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Volume 5, Issue 10
November/December 2011

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Undefinitized Contract Actions (UCA)

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Government Accountability Office

 
To meet urgent needs, the DoD can issue undefinitized contract actions (UCA), which authorize contractors to begin work before reaching a final agreement on contract terms. Such actions are considered to be a risky contract vehicle for the government because contractors lack incentives to control costs during this period. Defense regulations provide that the government determination of contractors’ allowable profit or fee should reflect any reduced cost risk.


A recent report by the Government Accountability Office looked at the DoD’s reporting process and made two recommendations.

DoD has taken several actions since August 2008 to enhance departmental insight into and oversight of UCAs; however, data limitations hinder its full understanding of the extent to which they are used. DoD issued policy that requires centralized, semi-annual reporting of undefinitized actions to gain insight in UCA use, including information on reason for award, obligation amounts at award, and definitization timelines. Over time, reporting requirements have evolved as DoD has taken steps to clarify guidance on the types of contract actions to be reported. DoD has also required components to submit management plans to describe actions taken for improved UCA use. Although these actions have helped enhance insight and oversight of UCA use, not all UCAs are included in the reports. Of the 24 UCAs GAO reviewed that should have been included in the April 2009 semi-annual report, eight actions valued at $439 million were unreported by the local commands to DoD.

For a copy of the entire report, click here.

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