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What Is a Purchase Order in Construction?

By Wyatt Cooper · Published · 3 min read

Key takeaways

  • A purchase order (PO) buys goods: materials or equipment delivered to the job, not work installed there.
  • The terms that matter on a job are the delivery date, ship-to address, tax, the approved submittal it must match, and what happens if it is late.
  • A PO becomes a contract when the supplier accepts it, in writing or by shipping.

A purchase order (PO) in construction is a contract to buy materials or equipment from a supplier at stated prices, quantities and delivery terms. Unlike a subcontract, a PO usually covers goods delivered, not work installed on site, so it centers on the delivery date, ship-to address, tax, the approved submittal and what happens if the material arrives late.

What a construction PO says

Purchase order 14: Type A fixtures

Supplier
Northgate Lighting Supply
Item
40 Type A LED troffers, per approved submittal 26 51 00-01
Price
40 × $185.00 = $7,400.00
Sales tax 7%
$518.00
Total
$7,918.00
Deliver by
June 9, to the site, Gate 2
A PO for light fixtures (fictional figures)

Federal small-purchase rules list the basics any PO should carry: the quantity or scope ordered, "a determinable date by which delivery" is required, inspection, and delivery terms (FAR 13.302-1). And an order is an offer: "a contract is established when the supplier accepts the offer," which it may do in writing or "by furnishing the supplies" (FAR 13.004). Get the acceptance in writing when the delivery date matters.

PO vs. subcontract

Federal rules count a PO as a kind of subcontract (FAR 44.101), but on the job they work differently. A subcontract buys installed work, with labor on site, insurance, retainage and progress billing. A PO buys material: usually no labor on site, no retainage, paid on delivery and invoice. Material the GC buys for a sub to install is often bought on a PO during buyout, and material stored before installation can be billed on a pay application.

How it works in Conflo

In Conflo's commitments, purchase orders sit beside subcontracts. A PO carries a delivery date, a tax rate and a ship-to address, and POs are numbered on their own sequence.

The Commitments list in Conflo: subcontracts and purchase orders with company and scope, payment holds, status, original and revised value, approved change orders, billed to date with percent, and retainage held.
The Commitments list in Conflo, with purchase orders beside subcontracts.

The bottom line

A purchase order buys material on stated terms; it is a contract once the supplier accepts it.

Tie every PO to the approved submittal and a delivery date you can hold the supplier to.

See how commitments work

Sources

  1. FAR 13.004, Legal effect of quotations — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
  2. FAR 13.302-1, Purchase orders: general — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
  3. FAR 44.101, Definitions (subcontract) — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.

Questions

Does a PO need retainage?

Usually not. Material suppliers are typically paid in full on delivery and invoice, unless the PO says otherwise.

Is a supplier's quote a contract?

Usually not. Under federal rules a quotation is not an offer: the order is the offer, and the contract forms when the supplier accepts it. Private deals can differ, so put every term that matters in the PO.

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