An ordering agreement is not itself a contract. It is a written agreement negotiated between a purchasing organization and a supplier that contains terms and conditions applying to future contracts between the parties. The contracts are established when orders are issued and accepted by the parties. Ordering agreements include Basic Pricing Agreements (BPAs) (see 2-18.11.6). Although there may be a price ceiling for individual orders, there is no limit on the aggregate value of orders and no commitment to purchase. This distinguishes ordering agreements from indefinite-delivery contracts.
An ordering agreement is useful for expediting contracting for uncertain requirements of supplies or services when specific quantities and prices are not known at the time the agreement is signed, but substantial quantities of the supplies or services are expected to be purchased. Ordering agreements reduce administrative lead time and inventory investment.
- An ordering agreement may not state or imply any obligation or agreement by the Postal Service to place future contracts or orders with the supplier.
- An ordering agreement may only be changed by modifying the agreement itself and not by individual orders issued against it. Modifying an ordering agreement does not retroactively affect orders previously issued against it.
- Ordering agreements should be periodically reviewed to determine whether they should be continued.
An ordering agreement must:
- Describe the supplies and services to be provided.
- Describe the method for determining prices.
- Include delivery terms and conditions or specify how they will be determined.
- List the purchasing organizations or ordering officials authorized to issue orders (see 2-18.11.4).
- Specify the point at which an order becomes a binding contract (for example, issuance of the order, acceptance of the order in a specified manner, or failure to reject the order within a specified number of days).
- Provide that failure to reach agreement on the price of any one order issued before a price is established (see 2-18.11.5) is a dispute under Clause B-9: Claims and Disputes (March 2006).
- Contain the clauses prescribed for the type of contract represented by the orders to be placed (for clauses prescribed according to contract dollar amount, the aggregate value of orders expected to be placed must be estimated).
A contracting officer representing a purchasing organization listed in an ordering agreement may issue orders for supplies or services covered by that agreement; in addition, contracting officers may designate ordering officials who may issue orders valued up to $10,000. Competition must be obtained before placing any order valued at $10,000 or more. Orders valued at less than $10,000 may be placed by the ordering officials listed in the agreement. Competition may be obtained by oral or written solicitation among firms holding ordering agreements for the same supplies or services, or on the open market. If an order valued at $10,000 or more is placed without obtaining competition, it is subject to the requirements of 2-10, Determine Extent of Competition, and 2-41, Obtain Selected Reviews and Approvals.
The contracting officer may not authorize the supplier to begin work on an order until prices have been established, unless urgency precludes advance pricing and the order establishes a ceiling price limiting the Postal Service’s obligation. Pricing must be accomplished as soon as possible after issuance of an unpriced order.
A basic pricing agreement (BPA) is an ordering agreement which permits individuals designated by name or title to place orders by telephone, over-the-counter, or in writing. BPAs permit consolidated invoicing (usually monthly) for all purchases made. Establishing BPAs with suppliers from which frequent, repetitive purchases are made can significantly reduce paperwork and administrative costs. Although there may be a ceiling for individual orders, there is no aggregate value of orders under a BPA. When the BPA is limited to specific items on a price list, only those items may be ordered. Suppliers may revise their prices at any time.
2-18.11.6.2 Use
BPAs are used when:
- A wide variety of items in a broad class of supplies (hardware, electrical supplies, etc.) may be available from suppliers but quantities and delivery requirements are not known and may vary considerably. BPAs may also be used for services.
- The preparation of numerous written orders and processing of invoices can be avoided.
- There is a need to provide supply sources for offices that do not have purchasing authority.
- A purchase or series of purchases from a particular supplier may not be made using local buying procedures.
BPAs should be established with suppliers from which numerous individual purchases will likely be made in a given period. For example, if experience shows that a supplier is dependable and consistently lower in price than other suppliers, and if numerous small purchases are made from it, it would be advantageous to establish a BPA with the supplier.
The following restrictions apply to BPAs:
- BPAs may not be made for supplies or services which must be purchased from mandatory sources (see 2-13, Purchase From Mandatory Sources).
- BPAs may not be made for construction on Postal Service premises.
- The term of a BPA may not exceed 5 years.
- Individual orders may not exceed $10,000 (except for fuel, where the ordering limit is tank capacity).
When orders are placed under a BPA established for specific items on a price list, only the items on the list may be ordered.
