FAR 8.406-1—Order placement.
Plain-English Summary
FAR 8.406-1 explains how ordering activities place orders against Federal Supply Schedule (GSA Schedule) contracts. It covers when oral orders are allowed and when they are not, what ordering formats may be used (such as Optional Form 347, an agency form, or an electronic ordering format), and the requirement to place orders directly with the schedule contractor under the contract’s terms and conditions. It also requires the ordering activity to confirm that any applicable statutory and regulatory requirements of the requiring agency have been applied before issuing the order. Finally, it lists the information that must be included in the order, such as shipping and billing addresses, contract number, order number, delivery terms, line-item details, pricing, inspection and acceptance points, and packaging/marking instructions. In practice, this section is about making schedule ordering accurate, compliant, and complete so that both the government and contractor have a clear, enforceable order record.
Key Rules
Oral orders are limited
Ordering activities may place orders orally, but not for supplies or services that do not require a statement of work and exceed the simplified acquisition threshold, services that require a statement of work, or orders with brand-name specifications over $25,000. These exceptions mean higher-risk or more complex orders must be documented in writing.
Use approved ordering formats
Orders may be placed using Optional Form 347, an agency-prescribed form, or an established electronic communications format. The key requirement is that the ordering method be recognized and capable of creating a clear order record.
Order directly from contractor
The ordering activity must place the order directly with the schedule contractor and follow the terms and conditions of the schedule price list. This reinforces that schedule ordering is governed by the contract already in place, not by a separate negotiation process unless otherwise permitted.
Apply agency requirements first
Before placing the order, the ordering activity must ensure that all applicable statutory and regulatory requirements of the requiring agency have been applied. This means the ordering office cannot skip agency-specific compliance steps just because the purchase is being made through a schedule contract.
Include required order data
Orders must contain the detailed information listed in the rule, including shipping and billing addresses, contract number and date, agency order number, FOB point, discount terms, delivery/performance period, item identifiers, line-item structure, quantity, unit price, total price, inspection and acceptance points, and any special instructions.
Describe services and items clearly
For services, the order must include a statement of work when required. For supplies, the description must be brief but complete, and if ordering by model number the order must specify available features and options such as color, finish, and electrical characteristics.
Address logistics and quality terms
The order must state inspection and acceptance points, marking requirements, and preservation, packaging, and packing levels. These details help avoid disputes over delivery condition, acceptance responsibility, and shipment handling.
Responsibilities
Ordering Activity
Place the order in an authorized format, determine whether oral ordering is permitted, ensure all required agency statutory and regulatory requirements are satisfied before award, and include every required data element in the order.
Contracting Officer / Ordering Official
Ensure the order is issued directly to the schedule contractor in accordance with the schedule contract terms and that the order documentation is complete, accurate, and compliant with FAR and agency requirements.
Requiring Agency
Identify and apply any agency-specific statutory or regulatory requirements that must be met before the order is placed, such as internal approvals, funding controls, or policy-based restrictions.
Contractor
Receive and perform orders placed under the schedule contract in accordance with the contract terms and the specific order requirements, including delivery, packaging, marking, and acceptance provisions.
Practical Implications
This section is a documentation and compliance checkpoint: even when buying from a schedule contract, the order must be complete enough to stand on its own and support performance, billing, and acceptance.
A common pitfall is relying on an oral order when the rule requires a written order, especially for SOW-based services or brand-name orders over $25,000.
Another frequent mistake is omitting key order details such as FOB point, inspection/acceptance location, or packaging instructions, which can lead to disputes, delays, or invoice problems.
Ordering offices must not assume the schedule contract alone satisfies all agency requirements; they still need to verify any agency-specific statutory or regulatory steps before issuing the order.
Clear item descriptions matter: if ordering by model number, failing to specify features and options can result in receiving the wrong product or creating ambiguity about what was actually ordered.
Official Regulatory Text
(a) Ordering activities may place orders orally, except for- (1) Supplies and services not requiring a statement of work exceeding the simplified acquisition threshold; (2) Services requiring a statement of work (SOW); and (3) Orders containing brand-name specifications that exceed $25,000. (b) Ordering activities may use Optional Form 347 , an agency-prescribed form, or an established electronic communications format to order supplies or services from schedule contracts. (c) The ordering activity shall place an order directly with the contractor in accordance with the terms and conditions of the price lists (see 8.402 (b)). Prior to placement of the order, the ordering activity shall ensure that the regulatory and statutory requirements of the requiring agency have been applied. (d) Orders shall include the following information in addition to any information required by the schedule contract: (1) Complete shipping and billing addresses. (2) Contract number and date. (3) Agency order number. (4) F.o.b. delivery point; i.e. , origin or destination. (5) Discount terms. (6) Delivery time or period of performance. (7) Special item number or national stock number. (8) Line item or subline item. (9) A statement of work for services, when required, or a brief, complete description of each item (when ordering by model number, features and options such as color, finish, and electrical characteristics, if available, must be specified). (10) Quantity and any variation in quantity. (11) Number of units. (12) Unit price. (13) Total price of order. (14) Points of inspection and acceptance. (15) Other pertinent data; e.g. , delivery instructions or receiving hours and size-of-truck limitation. (16) Marking requirements. (17) Level of preservation, packaging, and packing.