Purchase Order(PO)
A document issued by the government authorizing a vendor to deliver goods or services and establishing the terms of payment.
Overview
A Purchase Order (PO) is a contractual document the government uses to authorize a contractor to perform work and to establish the obligation of funds. For simplified acquisitions and commercial item purchases, the PO serves as the contract. It specifies the items or services, quantities, prices, delivery terms, and payment instructions.
Why It Matters in GovCon
POs are the primary contract vehicle for many small and simplified acquisitions. Understanding PO terms — including payment procedures like Wide Area Workflow (WAWF) for DoD — ensures timely invoicing and payment. POs against BPAs and GSA Schedules are common; tracking PO numbers and funding is essential for contract administration.
Key Details
- Simplified Acquisitions: POs are often used for purchases under the simplified acquisition threshold.
- Commercial Items: FAR Part 12 allows streamlined PO procedures for commercial buys.
- Obligation: The PO obligates government funds when accepted by the contractor.
- Invoicing: Contractors reference the PO number on invoices; DoD uses WAWF for submission.
- Modifications: PO changes require written modification by the issuing authority.
Related Terms
- Simplified Acquisition Procedures (SAP)
- Blanket Purchase Agreement (BPA)
- Wide Area Workflow (WAWF)
- Purchase Card (P-Card)
More Finance Terms
A guarantee submitted with a bid that ensures the bidder will enter into a contract if selected and provide required performance and payment bonds.
The government's internal estimate of what a procurement should cost, used to evaluate the reasonableness of contractor proposals.
The projected cost to finish remaining work on a contract or project based on current status.
Overhead costs that support the overall organization rather than direct contract performance.
Costs that cannot be traced to a single contract but are allocated across projects via indirect rates.
The total cost of owning, operating, maintaining, and disposing of a system or product over its entire useful life.
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