FAR 8.406—Ordering activity responsibilities.

Order placement.

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.

Inspection and acceptance.

FAR 8.406-2 explains how inspection and acceptance work for Federal Supply Schedule orders, separating rules for supplies from rules for services. For supplies, it addresses when the consignee inspects at destination, when source inspection by the schedule contracting agency is required or may be requested, how the ordering activity coordinates source inspection, what happens when items have already been inspected at source, and the rule that acceptance is generally conclusive except for latent defects, fraud, or gross mistakes amounting to fraud. For services, it confirms the ordering activity’s right to inspect all services against contract and order requirements and ties that inspection to the order’s quality assurance surveillance plan. In practice, this section is important because it allocates inspection responsibility between the ordering activity, consignee, and schedule contracting agency, and it helps prevent duplicate inspection, improper acceptance, and disputes over whether delivered supplies or services meet requirements.

Remedies for nonconformance.

FAR 8.406-3 explains what an ordering activity may do when a contractor’s delivered supplies or services do not meet the order’s requirements, or when the contractor fails to perform or correct the problem. It ties the remedy process to the contract’s inspection and acceptance clause, as supplemented by the individual order, so the government uses the same acceptance/rejection framework that governs the underlying schedule contract and order terms. The section also addresses two main remedies for more serious nonperformance: terminating the order for cause or modifying the order to set a new delivery date, with consideration obtained as appropriate. In practice, this provision tells contracting personnel how to respond to defective performance under a Federal Supply Schedule or similar ordering context, and it makes clear that termination for cause must follow the procedures in FAR 8.406-4. The section is important because it preserves the government’s ability to enforce order requirements while also allowing a practical path to cure, schedule adjustment, or formal termination when the contractor does not perform.

Termination for cause.

FAR 8.406-4 explains how a Federal Supply Schedule (FSS) ordering activity may terminate an individual order for cause, and how that action interacts with the underlying schedule contract. It covers the ordering activity contracting officer’s authority to terminate an order, the requirement to follow FAR 12.403 procedures, the possibility of assessing excess repurchase costs, and the duty to notify the schedule contracting office when an order is terminated for cause or when fraud is suspected. It also addresses what happens when the contractor claims the failure was excusable, how repurchase must be handled if excess costs are charged, when the ordering activity may withhold funds or set off amounts owed, and what notice must be sent if excess costs cannot be collected. In addition, it distinguishes between terminating an individual order and modifying the schedule contract itself, reserving contract-level termination authority to the schedule contracting officer and barring new orders for items removed from the schedule contract. Finally, it requires reporting of termination-for-cause actions, conversions to termination for convenience, and withdrawals in accordance with FAR 42.1503(h). In practice, this section is important because it defines who has authority to act, how to document and recover costs, and how to avoid overstepping between ordering activity and schedule contracting office roles.

Termination for the Government’s convenience.

FAR 8.406-5 addresses how the Government may end performance under Federal Supply Schedule (FSS) orders and, separately, how the underlying schedule contract itself may be changed to stop offering certain supplies or services. It covers three related topics: the ordering activity contracting officer’s authority to terminate individual orders for convenience, the requirement that such terminations comply with FAR 12.403, the preference for negotiating a no-cost settlement before issuing a convenience termination, and the exclusive authority of the schedule contracting officer to modify the schedule contract to terminate any or all covered supplies or services for the Government’s convenience. In practice, this section draws a clear line between order-level actions and contract-level actions, which matters because different contracting officers control each level and different procedures apply. It also reflects the commercial-item framework used for schedule contracts, meaning terminations should be handled in a streamlined, commercially reasonable way rather than through more formal termination procedures used in other parts of the FAR. For contractors, this section signals that an order may end even if the schedule contract remains in place, and that the Government will usually try to resolve the matter without a termination settlement if possible. For contracting officers, it requires careful coordination to avoid overstepping authority or using the wrong termination process.

Disputes.

FAR 8.406-6 explains how disputes are handled when a contractor performs an order under a Federal Supply Schedule (GSA Schedule) contract. It covers four main topics: disputes about performance of an individual order, disputes about the terms and conditions of the underlying schedule contract, contractor appeal rights after a final decision, and the use of alternative dispute resolution (ADR). The section draws a line between issues the ordering activity contracting officer may decide and issues that must be referred to the schedule contracting officer, which is critical because schedule contracts involve two contracting officers with different authorities. In practice, this rule helps prevent the wrong contracting officer from issuing a decision outside their authority, which could create procedural defects or delay resolution. It also tells contractors where to direct disputes and what appeal forums are available if they receive a final decision. Finally, it encourages ADR to resolve disputes efficiently and avoid formal litigation when possible.

Contractor Performance Evaluation.

FAR 8.406-7 addresses contractor performance evaluations for orders placed under Federal Supply Schedule and similar ordering procedures. It requires ordering activities to prepare performance evaluations at least annually and again when the work under an order is completed, but only for orders that exceed the simplified acquisition threshold. The section ties those evaluations to the governmentwide contractor performance reporting requirements in FAR 42.1502(c), which means the evaluation must be done in the prescribed performance assessment system and format, not informally or ad hoc. In practice, this section ensures that significant order-level performance is documented while the work is still fresh and that the record can be used for future source selections, responsibility determinations, and contractor past performance reviews. It also clarifies that the ordering activity, not the schedule contract holder or another office, is responsible for evaluating performance on the individual order. For contractors, this means order performance can affect future federal business even when the underlying contract is already in place.