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Establishing Basic Ordering Agreements (BOA)

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In August 2012 I posted a thread to aap@dau.mil regarding BOA management where I solicited responses for whether a BOA is required to incorporate an expiration date. This question continued amongst my regional QA community where every argument they presented for why a BOA cannot exceed five years was specifically in reference to contracts.

The DAU response noted that FAR 16.703 does not contain a tremendous amount of guidance regarding BOAs and that this is intentional. The FAR permits agencies a great deal of flexibility in crafting BOAs. However, the VA supplement (VAAR) is absolutely silent.

I have searched for VA OIG reports and GAO decisions on the topic but haven't found a single regulation or policy expressly stating that a BOA shall incorporate a term limit commensurate with that of a contract, IAW OMB A-76 (Revised) cost comparisons.

I'm hoping to find concrete evidence to support one approach (i.e. indefinite instrument of understanding or term limit). I have found cases of the VA establishing indefinite term business agreements in the form of Medical Affiliate agreements which are subsequently used to justify the procurement of physician services.

So the question in general being, in the absence of agency guidance, is anyone aware of an expressed prohibition against establishing indefinite term BOAs? Understanding of course that this discussion is specific to the BOA itself and completely exclusive of any orders or subsequent contract that might be awarded against it.

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Although I'm not aware of any express prohibition against establishing indefinite term BOAs, I have always viewed BOA's as 1-year instruments, because FAR 16.703( c) Limitations includes the following:

"(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."

The requirement for annual reviews effectively limits the term of the agreement to one year, even though it doesn't explicitly say so.

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I do not have an answer to Troy's question. I have a couple of other questions associated with the establishment of a BOA, so I am attaching to this thread. I hope that is ok. If not, someone tell me, and I will not do it again.

We are in the process of establishing a BOA with the Air Force. The first sentence of the BOA following the SF26 states: "New clauses or changes to existing clauses in this BOA apply to all orders, including previously awarded and future orders." Does the government have this right (to change previously awarded orders with a change to the BOA)? Does it have to be bilateral, or can it be unilateral? Note I have reviewed FAR Part 43. Under scope of the part, it states it "does not apply to (a) Orders for supplies or services not otherwise changing the terms of contracts or agreements (e.g., delivery orders under indefinite-delivery contracts)..." What does that mean for the statement included in our BOA. Please provide FAR reference with any answers if possible.

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Another question I have regarding a BOA is the FAR clauses associated with the future DOs under the BOA. Each of those DOs will use the FAR clauses and date listed in the BOA. Each new DO will not have the FAR clauses automatically updated if new versions of the clause have come out. I believe this is made clear by FAR 16.703(a) where the purpose of a BOA is to establish clauses applying to future contracts. Do you agree? If not, please point me to a FAR reference as to why not. Thanks.

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I do not have an answer to Troy's question. I have a couple of other questions associated with the establishment of a BOA, so I am attaching to this thread. I hope that is ok. If not, someone tell me, and I will not do it again.

We are in the process of establishing a BOA with the Air Force. The first sentence of the BOA following the SF26 states: "New clauses or changes to existing clauses in this BOA apply to all orders, including previously awarded and future orders." Does the government have this right (to change previously awarded orders with a change to the BOA)? Does it have to be bilateral, or can it be unilateral? Note I have reviewed FAR Part 43. Under scope of the part, it states it "does not apply to (a) Orders for supplies or services not otherwise changing the terms of contracts or agreements (e.g., delivery orders under indefinite-delivery contracts)..." What does that mean for the statement included in our BOA. Please provide FAR reference with any answers if possible.

See FAR 16.703( c)(2) -- ". . . Modifying a basic ordering agreement shall not retroactively affect orders previously issued under it."

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Thank you, Navy Contracting 4, for both posts. Interesting to view them as one year instruments. Ours is going to be for 5 years, but I see your point above.

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Although I'm not aware of any express prohibition against establishing indefinite term BOAs, I have always viewed BOA's as 1-year instruments, because FAR 16.703( c) Limitations includes the following:

"(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."

The requirement for annual reviews effectively limits the term of the agreement to one year, even though it doesn't explicitly say so.

The ambiguity at FAR 16.703(c )(2) speaks directly to the response previously provided by DAU in that, ultimately each agency is compelled to specify in certain terms what these limitations mean.

Reason being, I understand this same FAR passage to mean something altogether different.

I interpret that it only limits the term of the agreement in the event the required annual review is not conducted. Inasmuch as these reviews are executed timely to keep the agreement current with any applicable FAR changes, this language doesn't even imply that the BOA is even renewed by the review per sa, merely updated.

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Guest Vern Edwards

There is no ambiguity in FAR 16.703( c )(2). It requires a review "before the anniversary of its effective date." Nothing in FAR 16.703 requires that a BOA have an expiration date and nothing provides for the automatic expiration of a BOA upon any given date. What are the implications?

The annual review requirement must not be interpreted to mean that COs can issue orders against BOAs between the effective date and the date of annual review (or the date of expiration, if there is one) that do not conform with statutes and regulations that are in effect at the time an order is to be issued. Every contract must be awarded in conformity with the law in effect on the date that the solicitation for the contract is issued. See FAR 1.108(d) and 1.602-1( b ).

Under an indefinite-delivery contract, orders are issued under the existing contract and must conform to its terms, regardless of statutory or regulatory changes that take effect after contract award. Not so with a BOA. A BOA is not a contract. It is a convenience. See 16.703( b ). An order against a BOA is an offer to buy. Nothing in statute or regulation permits the issuance of orders against a BOA that do not conform to the law in effect when the offer to buy is made. If a BOA is out of date when an order against it is to be issued, the BOA must be updated or the order must be written to conform to the law in effect. See FAR 16.703( c )(2), second sentence:

Basic ordering agreements may need to be revised before the annual review due to mandatory statutory changes.

What that doesn't acknowledge is that a BOA also may need to be revised before the annual review due to mandatory regulatory changes.

Every time a CO issues an order against a BOA he or she must ensure that the order conforms to the statutes and regulations then in effect, regardless of the terms of the BOA.

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Vern, As usual, you answered all of my questions, including the FAR proof I need to have meaningful discussion with colleagues.

I have to admit that upon initial review of FAR 16.703, I was not reading it the way I was taught in the most excellent FAR Bootcamp.

Thanks for this post!

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Troy:

If you work for DoD, be aware that DFARS 216.703© limits the ordering period under a BOA to five years.

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The DODIG conducted a review of the Army’s issuance of BOAs and task orders pursuant to FAR 16.703.

http://www.dodig.mil/pubs/documents/DODIG-2014-095.pdf.

Objective

We determined whether U.S. Army Contracting Command-Rock Island (ACC-RI) officials awarded Enhanced Army Global Logistics Enterprise (EAGLE) basic ordering agreements and task orders in accordance with Federal and DoD guidelines.

Finding

For the basic ordering agreements and the task orders we reviewed, ACC-RI officials effectively executed EAGLE basic ordering agreements and properly awarded task orders in accordance with Federal and DoD guidelines.

Specifically, for the 10 basic ordering agreements we reviewed, ACC RI’s process for executing basic ordering agreements included:

• properly issuing requests for proposals,

• documenting required information, and

• accurately verifying contractor registration.

In my experience, there are more bureaucratic hurdles to overcome when using BOAs than when using BPAs against GSA Schedules or orders under FAR 16.5 (e.g. need for J&As when limiting competition to BOA holders and need to update BOAs to reflect FAR changes).

Why would one use FAR 16.703 BOAs instead of FAR 8.4 BPAs or FAR 16.5 IDIQs?

Unlike FAR 16.703, J&As are not required when competing orders among BPA holders or IDIQ holders under FAR 8.4 or FAR 16.5:

16.703 -- Basic Ordering Agreements.

© 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.

(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.

While the DODIG report addresses regulatory compliance with restrictions on competitions in the case of small business set asides, I cannot find any mention of compliance with FAR 16.703 (c ) and (d).

Did the Army do blanket J&As permitting limitation of competition to BOA holders? Do they do one for each order?

Also, FAR 16.703 (c ) (2) requires the BOA to be updated each time the FAR changes:

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.

This is not true of BPAs placed against GSA Schedule contracts, see FAR 8.405-3(e), or against IDIQ contracts issued under FAR 16.5, see FAR 1.108(d).

Why did Army use BOAs instead of IDIQs or GSA BPAs? Could it be that the Army lacked monies to fund IDIQ minimums or didn't like using BPAs against GSA Schedules?

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Guest Vern Edwards

I read the DODIG report and am writing it up for the September issue of The Nash & Cibinic Report. My speculation is that the Army is trying to use BOAs as though they were MATOCs (1) in order to avoid the minimum quantity/amount conundrum and (2) to get around the requirement for full and open competition.

The Army doesn't have the funds they would need to obligate minimum amounts on IDIQ contracts, so they issue BOAs, which don't require a minimum, and pretend that the BOAs are IDIQ contracts so they can use FAR 16.505-like procedures to issue "task orders" without getting full and open competition. This approach violates the Competition in Contracting Act.

It's possible that the Army has some special authority, but I doubt it. The DODIG either did not understand the law and the FAR or it looked the other way.

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I am soliciting suggestions for an action that relates to this discussion thread. I would like to know what the community feels the best way to handle this ongoing and into the future requirement:

We have a handful of research craft (deleted) and a need for indefinite type vehicle for ordering, and delivery of spare deleted aircraft parts. The client team and craft are often on deployment and housed at another location many miles away from the contracting staff that support them.

We have been discussing whether we should go IDIQ and issue tasks, or do something like a BOA. We expect to get a JOFOC approved for this; minimum guarantee is not an issue but CO admin burden and turnaround time is an issue.

The pilot and crew need to identify the part needed and get it ordered/delivered ASAP to keep the craft afloat. The exhibit spreadsheet has potentially thousands of line items for spare parts that could be ordered.

I am interested in any opinion on the best procurement approach/vehicle for this, and if there are any lessons-learned to be shared.

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baierle,

It is hard to tell from your facts. Is there only one responsible source? Does your J&A describe how there is only one responsible source for each spare part? Or is or J&A based on some sort of "bundling" scheme (not in the Part 19 sense), where the requirement is really more than the sum of the parts (excuse the pun)? If for each part there is really only one responsible source, then perhaps the fact that you are using other than full and open competition procedures doesn't make much impact on your choice between an IDIQ or a BOA. Otherwise, it might. In other words, if the requirement is more than the sum of the parts, and IDIQ may be more consistent with the rationale underlying the J&A.

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I apologize for not being clear. Yes, I inferred that we would get a JOFOC for Boeing parts via Boeing company. They do have quite the established process for their spare parts clients and their item listing is extensive.

I just did not know if BOA or IDIQ would be best in this case. The issue wasn't justifying the JOFOC or the availability of minimum guarantee. It was affecting the desires and needs of the deployed and remote client, and minimizing impact on acquisition folks with the best vehicle. It seems six of one and half dozen of the other but there must be something that I am missing.

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Again, for this specific case since it's sole source and funding isn't the issue: six of one, half dozen of the other. Requirements would work as well.

Is there anyone who would suggest a BOA over an IDIQ or Requirements type vehicle, or vice versa? Any lessons learned? Does the large population of potential parts to be priced/ordered/supplied affect the decision?

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I don't see much of an advantage to a BOA because you would have to comply with FAR part 6 for each order under the BOA. That's a lot of J&As.

As far as deciding between IDIQ and requirements, I would leave both options on the table during negotiations. See which one will get you a better deal with the contractor. I suspect that you would get a better deal if you used a requirements contract because the Government is making more of a commitment. However, if it makes no difference to the contractor, I would probably opt for the IDIQ. In that case, the Government only need order the contract minimum to meet its contractual obligation.

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Thank you very much. I think this is helpful.

IDIQ or Requirements seems like the best way and now I have good logic to back this decision---thanks to ya'll.

V/r-EB

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