3. Modifying the scope of a UCA when performance has already started. Your request should show that the modification is consistent with good business practices and is in the best interests of the U.S. h. When should a UCA be Definitized? i. It is mandatory for UCAs to include definitization schedules that provide for definitization by the earlier of: 1. The date that is 180 days after issuance of the action (this date can be extended an additional 180 days when a qualifying proposal is received from the contractor) - or – 2. The date on which the amount of funds obligated under the action is equal to more than 50 percent of the NTE price. ii. Delayed definitization of UCAs transfers additional cost and performance risk to the government , since contractors are normally reimbursed for all allowable costs incurred before definitization. i. Limitation of Government Liability
CON 200 i. The government shall not obligate more than 50 percent of the NTE price before the UCA is definitized. However, if a contractor submits a qualifying proposal before 50 percent of the NTE price has been obligated by the government, then the limitation may be increased to no more than 75 percent. 12. Letter Contracts a. Written preliminary contractual instruments that authorize the contractor to begin immediately manufacturing supplies or performing services prior to the finalization of the contract terms. b. Letter contracts may only be used when the government's needs are so urgent that work must begin immediately and negotiation of a definitive contract in time to meet the need is not possible. However, you must ensure that a letter contract contains as many terms and conditions as feasible under the circumstances. c. Definitizing a Letter Contract i. It is mandatory for each letter contract to have a definitization schedule that includes: 1. Dates for submission of the contractor’s price proposal, required certified cost or pricing data, and data other than certified cost or pricing data, and if required, make-or-buy subcontracting plans. 2. A date for the start of negotiations, and a target date for definitization, which shall be the earliest practicable date for definitization. This schedule provides for definitization of the contract within 180 days after date of the letter contract or before completion of 40% of the work to be done, whichever occurs first; however, in extreme cases, you may authorize an additional period. d. Negotiation of a Letter Contract Definitization i. The contract definitization clause requires the contractor to submit a proposal for negotiation of the contract. ii. As contracting officer, you must develop pre-negotiation objectives before the negotiation of any pricing action. Your objectives should be based upon an analysis of: 1. The offeror’s proposal 2. Field pricing support, if any 3. Audit reports and technical analysis 4. Fact-finding reports 5. Independent government estimates 6. Price histories e. Limitations on the Use of a Letter Contract i. You may use the letter contract only after the head of the contracting activity
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