Government Contracts DoD Rule Would Revise Undefinitized Contract Requirements
Wednesday, March 6, 2019

DoD Rule Would Revise Undefinitized Contract Requirements

By Government Contracts Editorial Staff

The Department of Defense is proposing to amend the Defense Federal Acquisition Regulation Supplement to revise requirements for definitizing undefinitized contract actions. The rule implements section 811 of the National Defense Authorization Act for Fiscal Year 2017 (PL 114-328) and section 815 of the NDAA for FY 2018 (PL 115-91). Section 811 modified restrictions on UCAs regarding risk-based profit, time for definitization, and foreign military sales. Section 815 established limitations on unilateral definitizations of UCAs over $50 million. If a UCA is definitized after the end of the 180-day period beginning on the date the contractor submits a qualifying proposal, the head of the agency must ensure profit reflects the contractor's cost risk that existed on the date the contractor submitted the qualifying proposal. The definitization of a UCA may not be extended by more than 90 days beyond the maximum 180-day definitization schedule negotiated in the UCA without a written best interests determination by a specified official.

Contracting Officer Directions. DoD contracting officers may not enter into a UCA for a foreign military sale unless the contract action provides for definitization within 180 days and the CO obtains approval from the head of the contracting activity. The head of the agency may waive this requirement if necessary to support a contingency or humanitarian or peacekeeping operation. COs may not unilaterally definitize a UCA with a value greater than $50 million until: the end of the 180-day period beginning on the date on which the contractor submits a qualifying proposal to definitize the contractual terms, specifications, and price; or the date on which the amount of funds expended under the contractual action is equal to more than 50 percent of the negotiated overall not-to-exceed price for the contractual action. This authority also requires the service acquisition executive for the military department that awarded the contract or the Under Secretary of Defense for Acquisition and Sustainment, if the contract was awarded by a defense agency or other DoD component, to approve the definitization in writing; the CO to provide a copy of the written approval to the contractor; and a period of 30 calendar days to elapse after the written approval is provided to the contractor. Accordingly, the rule would revise DFARS 215.404-71-3, DFARS 217.7401, DFARS 217.7402, DFARS 217.7404, DFARS 217.7404-4, DFARS 217.7404-3, DFARS 217.7404-5, and DFARS 217.7404-6. Comments on the rule, identified by DFARS Case 2018-D008, are due April 16, 2019. For the text of this proposed rule, see ¶70,020.426.

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