FAR 16.702—Basic agreements.
Plain-English Summary
FAR 16.702 explains what a basic agreement is, when agencies should use one, what it must contain, and how it interacts with later contracts. It covers the definition of a basic agreement, the fact that it is not itself a contract, the circumstances where it is appropriate, the required contents and annual review/update process, the 30-day termination notice rule, and the rule that changes must be made to the agreement itself rather than through an individual contract. It also addresses limits on what a basic agreement may do, including prohibitions on citing funds, obligating the Government, promising future awards, or restricting competition. Finally, it explains how later contracts incorporate the agreement, how missing clauses are handled, and how modifications to existing contracts may incorporate a newer basic agreement. In practice, this section is meant to reduce repetitive negotiation on recurring issues while preserving competition, funding discipline, and the normal contracting rules for each individual contract.
Key Rules
Basic agreement is not a contract
A basic agreement is only a written understanding that sets terms for future contracts; it does not by itself create a binding procurement contract or obligate the Government to buy anything.
Use for recurring negotiations
Agencies should use basic agreements when they expect a substantial number of separate contracts with the same contractor and have experienced recurring negotiation problems. They are available for negotiated fixed-price and cost-reimbursement contracts.
Required clauses must be included
The agreement must contain clauses required by statute, executive order, the FAR, and any agency acquisition regulations that the parties agree should apply to future contracts as applicable.
30-day termination right
Each basic agreement must allow either party to stop its future applicability on 30 days' written notice. This protects both sides from being locked into an outdated or unworkable framework.
Annual review and revision
The agreement must be reviewed every year before its anniversary date and revised as needed to stay consistent with current FAR requirements. Mandatory statutory changes may require revision sooner than the annual review.
Changes only by modifying the agreement
A basic agreement can be changed only by amending the agreement itself, not by changing a later contract that incorporates it. Ending or revising the agreement does not affect earlier contracts already awarded under it.
Use other agencies’ agreements when practical
Contracting officers should try to obtain and use existing basic agreements from other agencies to the maximum practical extent, which promotes consistency and reduces duplicate negotiation effort.
Strict limitations on content and effect
A basic agreement may not cite appropriations, obligate funds, promise future awards or orders, or be used to restrict competition. It must remain a planning and clause-setting tool, not a funding or source-selection commitment.
Each contract still needs its own terms
Every contract that incorporates a basic agreement must still include its own scope of work, price, delivery, and other contract-specific terms. Clauses not covered by the basic agreement must be added as if no basic agreement existed.
Modification rules for existing contracts
If an existing contract is modified for new work, the latest basic agreement should be incorporated for the added work unless the contract or modification already contains all required clauses. If the Government’s interest and contractor agreement support it, the newer basic agreement may be applied to the entire contract.
Responsibilities
Contracting Officer
Determine whether a basic agreement is appropriate based on recurring contracting needs and negotiation issues; ensure the agreement includes all required clauses; review and revise it annually; give or honor 30-day written notice to discontinue future applicability; incorporate the agreement correctly into each contract; add any missing contract-specific clauses; avoid using the agreement to obligate funds or restrict competition; and seek out usable basic agreements from other agencies when practical.
Agency / Contracting Activity
Establish and maintain basic agreements as a management tool for recurring acquisitions; ensure agreements stay current with statutory, executive order, FAR, and agency regulation changes; and support cross-agency use of existing agreements where practical.
Contractor
Negotiate the basic agreement and any amendments; understand that the agreement does not guarantee future awards; comply with the clauses incorporated into later contracts; and provide written notice if it wants to discontinue the agreement’s future applicability.
Government and Contractor (both parties)
Use the basic agreement only as a framework for future contracts, not as a substitute for a contract; modify the agreement itself when changes are needed; and recognize that termination or modification of the agreement does not alter prior contracts already awarded under it.
Practical Implications
Basic agreements can save time when the same legal and administrative issues keep coming up across many contracts, but they are only useful if the parties keep them current and use them correctly.
A common mistake is treating the agreement like a contract or funding document; it is neither, so it cannot obligate money or promise future work.
Another pitfall is failing to update the agreement when the FAR or statute changes, which can leave later contracts missing required clauses or using outdated language.
Contracting officers must still build each individual contract carefully; the basic agreement does not replace the need for a complete scope, price, delivery schedule, and any clauses not already covered.
When modifying an existing contract, users should check whether the latest basic agreement needs to be incorporated for new work and whether the contract already contains all required clauses, because the modification rule is not automatic in every case.
Official Regulatory Text
(a) Description . A basic agreement is a written instrument of understanding, negotiated between an agency or contracting activity and a contractor, that (1) contains contract clauses applying to future contracts between the parties during its term and (2) contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the basic agreement. A basic agreement is not a contract. (b) Application . A basic agreement should be used when a substantial number of separate contracts may be awarded to a contractor during a particular period and significant recurring negotiating problems have been experienced with the contractor. Basic agreements may be used with negotiated fixed-price or cost-reimbursement contracts. (1) Basic agreements shall contain- (i) Clauses required for negotiated contracts by statute, executive order, and this regulation; and (ii) Other clauses prescribed in this regulation or agency acquisition regulations that the parties agree to include in each contract as applicable. (2) Each basic agreement shall provide for discontinuing its future applicability upon 30 days’ written notice by either party. (3) Each basic agreement shall be reviewed annually before the anniversary of its effective date and revised as necessary to conform to the requirements of this regulation. Basic agreements may need to be revised before the annual review due to mandatory statutory requirements. A basic agreement may be changed only by modifying the agreement itself and not by a contract incorporating the agreement. (4) Discontinuing or modifying a basic agreement shall not affect any prior contract incorporating the basic agreement. (5) Contracting officers of one agency should obtain and use existing basic agreements of another agency to the maximum practical extent. (c) Limitations . A basic agreement shall not- (1) Cite appropriations or obligate funds; (2) State or imply any agreement by the Government to place future contracts or orders with the contractor; or (3) Be used in any manner to restrict competition. (d) Contracts incorporating basic agreements. (1) Each contract incorporating a basic agreement shall include a scope of work and price, delivery, and other appropriate terms that apply to the particular contract. The basic agreement shall be incorporated into the contract by specific reference (including reference to each amendment) or by attachment. (2) The contracting officer shall include clauses pertaining to subjects not covered by the basic agreement, but applicable to the contract being negotiated, in the same manner as if there were no basic agreement. (3) If an existing contract is modified to effect new acquisition, the modification shall incorporate the most recent basic agreement, which shall apply only to work added by the modification, except that this action is not mandatory if the contract or modification includes all clauses required by statute, executive order, and this regulation as of the date of the modification. However, if it is in the Government’s interest and the contractor agrees, the modification may incorporate the most recent basic agreement for application to the entire contract as of the date of the modification.