Q. I would like to know (given the background info) if there should have been a written contract or not, and if a contract is required, then what is the reason for it? An IFB was issued by us in 1999 for the purchase of various types of buses (total quantity 350, but this quantity was not specific to any particular type/size of bus). After receipt of offers, a PO was issued to bidder X for a partial quantity (say 35 out of total of 350). Subsequently, we have processed additional PO's to meet our requirements, total quantity say 180). Our Purchasing staff has not issued a contract (Requirements contract?). Their position is that the PO is sufficient.
A. We would agree that a "Requirements" contract should have been advertised as such and issued if that was the intent of your agency. The BPPM discusses these contract types in Sections 2.4.5.2* - Requirements Contracts, and 2.4.5.3** - Indefinite-quantity Contracts. It is important to note the FTA policy that such contracts contain maximum quantities and not be "open-ended," where no maximum quantity is stated. This open-ended situation has led to serious problems. Orders above the stated maximum in the contract must be processed as "new procurements" and not "change orders" since they are outside the scope of the original competition.
The procedure of issuing individual purchase orders would seem to say there may be no contractual understanding of a maximum quantity that can be ordered under the umbrella of the original competition. We would also be concerned about the prices being paid under each of the individual purchase orders. Was there a basic contract signed with this vendor, based on the original competition, committing the vendor to specific bus prices for a stated period of time? If the prices now being established in these purchase orders are being negotiated as the needs are being defined, we would say that these purchase orders are not competitive since the prices are not established on the basis of the original competition.
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* Section 2.4.5.2 of the BPPM is available on the Internet.
** Section 2.4.5.3 of the BPPM is available on the Internet.
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