Please review the following two definitions in the FAR:
Contract means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C.6301, et seq. For discussion of various types of contracts, see part 16.
FAR 2.101
A basic ordering agreement [“BOA”] [please read as “BPA or “Blanket Purchase Agreement” as well] is a “written instrument of understanding…that contains (1) terms and clauses applying to future contracts (orders) between the parties during its term” (2) a description 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 (emphasis added.)
FAR 16.703
The difference is significant. A contract includes definiteness and consideration, while a BPA may be definite, but it does not contain mutuality of consideration (prices and duties of the parties). Lacking that mutuality means that a BOA or a BPA is not a contract.
The U.S Department of Agriculture-Forest Service awarded Bear Mountain Cutters a BPA to obtain Heavy equipment, including a Mulcher/Masticator, Road Grader. On July 31, 2021, Bear Mountain accepted an a “resource order” (order) for a Masticator-Type 2 from the Department of the Interior. But the masticator was destroyed in the fire two weeks later, and Bear Mountain attempted to recover its cost based a clause in the BPA which stated that the government was responsible for loss, damage or destruction resulting from negligence or wrongful acts of government employees while acting within the scope of their employment. Bear Mountain Cutters, Inc. v. Department of Agriculture and Department of the Interior, CBCA 7323, 7918, Sept. 11, 2024.
Initially Bear Mountain submitted its $452,000 claim to the USDA-Forest Service, but it was denied. Subsequently, Bear Mountain submitted a $632,00 claim to the Department of the Interior for the Masticator, which was also denied.
The Civilian Board of Contract Appeals (“CBCA”) considered the appeal of both denials. The appeal of the USDA claim was dismissed by the board because there was no contract between the USDA and Bear Mountain. The Board only has jurisdiction over a contract between an agency and another party. “To be valid and enforceable, a contract must have both consideration to ensure mutuality of obligation and sufficient definiteness to as to provide for determining the existence of a breach and for giving an appropriate remedy.” The Board stated flatly “A BPA is not a contract since it lacks mutuality of consideration, [is essentially] a framework for future contracts which come into being when orders are placed and accepted under it.”
Therefore the Board dismissed the appeal against USDA because the BPA was not a contract, and it lacked jurisdiction to consider the matter.
The Board, however, noted that it did have jurisdiction over the claim made to Interior, because that agency had placed the order pursuant to the BPA. A contract arose when Interior placed an order with Bear Mountain and the contractor accepted it. Bear Mountain’s claim to recover damages under a clause of the BPA was properly before the CBCA. Even though the USDA contracting officer stated it could decide the claim, the Board reviews appeals de novo and stated it wanted the parties to develop the appeal of Interior’s claim denial on the record to permit a resolution on the merits.
Takeaway: The Boards have no jurisdiction over non-contracts, like grants, cooperative agreement, BPA’s, or BOAs—instruments that “look like” contracts but have no consideration. The Boards do have jurisdiction over orders placed pursuant to BPA’s or BOA’s where there is consideration.
For other helpful suggestions on government contracting, visit:
Richard D. Lieberman’s FAR Consulting & Training at https://www.richarddlieberman.com/, and Mistakes in Government Contracting at https://richarddlieberman.wixsite.com/mistakes.
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