BPAs, Part One: An Introduction to Blanket Purchase Agreements
Blanket Purchase Agreements (BPAs) have become a sizzling hot procurement vehicle. While in the not too distant past BPAs were a small-potatoes contract vehicle used for office and stationery supplies, agencies are now using BPAs like never before. Especially when combined with a GSA Schedules, BPAs are becoming the procurement vehicle of choice for agencies that need a readily available menu of various commercial items to quickly order.
A combination of events has led to a resurgence of interest in BPAs. First is the expansion of the small purchase limitation from $25,000 to $100,000, which greatly expanded the kind of products appropriate for placement on a BPA while simultaneously increasing an agency's purchasing power under the BPA. Second is the decline of large Indefinite Delivery Indefinite Quantity (IDIQ) contracts, which used to serve as the premier agency vehicle for office product procurements. Taking too many months to conduct and subject to protest, IDIQs have grown out of favor with agencies.
Last, but by no means least, is the liberalization and expansion of GSA Schedules, especially the easing of the Price Reduction clause and elimination of the Maximum Order Limitation. When used together, Schedules and BPAs have become a singularly strong procurement vehicle.
So what are BPAs? As stated in the Federal Acquisition Regulations, BPAs are simplified contracts allowing agencies to fill repetitive orders for commercial, off-the-shelf goods or commercial services. A BPA in effect establishes a charge account by which the agency can charge its purchases with qualified vendors. Agencies like BPAs because a BPA reduces the need for conducting numerous, individual procurements for the same type goods or services.
BPAs bear many similarities to GSA Schedules, with certain important differences. Unlike GSA Schedules, which allow agencies government-wide to place purchase orders for goods, a BPA must be negotiated on an agency-by-agency basis and generally allows only a limited number of an agency's offices to place orders against it. In addition, while an agency may place an order against a GSA Schedule for an unlimited amount, a purchase order placed against a BPA cannot exceed the small purchase limitation, which is now $100,000.
BPAs can be established when an agency needs to buy a wide variety of commercial items or services that are often purchased, but the exact goods, services, quantities, and delivery dates are not known in advance. An agency may also establish a BPA to provide a particular agency activity or project with a supply of commercial goods or services, or in any case when the issuance of numerous, duplicative purchase orders would be wasteful and unnecessary.
A BPA does not obligate the agency to buy a minimum number or dollar amount of goods or services. It simply provides the agency with a vehicle for the procurement of goods or services as the need arises.
Agencies should establish BPAs with companies that, based on past experience, offer the type goods and services the agency needs at a fair price. Agencies may place multiple BPAs with several vendors for the same type goods or services. This gives the agency a choice when buying the particular goods or services needed.
The BPA must include certain required clauses. In addition to naming the supplier, the term of the agreement and the types of goods or services supplied, the BPA must state the dollar limitation for purchases under the BPA. This dollar limitation can vary with each BPA, but cannot exceed the small dollar amount of $100,000 per order.
In addition, a BPA must include a list of agency personnel who are authorized to issue purchase orders against the BPA. To the extent possible, ordering should be accomplished electronically. For the agency's convenience, this can include agency personnel in a variety of offices at different locations. Also, the BPA must include a requirement that all deliveries be accompanied by a delivery ticket stating the name of the supplier, the BPA number, date of purchase, and other relevant information necessary to identify the order.
Depending on the circumstances, a BPA can state that the vendor will invoice the agency for each delivery separately, or will instead accumulate all delivery orders and invoice the government monthly for goods delivered during the proceeding month. Invoicing should be sent electronically, if at all possible.
The term of a BPA is either a fixed period of time, such as three years, or the total dollar limitation of the BPA, whichever comes first. However, once a vendor establishes a multi-year BPA with an agency, the agency should nevertheless review the BPA annually to insure that its terms and pricing are still competitive. A BPA is completed when its term expires or when the purchases placed under it equal its total dollar limitation. Of course, a new BPA can then be negotiated.
Once a BPA is awarded, an agency must still comply with the applicable small purchase requirements before placing an order against the BPA, which for orders over $2,500 generally requires the agency to solicit three sources before placing an order. Depending on the circumstances, the agency may be required to place the order with a small business or call around to one or two other vendors to insure that the BPA vendor is selling at a fair price. However, an agency can limit its sources to other vendors holding BPAs with the agency for similar products.
BPAs have been reinvented and reinvigorated. No longer the step-child of larger RFPs and IDIQs, BPAs are now an important procurement vehicle in their own right.
Part Two
