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.

Parent topic: Subpart 16.7 - Agreements