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FAR 13.303:  Blanket Purchase Agreements

Comptroller General - Key Excerpts

BPAs are one method of simplified acquisition. FAR 13.303; see Native Res. Dev., Inc. , B-246597.2, B-246597.3, July 13, 1992, 92-2 CPD 15 at 10 n. 11. Agencies are not required to request proposals or to conduct a competition before establishing BPAs. Information Sys. Tech. Corp. , B-280013.2, Aug. 6, 1998, 98-2 CPD 36 at 3. After a BPA is established, however, otherwise applicable competition requirements still apply to all procurements under the BPA. FAR 13.303-5(a) (BPA to be used only for purchases that are otherwise authorized by law or regulation); Information Sys. Tech. Corp. , supra . Moreover, the existence of a BPA does not justify purchasing from only one source. FAR 13.303-5(c). If, for a procurement in excess of $2,500 there is an insufficient number of established BPAs to ensure maximum practicable competition, the contracting officer must solicit quotations from other sources. FAR 13.303-5(d)(1). We find that DEA's use of BPAs to fulfill its hazardous waste cleanup requirements failed to comply with applicable competition requirements in several regards. First, the choice of vendors with whom DEA established BPAs was noncompetitive and apparently based upon the personal preference of local agency personnel. DEA also viewed the establishment of BPAs as a form of down-select that effectively determined which vendors the agency would exclusively consider and utilize to meet its hazardous waste cleanup requirements. See OMNIPLEX World Servs. Corp., supra . Lastly, DEAs subsequent decision to noncompetitively issue purchase orders to select BPA holders was not consistent with the applicable standard--obtaining competition to the maximum extent practicable.  (Envirosolve LLC, B-294974.4, June 8, 2005)  (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
  Envirosolve LLC, B-294974.4, June 8, 2005  (pdf)

U. S. Court of Federal Claims -  Key Excerpts

c. The Court’s Resolution.

It is a settled matter of law that to invoke jurisdiction under the Tucker Act or the CDA, a plaintiff must allege all the requisite elements of a contract with the United States. See Harbert/Lummus Agrifuels Projects v. United States, 142 F.3d 1429, 1434 (Fed. Cir. 1998). The requisite elements include “a mutual intent to contract including an offer, an acceptance, consideration, and facts sufficient to establish that the contract was entered into with an authorized agent of the United States who had ‘actual authority to bind the United States.’” Gonzalez-McCaulley Inv. Group, Inc. v. United States, 93 Fed. Cl. 710, 714 (2010) (quoting Lion Raisins, Inc. v. United States, 54 Fed. Cl. 427, 431 (2002)).

The issue before the court is whether the March 30, 2011 BPA creates a contractual relationship between Crewzers and the Forest Service.

The United States Court of Appeals for the Federal Circuit’s precedent supports a finding that a BPA is not an enforceable contract. See Ridge Runner Forestry v. Veneman, 287 F.3d 1058 (Fed. Cir. 2002); see also Ace-Fed. Reporters, Inc. v. Barram, 226 F.3d 1329 (Fed. Cir. 2000). In Ridge Runner, the plaintiff was a fire protection company that entered into a tender agreement with the Forest Service to provide equipment and trained staff. See 287 F.3d at 1060. The agreement stated, “Award of an Interagency Equipment Rental Agreement does not guarantee there will be a need for the equipment offered nor does it guarantee orders will be placed against the awarded agreements.” Id. at 1060 (citation omitted). The agreement also stated, “Because the equipment needs of the government and availability of contractor’s equipment during an emergency cannot be determined in advance, it is mutually agreed that, upon request of the government, the contractor shall furnish the equipment offered herein to the extent the contractor is willing and able at the time of the order.” Id. (citation omitted). This agreement is nearly identical to the BPA in this case, which states that “the Contractor shall furnish the resources listed herein to the extent the Contractor is willing and able at the time of order.” Pl. Resp. App. at 000085 (BPA § C.3.1).

Ridge Runner “presented a claim for $180,000 to a contracting officer alleging that the Forest[] Service violated an ‘implied duty of good faith and fair dealing,’ because Ridge Runner was ‘systematically excluded for the past several years from providing services to the Government.’” Id. The Department of Agriculture Board of Contract Appeals granted the Government’s motion to dismiss, because no contract was entered into and therefore the Board lacked jurisdiction. Id. at 1061. On appeal, the United States Court of Appeals for the Federal Circuit held that the agreement at issue created two illusory promises. Id. at 1062. First, “[t]he government had the option of obtaining services from Ridge Runner or any other source, regardless of whether that source had signed a tender agreement.” Id. at 1061-62. Second, “[i]f the government came calling, Ridge Runner ‘promised’ to provide the requested equipment only if it was ‘willing and able.’” Id. at 1062. The fact that Ridge Runner did not involve a formal BPA is irrelevant, since that decision rested on the lack of mutual consideration, not the legal import of the specific type of agreement. In sum, our appellate court has instructed that

To be valid and enforceable, a contract must have both consideration to ensure mutuality of obligation . . . and sufficient definiteness so as to “provide a basis for determining the existence of a breach and for giving an appropriate remedy.” Ace–Federal Reporters, Inc. v. Barram, 226 F.3d 1329, 1332 (Fed. Cir. 2000) (internal citations omitted). “To constitute consideration, a performance or a return promise must be bargained for.” RESTATEMENT (SECOND) OF CONTRACTS § 71(1) (1979). And the “promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances[.]” Id. § 77.

Ridge Runner, 287 F.3d at 1061.

In Ace-Federal Reporters, ten contractors were awarded agreements in response to a United States General Services Administration request for proposals. See 226 F.3d at 1330-31. The awardee-contractors agreed to supply comparable items with varying prices at the Government’s request. Id. at 1330. The contractors received the advantage of only having to compete with one to four contractors who were also on the schedule. Id. at 1332. Six of the contractors filed a claim with a contracting officer alleging breach of their contracts, because of unauthorized off-schedule purchases. Id. at 1331. The contracting officer declined to take action, which resulted in an appeal to the General Services Administration (GSA) Board of Contract Appeals. Id. The Board determined a contract did not exist, because the contractors were not guaranteed any business. Id. Following this appeal, the United States Court of Appeals for the Federal Circuit held that a contract did exist. Id. The appellate court reasoned, “[A]s consideration for the contractors’ promises regarding price, availability, delivery, and quantity, the government promised that it would purchase only from the contractors on the schedule, with few exceptions.” Id. at 1332.

Here, the relationship between Crewzers and the Forest Service is different than that between the contractors and the Government in Ace-Federal Reporters. The contractors in Ace-Federal Reporters promised the Government price, availability, delivery, and quantity, akin to a requirements contract. See 226 F.3d at 1332. In contrast, Crewzers only promised the Forest Service that crew transportation buses could be procured at a particular price, but made no promises as to their availability.

The United States Court of Federal Claims also has determined that a BPA does not manifest the necessary mutuality of consideration required for an enforceable contract, and instead is “merely a framework for future contracts [that] only creates a contractual obligation with regard to accepted orders.” Crewzers I, 98 Fed. Cl. at 79 (quoting Zhengxing v. United States, 204 F. App’x 885, 886-87 (Fed. Cir. 2006)). Put another way, “[f]uture terms are spelled out, but performance is not guaranteed.” Crewzers I, 98 Fed. Cl. at 79. In addition, the FAR provides relevant guidance on the treatment of BPAs. FAR 13.303-3(a)(2) requires a statement that expressly limits the Government’s obligation under a BPA “only to the extent of authorized purchases actually made under the BPA.” 48 C.F.R. § 13.303-3(a)(2). FAR 13.303-3(a)(1) further requires a “statement that the supplier shall furnish supplies or services, described in general terms, if and when requested by the contracting officer . . . during a specified period and within a stipulated aggregate amount, if any.” 48 C.F.R. § 13.303-3(a)(1) (emphasis added). In Crewzers I, the United States Court of Federal Claims determined that the FAR’s provision of these mandatory terms and conditions “make[s] it abundantly clear that the BPA carries no guarantee of performance.” Crewzers I, 98 Fed. Cl. at 79. In addition, FAR 13.004 states that “issuance by the Government of an order in response to a supplier’s quotation does not establish a contract. The order is an offer by the Government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when the supplier accepts the offer.” 48 C.F.R. § 13.004. In this case, the BPA contains Crewzers’ quotation and the qualification that the Forest Service may place orders with Crewzers, upon need. While Crewzers is correct that the FAR does not explicitly deny that a BPA is a contract, the aforementioned FAR provisions read together support a finding that a contract is not formed between a contractor and the Government until two conditions are met: an order must be placed under the BPA; and the contractor must accept that order.

The Second Amended Complaint failed to allege the mutuality of obligations necessary to form a binding contract, because even if and to the extent that the Forest Service promised to follow the DPL in the event of an order (Pl. Resp. App. at 000081, 000090 (BPA §§ B, D.6.3.1)), Crewzers did not make a binding promise to the Forest Service. In addition, the BPA states that, “[f]ollowing Agreement award, each host dispatch center will have an established dispatch priority list showing the resources located within their Host Dispatch Zone. The Government intends to dispatch contractor resources based on this priority ranking for other than initial attack.” Pl. Resp. App. at 000090 (BPA § D.6.3.1). In other words, in the event of an incident, the Forest Service intended to follow the DPL, if it decided to order private-party crew carrier buses. Pl. Resp. App. at 00090 (BPA § D.6.3.1). The BPA also states, however, that “due to the sporadic occurrence of Incident activity, the placement of any orders IS NOT GUARANTEED.” Pl. Resp. App. at 000081 (BPA § B). While Crewzers argues that the conditional nature of this promise does not matter (Pl. Resp. at 20), the Forest Service’s obligation to follow the DPLs appears to come into play only when a contract is formed by the placement and acceptance of an individual order.

Regardless of whether this conditional promise is sufficient, as Crewzers insists, the court has determined that Crewzers made no binding promises to the Forest Service. The BPA states, “the Contractor shall furnish the resources listed herein to the extent the Contractor is willing and able at the time of order.” Pl. Resp. App. at 000085 (BPA § C.3.1) (emphasis added). This language is identical to that in the Ridge Runner agreement. The BPA also states, “[i]f the Contractor cannot be reached or is not able to meet the time and date needed, the dispatcher may proceed with contacting the next resource on the dispatch priority list.” Pl. Resp. App. at 000090 (BPA § D.6.5.1). This sentence again emphasizes Crewzers’ flexibility under the BPA. In other words, the BPA effectively states that Crewzers will accept an order only if it wishes to – a classic illusory promise. See Ridge Runner, 287 F.3d at 271 (“[An illusory promise consists of] words in promissory form that promise nothing; they do not purport to put any limitation on the freedom of the alleged promisor, but leave his future action subject to his own future will, just as it would have been had he said no words at all” (quoting Torncello v. United States, 681 F.2d 756, 769 (Ct. Cl. 1982))). A promise that a contractor will perform, only when the contractor is “willing and able” to do so is “a route of complete escape [that] vitiates any other consideration furnished and is incompatible with the existence of a contract.” Torncello, 681 F.2d at 769. Therefore, Crewzers’ BPA did not itself establish a contract with the Forest Service.  (Crewzers Fire Crew Transportation, Inc., No. 11-607C, May 31, 2013)  (pdf)


II.     Blanket Purchase Agreements (BPAs)

Part 13 of the FAR establishes procedures for simplified acquisitions. Pertinent to the present case, section 13.303-1(a) of the FAR defines the BPA as “a simplified method of filling anticipated repetitive needs for supplies or services by establishing ‘charge accounts’ with qualified sources of supply.” FAR § 13.303-1(a). These charge accounts are established as an administrative convenience with multiple vendors “so purchases can thereafter be made without having to issue individual purchase documents each time.” Mid-America Officials Ass’n., 89-3 BCA ¶ 22,231 (1989); see also 2 GOVT CONTRACT AWARDS § 2:16 (Purpose of the BPA “is to reduce administrative costs, improve opportunities for small business concerns, to promote efficiency and economy in contracting, and to avoid undue burdens for agencies and contractors.”)

The blanket purchase agreement is not a contract. Mid-America Officials Ass’n., 89-3 BCA ¶ 22,231 (1989). It is instead a collection of provisions that may mature into a contract between the government and a supplier if and when a purchase order – in this case, a “resource order” -- is entered into by each. See Potomac Computers Unlimited, Inc., 94-1 BCA ¶ 26,304 (1993); Prod. Packaging, 03-2 BCA ¶ 32,388 (2003).

III.     Illusory Contract Argument

Crewzers has cast the entire BPA scheme established by the Forest Service as an unlawful endeavor, insofar as the solicitation contains language of agreement which is both illusory and unenforceable. Am. Compl. ¶¶ 4. According to the plaintiff the procurement itself, therefore, “lacks a rational basis, and is unreasonable or irrational, and thus arbitrary and capricious.” Id. at ¶ 5. Furthermore, complains Crewzers, the unenforceable, illusory promises in the challenged BPAs violate various procurement statutes and regulations because they fail to promote competition, efficiency and economy in contracting, frustrate the contracting officer’s ability to arrive at price reasonableness determinations and result in a breach of the contracting officer’s duty to treat offerors fairly. See id. at ¶¶ 5(c)-(g) (citing Competition in Contracting Act, 41 U.S.C. § 253 (g)(1) and FAR §§ 1.102(b)(3); 1.1.102-2(c)(3) and 13.106-3(a)).

The plaintiff’s pleadings rely heavily on the case Ridge Runnner Forestry v. Veneman, 287 F.3d 1058 (Fed. Cir. 2002). That case involved so-called “tender agreements,” entered into pursuant to a Request for Quotations (RFQ) between the Forest Service and Ridge Runner Forestry, a fire protection company that sought to lease equipment to the Forest Service in the event of a wildfire. Several clauses of the RFQ, incorporated into the agreements, were at issue there: (1) a statement that an award of a tender agreement “does not preclude the Government from using any agency or cooperator or local [Emergency Equipment Rental Agreement] resources;” (2) a statement that the award “does not guarantee there will be a need for the equipment offered nor does it guarantee orders will be placed against awarded agreements;” and (3) a provision which allowed the contractor to decline any agencyrequested equipment rental for any reason. Id. at 1060. With respect to this last clause, “it [was] mutually agreed that, upon request of the government, the contractor shall furnish the equipment offered ... to the extent the contractor is willing and able at the time of order.” Id. (Emphasis supplied by opinion.)

It is important to note that the case is not a bid protest, nor does it involve preaward activity. Instead Ridge Runner attempted to invoke the jurisdiction of the Department of Agriculture Board of Contract Appeals in order to challenge the fact that the vendor had been systematically excluded, not having been called upon pursuant to the tender agreement for four years running. Id. The question presented in that matter was whether there was, in fact, a contract needed to give the Board jurisdiction. The Board found that the tender agreement was not a valid contract. The Court of Appeals agreed, reasoning:

To be valid and enforceable, a contract must have both consideration to ensure mutuality of obligation ... and sufficient definiteness so as to “provide a basis for determining the existence of a breach and for giving an appropriate remedy.” Ace Federal Reporters, Inc. v. Barram, 226 F.3d 1329, 1332 (Fed. Cir. 2000) (internal citations omitted.) “To constitute consideration, a performance or a return promise must be bargained for.” RESTATEMENT (SECOND) OF CONTRACTS § 71 (1) (1979). And the “promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances....” Id. § 71 .

Ridge Runner, 287 F.3d at 1061. As the Court of Appeals observed, “[t]he government had the option of attempting to obtain firefighting services from Ridge Runner or any other source, regardless of whether that source had signed a tender agreement.” Id. Likewise, the agreement “placed no obligation upon Ridge Runner ... If the government came calling, Ridge Runner ‘promised’ to provide the requested equipment only if it was ‘willing and able.’” Id. at 1062. “It is axiomatic,” reasoned the Court, “that a valid contract cannot be based upon the illusory promise of one party, much less illusory promises of both parties.” Id. (citations omitted).

It is well established that a contract is not formed under these circumstances. As the Federal Circuit has held, “a route of complete escape vitiates any other consideration furnished and is incompatible with the existence of a contract.” Torncello v. United States, 681 F.2d 756, 769 (Fed. Cir. 1982). While Crewzers has challenged both the illusory nature of the Forest Service’s obligations and those of the suppliers under the proposed BPA, the plaintiff’s primary criticism of this solicitation has focused on the company’s own “route of complete escape.”

First, Crewzers argues that under FAR 13.303-3(a)(1), awardees of BPAs are required to accept orders placed against the BPAs. Consequently, the “willing and able” language of the solicitation transmutes what is intended to be a binding obligation into an illusory promise. Plaintiff’s Brief in Support of Plaintiff’s Motion for Judgment on the Administrative Record (Pl. Br.) at 29-30. Second, according to the plaintiff, the proffered BPAs are illusory and unenforceable because they “unlawfully reserve for the United States Forest Service Contracting Officer a choice of alternative performances,” including: the right to rely on agency cooperators; the ability to discard the dispatch priority ranking in favor of the “closest forces” concept in cases of “initial attack;” and the right to modify rankings and ordering procedures. See id. at 30-32 (citing Ridge Runner, 287 F.3d at 1061 and AR 15-16).

The plaintiff’s arguments must fail where, as here, the alleged illusory promises are not – and do not purport to be – part of a binding agreement giving the plaintiff exclusive contractual rights. The chosen procurement vehicle is, by definition, not a contract. See Zhengxing v. United States, 71 Fed. Cl. 732, 738, (2006) (Holding there was no factual or legal predicate establishing jurisdiction under the Contract Disputes Act (“CDA”), 41 U.S.C. § 609, because BPA is not a contract), aff’d, 204 Fed. Appx. 885, 2006 WL 3228605 (Fed. Cir. Nov. 8, 2006); Mid-America Officials Ass’n., 89-3 BCA ¶ 22,231 (1989) (“[T]he issuance of a BPA to appellant was not a promise or representation that needs for officiating services would be purchased only from appellant during the term of the BPA.”)

With the Ridge Runner case, Crewzers establishes no more than the fact that nearly identical terms in an earlier iteration of the Forest Service’s agreement were likewise not binding upon the parties entering into them. We note that Ridge Runner, like other cases cited by the parties, does not actually involve a formal BPA, a distinction without a difference for the purposes of this discussion. See Modern Sys. Tech. Corp. v. United States, 24 Cl. Ct. 360 (1991) (“Basic pricing agreements” held not binding on parties), opinion adopted, 979 F.2d 200 (Fed. Cir. 1992); Zhengxing, 71 Fed. Cl. at 738 n.19 (analogizing blanket purchase agreements and basic pricing agreements). In any event, the government embraces the Federal Circuit’s holding that these types of agreements are not meant to bind either party.

We agree. In the typical case, the BPA is “merely a framework for future contracts and only creates a contractual obligation with regard to accepted orders.” Zhengxing v. United States, 204 Fed. Appx. 885, 886-87, 2006 WL 3228605 (Fed. Cir. Nov. 8, 2006) (Emphasis added). We concur with Crewzers’ own assessment that this BPA contains illusory rights and responsibilities. It is meant to do no more. Future terms are spelled out, but performance is not guaranteed. The BPA, therefore, “lacks the mutual intent to form a binding contract.” See id. (citing Modern Sys. Tech. Corp. v. United States, 979 F.2d 200, 202-04 (Fed. Cir. 1992)); see also Cardiometrix, 94-1 BCA ¶ 26269 (1993) (Blanket purchase agreement “lacks an ingredient that is essential for the formation of a contract, namely, mutual consideration.”)

Indeed, the FAR goes so far as to set forth mandatory terms and conditions for a BPA, which make it abundantly clear that the BPA carries no guarantee of performance. Notable among these is the requirement to include “[a] statement that the supplier shall furnish supplies or services, described in general terms, if and when requested by the contracting officer ... during a specified period and within a stipulated aggregate amount, if any. FAR § 13.303-3(a)(1) (Emphasis added). In that same vein, the FAR provides that the BPA must state “that the Government is obligated only to the extent of authorized purchases actually made under the BPA.” Id. at § 13.303-3(a)(2) (Emphasis added).

Given all of these authorities supporting the government’s chosen procurement method, we strained to understand the plaintiff’s objections to the BPA. In its simplest terms, Crewzers now argues that to be a valid BPA under the FAR, the agreement is binding on the party supplying the service, but not upon the government. In making this argument, plaintiff selectively ignores its earlier contrary position that the Forest Service is bound to seek its resources from among BPA-holder resources, and may not reserve the right to use agency cooperators.

The language of the FAR upon which the plaintiff relies for its premise -- “the supplier shall furnish supplies or services, described in general terms, if and when requested by the contracting officer” -- is plucked out of context from a section of the regulation governing the level of detail required in describing the items to be furnished in the event a purchase order is made against the BPA. See FAR 13.303-3(a)(1). Read in light of the entire passage, which sets forth a menu of items and formats to be used in preparing a BPA, this provision contemplates that a purchase order has been entered into by the parties. It is not, as the plaintiff suggests, based on its parsed reading of FAR 13.303-3(a)(1), a clause making acceptance of all purchase orders mandatory on the part of the supplier.

In fact, it is universally understood – among courts, various boards of contract appeals and noted authorities in the field of procurement law – that a BPA obligates neither party until such time as an individual purchase order is issued by the government and accepted by the contractor. See e.g., Potomac Computers, 94-1 BCA ¶ 26,304 (1993) (Recognizing that vendor could refuse to accept call for services); Julian Freeman, 94-3 BCA ¶ 27280 (1994) (“Under a BPA, neither party actually commits itself nor assumes any duty toward the other.”); BPAs vs. IDIQs: An Interesting Choice, 24 NASH & CIBINIC REPORT ¶ 26 (In broader discussion of pros and cons of BPAs commentator notes: “Of course, using this technique means that the contractor is not contractually bound but that is of little concern to an agency when there are multiple contractors capable of performing the work.”)

As this Court has recognized, in the context of a failed attempt to invoke the CDA with a BPA, only accepted orders create contractual obligations. See Zhengxing, 71 Fed. Cl. at 738, n.21 (distinguishing umbrella BPA from individual purchase order “which can give rise to a contract.”); see also FAR § 13.302-3 (a) (“When it is desired to consummate a binding contract between the parties before the contractor undertakes performance, the contracting officer shall require written acceptance of the purchase order by the contractor.”) Accordingly, to the extent Crewzers contends that a BPA is valid only if it imposes a unilateral obligation to perform on the supplier, we reject this plank of the plaintiff’s argument. There is simply no precedent favoring the view that a BPA is a contract which binds one party and not the other. As Ridge Runner, Modern Systems Technology, Zhengxing, and many other decisions before them have held, there is no mutuality of consideration in such a case. See Zhengxing v. United States, 204 Fed. Appx. 885, 886-87, 2006 WL 3228605 (Fed. Cir. Nov. 8, 2006) (citing Modern Sys., 979 F.2d at 202-04). Crewzers has conceded as much.  (Crewzers Fire Crew Transport, Incorporated v. U. S., No. 10-819C, March 18, 2011) (pdf)

U. S. Court of Federal Claims - Listing of Decisions

For the Government For the Protester
Crewzers Fire Crew Transportation, Inc., No. 11-607C, May 31, 2013  (pdf)  
Crewzers Fire Crew Transport, Incorporated v. U. S., No. 10-819C, March 18, 2011 (pdf)  
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