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  • Question

    Can a call be established against a BPA where the exact qty is unknow and the price is subject to change by establishing a not to exceed price and/or qty on the call? Example: Our current price is 1.51 gal. The price could be 1.25 or 1.75 next week depending on market conditions. Could we establish a NTE price of 1.70 on the call for multiple deliveries instead of issueing a call every time a tank needs to be filled?


    Answer

    Additional clarifying information received from the requestor via a phone conversation:
    The activity desires to reduce the amount of calls/orders that are needed to be made each day caused by the requirement of filling hundreds of propane tanks located in in a variety of places around the activity and with varying usage demands.  The current BPA was competed and the agreement was made to 1 vendor with the cheapest price of delivery to a remote location.  Additionally, the current BPA contains terms for Economic Price Adjustment due to expected fluctuation of fuel prices.  The activity is reluctant to establish an auto-fill agreement for a period of time due to concerns with violating the bona fide need rule caused from fulfilling unknown future requirements. 
     
    FAR 13.303 on Blanket Purchase Agreements (BPA) does not expressly prohibit the establishment of an “auto-fill” for a period of time or setting a Not To Exceed (NTE) price for multiple deliveries.  Assuming your Service or Activity regulations do not prohibit these scenarios than FAR 1.102-4(e) may apply “…If a policy or procedure… is not specifically addressed… nor prohibited… the Team should not assume it is prohibited.”
     
    If your activity decides to establish and auto-fill and/or NTE price terms for your BPA, I would recommend keeping the time period relatively short in order to ensure both the pricing can be frequently evaluated to ensure it remains fair and reasonable and to avoid concerns about violating the Bona Fide Need rule when preparing to cross fiscal years.  The definition for Bona Fide Need rule is as follows.
     
    The Bona Fide Need rule (law) requires appropriated funds be used only for goods and services for which a need arises during the period of that appropriation’s availability for obligation.  US Code, Title 31, Section 1502(a)
     
    Additional information on the Bode Fide Need rule can be found on DAU’s ACQuipedia at the following link:  https://dap.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=b2f52b87-8cc1-4639-87af-b8941f72d965
     
    Assuming the activity’s concern on placing frequent calls/orders under the existing BPA places an unreasonable workload on one person, you can consider having the contracting officer designate authorized representatives to place calls/orders as per FAR 13.303-3(a)(4).  This would help alleviate the workload on any one individual and avoid changing the BPA to an auto-fill/NTE scenario if that is deemed not in the best interest of the government.
     
    As always, we encourage you to work with your contracting, financial and legal office for any acquisition as we don't have all the facts or access to the contract files.

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