In a previous blog, we discussed a decision by the Court of Federal Claims (COFC) in McLeod Group, LLC v. United States, 142 Fed. Cl. 558 (2019), that blanket purchase agreements (BPAs) are not contracts for purposes of the Contract Disputes Act (CDA). In that case, the contractor argued that the Department of Homeland Security (DHS) acted in bad faith when DHS stopped issuing additional task orders under the contractor’s BPA although the BPA expressly provided it was not a contract and did not obligate any funds. The COFC held that BPAs generally are not considered contracts but rather are frameworks for future contracts that come into existence when a task order is placed. Therefore, the COFC dismissed the contractor’s complaint.
Recently, the Court of Appeals for the Federal Circuit affirmed the COFC’s decision in McLeod Group, LLC v. United States, No. 2020-1389 (Dec. 17, 2020). The Federal Circuit reiterated that a contract with the Government requires: (1) mutuality of intent, (2) consideration, (3) an unambiguous offer and acceptance, and (4) actual authority on the part of the Government’s representative to bind the Government in contract. The Federal Circuit stated that BPAs that do not impose any binding obligations on the parties are not contracts. Since the BPA at issue did not require the Government to place task orders against the BPA, it was not a binding contract. The fact that the Government had placed some task orders against the BPA did not make the BPA a binding contract; rather, it was the task orders that were contracts.
Once again, contractors who enter into BPAs with the Government should be cognizant that the BPA may not be a binding contract that requires the Government to place orders against the BPA. Whether the BPA is a binding contract will depend in key part on whether there is any express language in the BPA evidencing an intent to create a contract. Absent such language, it is likely that the BPA will not be considered a contract but rather a document that establishes the terms and conditions of future task orders.