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Letter Contract – FAR Part 16.603

Letter Contract (FAR Part 16.603)

Letter contracts, also known as Undefinitized Contract Actions (UCA), are a means to authorize a contractor to immediately begin delivering supplies or performing services before the terms and conditions of the contract can be agreed upon. This strategy is used only when negotiating a definitive contract is not possible in sufficient time to meet the requirement, and the Government’s interest demands that the Contractor start immediately.

 

Common Applications

  • Supplies, products, or services used in support of a contingency operation or humanitarian/peacekeeping operation.

Pros

Cons

Provides opportunity to rapidly meet urgent mission requirements Undefined terms and conditions and limited ability to control cost increases risk to the Government
Letter Contract/UCA procedures reduce time to execute for an immediate authority to proceed Reporting requirements increases burden on program office and contracting activity
Initial proposals may not meet government standards resulting in prolonged negotiations increasing risk to definitization schedule
Elevated level of approvals and government oversight and increases burden on program office and contracting activity

Restrictions

  • Requires statement of urgency from requiring organization
  • May be used only after the head of the contracting activity or a designee determines in writing that no other contract is suitable
  • May not commit the government to a definitive contract in excess of the funds available at the time the letter contract is executed;
  • May not be entered into without competition when competition is required by FAR 6
  • May not be amended to satisfy a new requirement unless that requirement is inseparable from the existing letter contract
  • Must be definitized by 180 days or before completion of 40% of work

 

References

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