free trial agreement is being
considered:

\(1\) The total value of all items must be within the authority limit of
the CO.

\(2\) Use of the program/product is at BPA\'s sole discretion and within
the parameters for which the program/product was designed.

\(3\) Programs/products do not require extensive training programs or
start-ups.

\(4\) Programs/products do not create a dependency on them.

\(5\) The use of the program/product will be for a reasonable period,
usually not for more than 90 days.

\(c\) ***PROCEDURE:***

\(1\) Any BPA employee interested in accepting an offer to try a
program/product requiring a free trial agreement shall submit a request
to the CO. The request shall include any relevant background
information.

\(2\) The CO shall negotiate the agreement to ensure that the supplier
understands that the use on a free trial basis of the program/product
does not preclude the use of BPA\'s competitive process in the purchase
of the same or similar program/product.

\(3\) The CO and the supplier shall execute a written agreement
outlining the parameters of the transaction (see Exhibit 7D, Sample Free
Trial Agreement).

\(4\) BPA may return the merchandise at any time during or at the
completion of the free trial period.

**Exhibit 7D \-- SAMPLE FREE TRIAL AGREEMENT**

1\. This agreement is between Bonneville Power Administration (BPA) and
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(Submitter). The
program/product submitted by the firm shall hereinafter be referred to
as \"merchandise\".

2\. The trial use period shall begin on [ ]{.underline} and terminate on
[ ]{.underline}

3\. The Submitter hereby agrees to provide BPA the following
merchandise:

\[This section is for the CO to provide the description of the
merchandise to be evaluated on a free trial basis. The description
should include but not be limited to descriptive instruction material,
manuals, diagrams, flow charts, installation instructions, or technical
advice needed to evaluate the merchandise. The CO shall instruct the
submitter to carefully mark or label all of the materials associated
with the merchandise being used by BPA which are to be returned at the
end of the trial period.\]

4\. BPA shall use reasonable care with the merchandise, but it shall not
be liable for loss of or damage to the merchandise during the trial use
if such loss or damage results from defective merchandise. BPA shall
indemnify, and hold harmless the submitter for any damage resulting from
normal use of the merchandise, except for damage resulting from or
caused by a defect in the merchandise.

5\. BPA agrees to keep confidential and will not copy, in whole or in
part, any of the technical data, materials, or other proprietary
information furnished to it for use during the Free Trial.

6\. There shall be no payment made from BPA to submitter under this
agreement. Each party shall pay its own expenses that may be incurred
because of this trial. Submitter is responsible for all costs associated
with delivery and return of the merchandise.

7\. The submitter shall not publish any information about BPA\'s trial
use of the merchandise without prior written approval from BPA, nor
shall the submitter use BPA\'s name in any advertisement or promotion or
other solicitation for business without written approval from BPA.

8\. At any time during the free trial evaluation period, BPA may return
the merchandise to the submitter without explanation or obligation and
at no cost to BPA.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

BPA Contracting Date

Officer\'s Signature

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Submitter\'s Signature Date

####   {#section-1 .unnumbered}

#### 7.2.9 Quick Response Contracts.

\(a\) ***INFORMATION:*** A quick response contract, sometimes referred
to as a "letter contract", is a written contract, signed by a CO, that
authorizes the contractor to immediately begin the manufacture of
supplies or performance of services before all contract terms and
requirements have been finalized. It is a unilateral authorization or
offer by BPA that becomes a binding contractual agreement if performance
by the contractor has commenced. The signature of the prospective
contractor is not required, but may be obtained in order to protect
BPA\'s interests.

\(b\) ***POLICY:*** A quick response contract may be used when:

\(1\) The interests of BPA demand that the contractor be given a binding
commitment so that work can start immediately; and

\(2\) Complete negotiation and assembly of a definitive contract is not
possible in time to meet the requirement.

\(c\) ***POLICY:*** Quick response contracts shall be used judiciously,
and not as substitutes for properly planned, scheduled, and executed
acquisition plans. They may not be awarded until after the parties have
reached agreement in principle on the substance of the contract. Quick
response contracts must be definitized within 30 days unless the CO's
first line performance manager approves an extension. Funding
commitments should not exceed what is required for performance before
definitization and for acquisition of specific long lead-time materials.
Quick response contracts shall not \--

\(1\) Be entered into without competition when competition is
practicable;

\(2\) Be amended to satisfy a new requirement unless that requirement is
inseparable from the existing quick response contract. Any such
amendment is subject to the same requirements and limitations as a new
quick response contract.

\(d\) ***PROCEDURE:***

\(1\) Prior to initiating a quick response contract, the CO must have
received:

(A) A material request, purchase requisition, or contract requisition.

(B) An initial statement of work or specification that describes the
    fundamental goods or services to be provided, key elements of
    quality or acceptability, and deliverables. (Such statement of work
    or specification may be revised to provide greater detail when the
    contract is definitized.); and

\(C\) An approved request for ratification, if applicable.

\(2\) Quick response contracts are subject to the competitive
requirements described in BPI subpart 11.6.

\(3\) Each quick response contract must contain provisions substantially
the same as shown in Exhibit 7E, Sample Quick Response Contract. The
contract may be documented in letter form, as shown in Exhibit 7E, or
may be documented on a paper or electronic contract award form.

\(4\) Copies of the quick response contract shall be distributed to the
same organizations that will receive the definitized contract when it is
executed.

\(5\) The definitized contract, when completed, shall incorporate the
quick response contract. The effective date of the contract shall be the
start work date authorized in the quick response contract.

\(6\) For contracts which require a subcontracting plan (see BPI 8.3.1),
the plan shall be obtained within 90 days after award of the quick
response contract, or by contract definitization, whichever occurs
first.

**EXHIBIT 7E \-- SAMPLE QUICK RESPONSE CONTRACT**

Alex Johnson Services Company

6847 Kingsway East Court

Baldwin, Oklahoma 84711

Dear Mr. Johnson:

Subject: Proposed Contract No. 01234, Hazardous Waste Clean-up

This letter constitutes an authorization for you to commence work on the
project described above, subject to the following:

\(a\) A maximum of \$75,000 of costs may be incurred.

\(b\) Expenditures above that amount are not authorized, and are at your
risk.

\(c\) Work is authorized to begin [\_\_\_\_\_]{.underline} (insert date
not earlier than date of letter).

\(d\) This authorization is subject to the cost principles described in
Part 13 of the Bonneville Purchasing Instructions.

\(e\) When the contract for this project is definitized, it will be a
(insert appropriate type of contract) type contract.

\(f\) In the event of contract termination, calculation of payments due
under this authorization will be accomplished under the provisions of
clause(s) \_\_\_\_\_\_\_\_\_\_ (enter appropriate termination clauses)
of the Bonneville Purchasing Instructions.

\(g\) The work authorized by this letter is described in your proposal
of \_\_\_\_\_\_\_ (date or other appropriate reference to the statement
of work or company offer and type of transmission: oral, written,
facsimile, e-mail, etc.).

\(h\) No payments will be made before a definitized contract is
completed for this project. (CO may allow for interim payments, if
necessary. In this case, appropriate payment and invoicing clauses shall
be included in the quick response contract.)

\(i\) The Contracting Officer\'s Representative is Alice Adams and her
telephone number is (503) 230-48l7.

\(j\) You are obligated to furnish cost or pricing information if the
Contracting Officer requests such information.

\(k\) (The CO may enter any other terms and conditions deemed necessary
for the proper execution of the project.)

\(l\) A definitized contract is expected to be executed within 30 days.

\(m\) This is contract number [\_\_\_(fill in)\_\_\_;]{.underline}
Accounting data: [\_\_\_(fill in)\_\_\_]{.underline}.

> Sincerely,
>
> Contracting Officer

####   {#section-2 .unnumbered}

#### 7.2.10 Trade-Ins.

\(a\) ***POLICY:*** BPA may trade-in non-excess personal property
concurrent with the purchase of similar replacement items with the
concurrence of the responsible Asset Center Representative. A separate
solicitation is not required when the need or opportunity to trade in
property occurs after contract award.

\(b\) ***PROCEDURE:*** Requisitioners are responsible for determining
whether current property should be traded in, concurrent with the
purchase of similar replacement property. CO\'s shall not enter into
contracts that involve trade-ins of property without first obtaining
from the requisitioner a copy of the Asset Center Representative's
disposal analysis and approved Property Survey Report. See BPI Part
6.12.

##### 7.2.10.1 Clause Usage Prescriptions.

***PROCEDURE:*** CO\'s shall include a clause similar to Clause 7-9,
Trade-In of Personal Property, in solicitations and contracts that
include trade-in of personal property.

### 7.50 TEXT OF CLAUSES.

The following clauses are referred to in BPI Part 7:

7-1 Contract Type

7-2 Price Adjustment

7-3 Award Fee and Payment (Fixed-price award fee)

7-4 Definite Quantity Contract: Ordering

7-5 Indefinite Quantity Contract: Ordering

7-6 Master Agreement: Basic Terms

7-7 Performance Period And Options

7-8 Option for Increased Quantity

7-9 Trade-In of Personal Property

######### Clause 7-1 CONTRACT TYPE (Sep 98)(BPI 7.1.9)

This is a [FILL-IN]{.underline} type contract.

(End of clause)

######### Clause 7-2 PRICE ADJUSTMENT (Sep 98)(BPI 7.1.9)

\(a\) From \_\_\_\_\_\_\_\_\_\_\_\[FILL IN event or date which triggers
price adjustment review, e.g., \"the start of the 13th month after the
date of award\"\], through the remainder of the contract option periods,
the \_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN, e.g., \"hourly rates\", \"unit
prices\", etc.\] identified in the Schedule of Items may be adjusted
upward or downward based on increases or decreases in
\_\_\_\_\_\_\_\_\_\[FILL IN appropriate index including appropriate
dates, e.g., \"the Consumer Price Index (CPI-U) for All Urban Consumers,
all Items 1982-84 = 100, as published by the U.S. Bureau of Labor
Statistics\"\]. The final index point at date of award is
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\[FILL IN\], dated
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\[FILL IN\].

\(b\) On \_\_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN date or event which
triggers price adjustment review, e.g., \"each anniversary of the date
of award\"\], if an option year is exercised, the percent of increase or

decrease in the index will be computed by the Contracting Officer. No
prices will be adjusted unless the percent of change in the index (since
the date of contract award or date of last adjustment) amounts to
\_\_\_\_\_\_\_\_\_\_\_ FILL IN, e.g., \"six percent or more\"\]. If the
index has

changed by six percent or more since the date of award or since the
previous calculation that resulted in a price adjustment, the specific
prices will be adjusted for the ensuing year. If an adjustment is
warranted in accordance with the above, the then current unit prices
will be increased or decreased, for the ensuing year, by the product of
the unit price times the percent of change reported in the index
(figured to two decimal places).

\(c\) No upward adjustment shall apply to supplies or services which are
required to be delivered or performed prior to the effective date of the
adjustment unless the Contractor\'s failure to deliver or perform in
accordance with the delivery schedules results from causes beyond the
control and without the result or negligence of the Contractor.

\(d\) The index base rate shown above for the first year of the contract
shall be the latest rate published at the date of contract award. Should
an adjustment in the hourly rates be effected per this clause, the index
base rate will be revised to reflect the latest rate published at the
date of contract renewal.

(End of clause)

######### Clause 7-3 AWARD FEE AND PAYMENT (Fixed-Price Award Fee) (Sep 98)(BPI 7.1.9)

\(a\) In addition to any profit included in the fixed price portion of
the contract payment, the Contractor may earn an additional fee,
referred to as an award fee, not to exceed \$\_\_\_\_\_\_\_. Payment of
the award fee will be based on the degree to which the Contractor\'s
performance exceeds the requirements of the contract during each
evaluation period. See the Award Fee Plan, Attachment \_\_\_\_\_.

\(b\) The Contractor\'s performance will be evaluated after the
completion of each evaluation period, which shall be every 4 months. The
available award fee allocation in an evaluation period is determined by
dividing the award fee pool negotiated annually as stated in the
Schedule of Items by three. Unearned award fee will [not]{.underline} be
added to any evaluation periods for future periods.

\(c\) The award fee will be paid after determination of the award fee by
BPA and submission of an invoice by the Contractor for the earned
amount.

\(d\) Before an evaluation period is started, BPA may unilaterally
modify the award fee performance evaluation criteria, performance
evaluations areas, and/or weights applicable to the evaluation period.
The Contractor will be notified in writing of these changes by the
Contracting Officer before the relevant evaluation period is started.
The Award Fee Plan will be modified accordingly.

\(e\) The decision of the Fee Determining Official on the amount of the
earned award fee is not subject to the Disputes clause.

(End of clause)

######### Alternate I (Sep 98)

\(a\) In addition to a base fee of not to exceed \_\_\_\_\_ percent of
estimated costs, the Contractor may earn an award fee on the basis of
its performance during each evaluation period. See the Award Fee Plan,
Attachment \_\_\_\_\_.

(End of Alternate I)

######### Clause 7-4 DEFINITE QUANTITY CONTRACT: ORDERING (SEP 02)(BPI 7.2.5.1.1)

\(a\) This is a definite-quantity, indefinite-delivery contract. The
Contractor shall furnish to BPA, when ordered, all supplies or services
specified in the Schedule of Items. Delivery or performance shall be at
locations designated in orders.

\(b\) BPA will order the quantity of supplies or services specified in
the Schedule of Items.

\(c\) Only orders placed by individuals or BPA offices designated by the
Contracting Officer will be considered valid orders. If mailed, a
delivery order is considered "issued" when BPA deposits the order in the
mail. Orders may also be issued orally or by facsimile. Orders may also
be issued electronically as an unalterable, electronic read-only
formatted document transmitted via the Internet. A binding order will be
formed after the Contracting Officer or his;/her authorized
representative transmits to the Contractor a complete and legible order
that includes an order (release) number and the contract number, and has
received from the Contractor a written, or electronic Internet
confirmation. An order or confirmation transmitted via facsimile or the
Internet will be deemed "writings."

\(d\) Except for any limitations on quantities shown below, there is no
limit on the number of orders that may be issued.

\(1\) Minimum Individual Order: \_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[FILL IN
quantity or dollar amount\]

\(2\) Maximum Individual Order: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN
quantity or dollar amount\]

\(e\) Any order issued must be completed/delivered prior to the
expiration date of this contract.

\(f\) All orders are subject to the Terms and Conditions of this
contract. In the event of conflict or terms between an individual order
and this contract, the contract shall control.

(End of clause)

######### Clause 7-5 INDEFINITE QUANTITY CONTRACT: ORDERING (SEP 02)(BPI 7.2.5.1.1)

\(a\) This is an indefinite-quantity contract. The Contractor shall
furnish to BPA, when and if ordered, the supplies or services specified
in the Schedule of Items. The quantities of supplies and services
specified in the Schedule of Items are estimates only and are not
purchased by this contract. Delivery or performance shall be at
locations designated in orders.

\(b\) Only orders placed by individuals or BPA offices designated by the
Contracting Officer will be considered valid orders. If mailed, a
delivery order is considered \"issued\" when BPA deposits the order in
the mail. Orders may also be issued orally or by facsimile. Orders may
also be issued electronically as a unalterable, electronic read-only
formatted document transmitted via the Internet. A binding order will be
formed when the Contracting Officer or his/her authorized representative
transmits to the Contractor a complete and legible order that includes
an order 9release) number and the contract number, and receives from the
Contractor a written or facsimile or electronic Internet confirmation.
An order or confirmation transmitted via facsimile or the Internet will
be deemed "writings."

\(c\) Except for any limitations on quantities shown below, there is no
limit on the number of orders that may be issued.

\(1\) Minimum, Individual Order: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN
quantity or dollar amount\]

\(2\) Maximum, Individual Order: \_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN
quantity or dollar amount\]

\(3\) Minimum, Total Orders: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN
quantity or dollar amount\] BPA will order at least this quantity of
supplies or services.

\(4\) Maximum, Total Orders \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN
quantity or dollar amount\]

\(d\) Any order issued during the effective period of this contract and
not completed within that time shall be completed by the Contractor
within the time specified in the order. The contract shall govern the
Contractor\'s and BPA\'s rights and obligations with respect to that
order to the same extent as if the order were completed during the
contract\'s effective period; provided that the Contractor is not
obligated to make deliveries after\_\_\_\_\_\_\_\_\_\[FILL IN date or
period of time.\]

\(e\) All orders are subject to the Terms and Conditions of this
contract. In the event of conflict between an order and this contract,
the contract shall control.

(End of clause)

######### Clause 7-6 MASTER AGREEMENT: BASIC TERMS (SEP 02)(BPI 7.2.5.2.1)

\(a\) Effective Period. This agreement is effective upon receipt and
acceptance of this Agreement and continues until canceled by BPA or the
Contractor in writing, or the date in Block 5, Page 1 of this master
agreement, whichever occurs first.

\(b\) BPA\'s Obligation. This agreement places no obligation on BPA to
purchase a minimum amount of supplies or services. BPA is obligated only
to the extent of authorized orders actually placed against this
agreement.

\(c\) Order Placement, Confirmation and Contract Formation. Only orders
placed by individuals specifically authorized by the Contracting Officer
will be considered valid orders. Orders may also be issued orally or by
facsimile. Orders may also be issued electronically as unalterable,
electronic read-only formatted document transmitted via the Internet. A
binding order will be formed when the Contracting Officer or his/her
authorized representative transmits to the Contractor a complete and
legible order that includes an order (release) number and the contract
number, and receives from the Contractor a written or facsimile or
electronic internet confirmation. An order or confirmation transmitted
via facsimile or the Internet will be deems "writings." There is no
limit on the number of orders that may be issued, unless otherwise
limited in the Schedule of Items.

\(d\) Order Numbers. An \"order number\" will be the identifying number
for each order placed against this agreement. Both this order number and
the Master Agreement Number must be included on all correspondence,
packing lists, invoices, etc.

\(e\) Delivery Tickets. All deliveries made under this agreement shall
be accompanied by a delivery ticket or sales slip which shall contain
the following minimum information: (1) Name of Contractor; (2) Master
Agreement Number; (3) Date of order; (4) Name of BPA employee placing
order; (5) Order number; (6) Itemized list of supplies or services
furnished (quantity, unit price, and extended price, less discounts; and
(7) Date of delivery or shipment.

\(f\) Variation In Quantity. No variation in the quantity of any item
ordered will be accepted unless such variation has been caused by
conditions of loading, shipping, or packing, or allowances in
manufacturing processes, and then only to the extent, if any, specified
elsewhere in this agreement or in any specific order.

\(g\) Transportation Charges. No allowance will be made for packing,
cartage, carting, or transportation charges unless specifically provided
elsewhere in this agreement or unless provided at the time a specific
order is placed.

\(h\) Inspection and Acceptance. Inspection and acceptance will be at
the place specified in each order for delivery or performance.

\(i\) Taxes and Duties. The price includes all applicable Federal,
State, and local taxes and duties in effect on the date an order is
placed, but does not include any taxes from which BPA, the Supplier, or
any specific order is exempt. Upon request of the Supplier, BPA shall
furnish a Tax Exemption Certificate or similar evidence of exemption, if
appropriate, with respect to any such tax not included in the price
pursuant to this clause.

\(j\) Payment.

\(1\) Payment Due Date. Payment shall be due not later than thirty (30)
calendar days after the later of the date on which BPA actually receives
a proper invoice in the designated billing office or the date when the
items delivered or completed services are accepted by BPA. For purposes
of payment only, items will be deemed accepted not later than seven (7)
working days after proper delivery. If delivered items or completed
services are found defective, the provisions of this paragraph will be
reapplied upon receipt of a corrected item or service.

\(2\) Invoices. Supplier\'s may invoice monthly or at more frequent
intervals as may be agreed to by the CO. Invoices shall include:

> • supplier\'s name and address;
>
> • invoice date;
>
> • master agreement number;
>
> • order number;
>
> • description of products delivered or work performed;
>
> • price and quantity of item(s) actually delivered or rendered
> identified separately by order number,
>
> • the name and address of the person to whom payment will be made, and
>
> • name (where practicable), title, phone number, and mailing address
> of person to be notified in event of a defective invoice.

If the order is for supplies, each invoice shall also contain a
reference to each delivery ticket and shall be supported by a copy of
the delivery ticket. Failure to submit a proper invoice may result in a
delay in payment.

\(3\) Prompt Payment Act. This agreement is subject to the provisions of
the Prompt Payment Act (31 U.S.C. 3901 et seq.), and Office of
Management and Budget Circular A-125.

\(4\) Interest Penalty Payments. If interest penalty payments are
determined due under the provisions of the Prompt Payment Act, payment
shall be made at the rates determined by the U.S. Treasury, Section 12
of the Contract Disputes Act of 1978 (41 U.S.C. 611).

(End of clause)

######### Clause 7-7 PERFORMANCE PERIOD AND OPTIONS (Sep 98)(BPI 7.2.7.1)

\(a\) This is a \_\_\_\_\_\_\_\[FILL IN\] year contract with options to
extend for \_\_\_\_\_\_\[FILL IN\] additional \_\_\_\_\_\_\_\[FILL IN\]
year periods.

\(b\) BPA may unilaterally extend the term of this contract by written
notice to the Contractor. BPA will give the Contractor preliminary
notice of its intent to extend at least 30 days before the contract
expires.

(End of clause)

######### Clause 7-8 OPTION FOR INCREASED QUANTITY (Sep 98)(BPI 7.2.7.1)

BPA may acquire the option quantity listed in the Schedule of Items at
the unit price(s) specified. The Contracting Officer may exercise the
option by written notice to the Contractor not later than 30 days prior
to the end of the contract. Delivery of the option quantity shall be
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\[FILL IN delivery terms\].

(End of clause)

######### Clause 7-9 TRADE-IN OF PERSONAL PROPERTY (Sep 98)(BPI 7.2.10.1)

The following property is offered for trade-in. The property is offered
on an \"as is-where is\" basis. BPA\'s descriptions of the property may
not accurately reflect the condition or value of the property. The
Contractor is responsible for determining the condition of the property
and assessing its value prior to award. The contractor will be given
title to the specified property upon award of the contract, and will
remove the property from BPA\'s custody within 30 days after award.

Description of Property Location

FILL IN FILL IN

(End of clause)