A Purchase Order (PO) (FAR Part 13.302) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller usually forms a one-off contract between the buyer and seller, so no contract exists until the purchase order is accepted. A PO is usually issued on a fixed-price basis. [1,2]
Definition: A Purchase Order (PO) is a document developed and issued by a buyer to a seller indicating terms, types, quantities, and agreed prices for products and/or services.
The PO is an award instrument used with the Request for Quotation (RFQ). The order is an offer by the Government to the supplier to buy certain supplies or services upon specific terms and conditions. The PO falls under the simplified acquisition procedures.
The contracting officer should always require written acceptance of the PO by the contractor when binding a PO between the government and contractor.
Types of Purchase Orders (PO)
- Unilateral: The most common type issued. The Contracting Officer signs a PO and sends it to the Vendor for acceptance. The Government’s offer is accepted when the Vendor delivers, performs, or exhibits an intention to perform.
- Bilateral: Signed by both the Contracting Officer and the Vendor. The Government’s offer is accepted when the Vendor signs the PO, creating a legally binding contract requiring the Vendor to perform per the terms and conditions of the contract. The advantage of a bilateral PO is that it provides legal rights to the Government in the event the Vendor fails to perform.
9 steps in Issuing a Purchase Order (PO)
- Step 1: Preparation of Request for Quotation (RFQ) (Standard Form 18 – Request for Quotation)
- Step 2: Publication of RFQ
- Step 3: Submission of quotations
- Step 4: Evaluation of quotations
- Step 5: Development of an informal competitive range
- Step 6: Discussion/negotiations if necessary
- Step 7: Issue purchase order
- Step 8: Process Debriefing if requested and protests
- Step 9: Contractor accepts by performance or by signing or returning the purchase order
Purchase Orders (PO) Shall Include 
- Any trade and prompt payment discounts that are offered, consistent with the applicable principles at (FAR Part 14.408-3)
- Specify f.o.b. destination for supplies to be delivered within the United States, except Alaska or Hawaii, unless there are valid reasons to the contrary; and
- Provide for inspection as prescribed in FAR Part 46 “Quality Assurance” (see Quality Assurance)
- Contain a determinable date by which delivery of the supplies or performance of the services is required;
- Specify the number of supplies or scope of services ordered;
Purchase Order (PO) Terms and Conditions
Where market research has determined that the requirement is not a commercial item, the Contracting Officer should include those terms and conditions found in FAR 13.302 . Where market research has determined that the requirement is a commercial item, the Contracting Officer should include those terms and conditions found in FAR Part 12 . Unless otherwise directed, clauses appropriate to the PO should be incorporated by reference. Clauses that are required for all other than commercial POs may be found in FAR 13.302-5.
The following clauses may be used in Purchase Orders (PO), as applicable:
- FAR 52.211-17 – Delivery of Excess Quantities. This clause may be incorporated by reference and should be used in all POs for supplies. (POs for commercial items may be modified to include this clause.) This clause provides that if the Contractor delivers a number of supplies in excess of that specified in the order (unless within allowable variation, if any) the Government will keep such excess supplies up to $250 in value without repaying the Contractor. The clause states that quantities in excess of $250 will, at the option of the Government, be returned to the Contractor at the expense of the Contractor or retained and paid for by the Government at the contract price.
- FAR 52.211-5 – Material Requirements. This clause applies when the solicitation/order for supplies requires the use of new material and for any services that may involve the incidental furnishing of parts.
- FAR 52.213-2 – Invoices. This clause is required to be included in POs that authorize advance payments for subscriptions or other charges for newspapers, magazines, periodicals or other publications (i.e., any publication printed, microfilmed, photocopied or magnetically or otherwise recorded for auditory or visual usage).
- When the cost of GFP to be repaired does not exceed the SAT, POs for property repair need not include a Government Property Clause. Government Property Clauses may be used whenever the Contracting Officer considers them appropriate. Refer to FAR 45.106 for applicable Government Property Clauses.
AcqLinks and References:
-  Website: Wikipedia – Purchase Order
-  Website: FAR 13.302 – Purchase Orders
- DD Form 1155 – Purchase Order
- Standard Form 18 – Request for Quotation