Subpart 16.7 - Agreements

Parent topic: Part 16 - Types of Contracts

16.701 Scope.

This subpart prescribes policies and procedures for establishing and using basic agreements and

basic ordering agreements. (See 13.303 for blanket purchase agreements (BPA’s) and see 35.015(b)

for additional coverage of basic agreements with educational institutions and nonprofit

organizations.)

16.702 Basic agreements.

(a) Description. A basic agreement is a written instrument of understanding, negotiated between an

agency or contracting activity and a contractor, that (1) contains contract clauses applying to future

contracts between the parties during its term and (2) contemplates separate future contracts that

will incorporate by reference or attachment the required and applicable clauses agreed upon in the

basic agreement. A basic agreement is not a contract.

(b) Application. A basic agreement should be used when a substantial number of separate contracts

may be awarded to a contractor during a particular period and significant recurring negotiating

problems have been experienced with the contractor. Basic agreements may be used with negotiated

fixed-price or cost-reimbursement contracts.

(1) Basic agreements shall contain-

(i) Clauses required for negotiated contracts by statute, executive order, and this regulation; and

(ii) Other clauses prescribed in this regulation or agency acquisition regulations that the parties

agree to include in each contract as applicable.

(2) Each basic agreement shall provide for discontinuing its future applicability upon 30 days’

written notice by either party.

(3) Each basic agreement shall be reviewed annually before the anniversary of its effective date and

revised as necessary to conform to the requirements of this regulation. Basic agreements may need

to be revised before the annual review due to mandatory statutory requirements. A basic agreement

may be changed only by modifying the agreement itself and not by a contract incorporating the

agreement.

(4) Discontinuing or modifying a basic agreement shall not affect any prior contract incorporating

the basic agreement.

(5) Contracting officers of one agency should obtain and use existing basic agreements of another

agency to the maximum practical extent.

(c) Limitations. A basic agreement shall not-

(1) Cite appropriations or obligate funds;
(2) State or imply any agreement by the Government to place future contracts or orders with the

contractor; or

(3) Be used in any manner to restrict competition.

(d) Contracts incorporating basic agreements.

(1) Each contract incorporating a basic agreement shall include a scope of work and price, delivery,

and other appropriate terms that apply to the particular contract. The basic agreement shall be

incorporated into the contract by specific reference (including reference to each amendment) or by

attachment.

(2) The contracting officer shall include clauses pertaining to subjects not covered by the basic

agreement, but applicable to the contract being negotiated, in the same manner as if there were no

basic agreement.

(3) If an existing contract is modified to effect new acquisition, the modification shall incorporate the

most recent basic agreement, which shall apply only to work added by the modification, except that

this action is not mandatory if the contract or modification includes all clauses required by statute,

executive order, and this regulation as of the date of the modification. However, if it is in the

Government’s interest and the contractor agrees, the modification may incorporate the most recent

basic agreement for application to the entire contract as of the date of the modification.

16.703 Basic ordering agreements.

(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 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.