What is a blanket purchase agreement?

A blanket purchase agreement is defined as a bulk contract for specific items over a set period. This type of agreement is typically used when an organization expects to make repeated purchases of certain goods or services over time but doesn't want to place an individual order for each transaction. Instead, the parties agree on the terms, prices, and quantities in advance, allowing for more efficient procurement and often better pricing due to the bulk nature of the agreements.

Such arrangements provide flexibility and streamline the purchasing process, enabling organizations to ensure a reliable supply while managing budgetary constraints effectively. This approach reduces administrative costs and time associated with processing multiple purchase orders for the same items. A blanket purchase agreement can be particularly beneficial in scenarios where demand is predictable, or suppliers can offer lower prices due to the overarching contract.