Defense Federal Acquisition Regulation Supplement (DFARS) Part 217, Special Contracting Methods, and related clauses at 252.217

Defense Federal Acquisition Regulation Supplement
Part 217—Special Contracting Methods

SUBPART 217.74--UNDEFINITIZED CONTRACT ACTIONS
(Revised May 12, 2006)
217.7400 Scope.
This subpart prescribes policies and procedures implementing 10 U.S.C. 2326.
217.7401 Definitions.
As used in this subpart—
(a) “Contract action” means an action which results in a contract.
(1) It includes contract modifications for additional supplies or services.
(2) It does not include change orders, administrative changes, funding
modifications, or any other contract modifications that are within the scope and under
the terms of the contract, e.g., engineering change proposals, value engineering change
proposals, and over and above work requests as described in Subpart 217.77.
(b) “Definitization” means the agreement on, or determination of, contract terms,
specifications, and price, which converts the undefinitized contract action to a definitive
contract.
(c) “Qualifying proposal” means a proposal containing sufficient information for the
DoD to do complete and meaningful analyses and audits of the—
(1) Information in the proposal; and
(2) Any other information that the contracting officer has determined DoD
needs to review in connection with the contract.
(d) “Undefinitized contract action” means any contract action for which the contract
terms, specifications, or price are not agreed upon before performance is begun under
the action. Examples are letter contracts, orders under basic ordering agreements, and
provisioned item orders, for which the price has not been agreed upon before
performance has begun.
217.7402 Exceptions.
The following undefinitized contract actions (UCAs) are not subject to this subpart, but
the contracting officer should apply the policy to them (and to changes under the
Changes clause) to the maximum extent practicable—
(a) UCAs for foreign military sales;
(b) Purchases at or below the simplified acquisition threshold;
(c) Special access programs;
(d) Congressionally mandated long-lead procurement contracts.

1998 EDITION

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Defense Federal Acquisition Regulation Supplement
Part 217—Special Contracting Methods

217.7403 Policy.
DoD policy is that undefinitized contract actions shall—
(a) Be used only when—
(1) The negotiation of a definitive contract action is not possible in sufficient
time to meet the Government's requirements; and
(2) The Government's interest demands that the contractor be given a binding
commitment so that contract performance can begin immediately.
(b) Be as complete and definite as practicable under the particular circumstances.
217.7404 Limitations.
217.7404-1 Authorization.
The contracting officer shall obtain approval from the head of the contracting activity
before—
(a) Entering into a UCA. The request for approval must fully explain the need to
begin performance before definitization, including the adverse impact on agency
requirements resulting from delays in beginning performance.
(b) Including requirements for non-urgent spare parts and support equipment in a
UCA. The request should show that inclusion of the non-urgent items is consistent
with good business practices and in the best interest of the United States.
(c) Modifying the scope of a UCA when performance has already begun. The
request should show that the modification is consistent with good business practices
and in the best interests of the United States.
217.7404-2 Price ceiling.
UCAs shall include a not-to-exceed price.
217.7404-3 Definitization schedule.
(a) UCAs shall contain definitization schedules that provide for definitization by the
earlier of—
(1) The date that is 180 days after issuance of the action (this date may be
extended but may not exceed the date that is 180 days after the contractor submits a
qualifying proposal); or
(2) The date on which the amount of funds obligated under the contract action
is equal to more than 50 percent of the not-to-exceed price.
(b) Submission of a qualifying proposal in accordance with the definitization
schedule is a material element of the contract. If the contractor does not submit a
timely qualifying proposal, the contacting officer may suspend or reduce progress
payments under FAR 32.503-6, or take other appropriate action.

1998 EDITION

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Part 217—Special Contracting Methods

217.7404-4 Limitations on obligations.
The Government shall not obligate more than 50 percent of the not-to-exceed price
before definitization. However, if a contractor submits a qualifying proposal before 50
percent of the not-to-exceed price has been obligated by the Government, then the
limitation on obligations before definitization may be increased to no more than 75
percent (see 232.102-70 for coverage on provisional delivery payments).
217.7404-5 Exceptions.
(a) The limitations in 217.7404-2, 217.7404-3, and 217.7404-4 do not apply to UCAs
for the purchase of initial spares.
(b) The head of an agency may waive the limitations in 217.7404-2, 217.7404-3, and
217.7404-4 for UCAs if the head of the agency determines that the waiver is necessary
to support—
(1) A contingency operation; or
(2) A humanitarian or peacekeeping operation.
217.7404-6 Allowable profit.
When the final price of a UCA is negotiated after a substantial portion of the required
performance has been completed, the head of the contracting activity shall ensure the
profit allowed reflects—
(a) Any reduced cost risk to the contractor for costs incurred during contract
performance before negotiation of the final price; and
(b) The contractor's reduced cost risk for costs incurred during performance of the
remainder of the contract.
217.7405 Contract clauses.
(a) Use the clause at FAR 52.216-24, Limitation of Government Liability, in all
UCAs, solicitations associated with UCAs, basic ordering agreements, indefinite
delivery contracts, and any other type of contract providing for the use of UCAs.
(b) Use the clause at 252.217-7027, Contract Definitization, in all UCAs,
solicitations associated with UCAs, basic ordering agreements, indefinite delivery
contracts, and any other type of contract providing for the use of UCAs. Insert the
applicable information in paragraphs (a), (b), and (d) of the clause. If, at the time of
entering into the UCA, the contracting officer knows that the definitive contract action
will meet the criteria of FAR 15.403-1, 15.403-2, or 15.403-3 for not requiring
submission of cost or pricing data, the words “and cost or pricing data” may be deleted
from paragraph (a) of the clause.

1998 EDITION

217.74-3