United States Government Accountability Office

GAO Report to Congressional Committees

DEFENSE 

CONTRACTING 

Use of Undefinitized 

Contract Actions 

Understated and 

Definitization Time 

Frames Often Not Met

June 2007 

GAO-07-559 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 2007

DEFENSE CONTRACTING 

Use of Undefinitized Contract Actions 

Understated and Definitization Time 

Frames Often Not Met 

Highlights of GAO-07-559, a report to 

congressional committees 

To meet urgent needs, the 

Department of Defense (DOD) can 

issue undefinitized contract actions 

(UCA), which authorize

contractors to begin work before

reaching a final agreement on 

contract terms. The contractor has 

little incentive to control costs 

during this period, creating a 

potential for wasted taxpayer 

dollars. 

Pursuant to the House of

Representatives report on the

National Defense Authorization Act 

for Fiscal Year 2007, we assessed 

(1) the level of insight DOD has 

into its use of UCAs, (2) how and 

when DOD is using UCAs, 

(3) whether DOD is definitizing 

UCAs in a timely fashion, and 

(4) whether contracting officers are 

documenting the basis for 

negotiated profit or fee. GAO 

reviewed 77 randomly-selected

contracts at seven locations and 

interviewed DOD officials. 

What GAO Recommends

GAO recommends that the

Secretary of Defense take actions

to help ensure UCAs are definitized 

on time and to mitigate associated 

risks. GAO also recommends that 

the Administrator of the Office of

Federal Procurement Policy, which 

sets government contracting

requirements, improve the level of

information needed to oversee 

UCAs. In written and oral 

comments, respectively, DOD and 

the Office of Federal Procurement

Policy agreed with the

recommendations. 

DOD faces a potentially large gap in its data and thus does not know the 

extent to which it is using UCAs. DOD’s reported obligations for UCAs 

increased from $5.98 billion in 2001 to $6.53 billion in 2005. However, the 

government’s procurement system does not identify undefinitized task or 

delivery orders or undefinitized contract modifications. In light of DOD’s 

reported increase in its use of task and delivery orders in recent years, the 

data gap could be large. Because DOD decentralizes oversight of its UCAs,

the department would have to manually obtain data from each of its local

commands in order to obtain a complete picture. The local commands GAO 

visited performed oversight of their UCAs to varying degrees. 

DOD is generally using UCAs to rapidly fill urgent needs, as permitted, in a 

variety of circumstances. Local managements’ message to the contracting 

community is to not use a UCA unless absolutely necessary, but this 

message is emphasized differently from one location to another. GAO found

10 instances in the 77 UCAs we reviewed where UCAs could have been 

avoided with better acquisition planning. For example, one UCA for the 

continuation of ongoing services was awarded the day after the previous 

contract expired. 

DOD did not meet the definitization time frame requirement of 180 days after 

award on 60 percent of the 77 UCAs reviewed. The most common reasons 

for the delays were untimely receipt of an adequate proposal from the 

contractor, acquisition workforce shortfalls, and changing requirements. 

GAO also found that DOD tends to obligate the maximum amount of funding 

permitted—up to 50 percent of the not-to-exceed amount—immediately at 

award of UCAs. As a result, contractors may have little incentive to quickly 

submit proposals. In addition, since DOD does not track whether it meets 

the Federal Acquisition Regulation requirement to definitize letter contracts 

(one type of UCA) before 40 percent of the work is complete, GAO was 

unable to assess compliance with this requirement. 

Contracting officers are not documenting, as required, the basis for the profit 

or fee prenegotiation objective and the profit or fee negotiated. As such, it is

unclear whether the costs incurred prior to definitization are considered 

when computing the profit rates or fee amounts. For the 40 fixed-price 

contracts GAO reviewed, profit ranged from 3 to 17 percent, and for the 

37 cost-type contracts in our sample, fees ranged from 4 to 15 percent. 

Generally the rate was applied equally over the entire contract term, 

including the undefinitized period. 

www.gao.gov/cgi-bin/getrpt?GAO-07-559.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Ann CalvaresiBarr at (202) 512-4841 or

calvaresibarra@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 5

DOD Does Not Know the Full Extent of Its UCA Usage 6 

UCAs Used to Quickly Fill Needs in a Variety of Circumstances 10 

DOD is Often Not Meeting Definitization Time Frame 

Requirements 12

Little Insight into Whether Reduced Risk Is Taken into Account 

when Negotiating Profit or Fee 17 

Conclusions 19

Recommendations for Executive Action 19 

Agency Comments and Our Evaluation 20 

Appendix I Scope and Methodology 22 

Appendix II Undefinitized Contract Actions Reviewed 25 

Appendix III Comments from the Department of Defense 30 

Tables 

Table 1: Obligations on Undefinitized Task and Delivery Orders 

during Fiscal Years 2004-2005 at Locations Visited 9 

Table 2: Reasons Cited for Issuance on UCAs Reviewed 11 

Table 3: Elapsed Days before Definitization on UCAs Reviewed 13 

Table 4: Definitization Delays Cited for UCAs Reviewed 15 

Table 5: Range of Negotiated Profit or Fee Rates for UCAs 

Reviewed 18

Figures 

Figure 1: DOD Reported Obligations on Letter Contracts for Fiscal 

Years 2001-2005 7 

Figure 2: DOD Obligations on Task and Delivery Orders for Fiscal 

Years 2001-2005 8 

Figure 3: Average Time Frame for Definitization of UCAs 14 

Page i GAO-07-559 Undefinitized Contract Actions 
Abbreviations 

DFARS Defense Federal Acquisition Regulation Supplement 

DOD Department of Defense 

FAR Federal Acquisition Regulation 

FPDS-NG Federal Procurement Data System—Next Generation 

IG Inspector General 

OFPP Office of Federal Procurement Policy 

UCA Undefinitized Contract Action 

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Page ii GAO-07-559 Undefinitized Contract Actions 
United States Government Accountability Office

Washington, DC 20548 

June 19, 2007 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable Duncan Hunter 

Ranking Member 

Committee on Armed Services 

House of Representatives 

To meet urgent needs, the Department of Defense (DOD) can authorize 

contractors to begin work and incur costs before reaching a final 

agreement on contract terms and conditions, including price. Such 

agreements are called undefinitized contract actions (UCA). The terms and 

conditions of UCAs are generally required to be definitized within 

180 days, before more than 50 percent of the estimated contract price is 

obligated, or before more than 40 percent of the work is completed, 

whichever occurs first.1

 Although UCAs may be necessary to support 

urgent needs, these actions are not a desirable form of contracting. The 

government bears the majority of the cost and risk during the 

undefinitized period. The government risks paying increased costs during 

this period because the contractor has little incentive to control costs, 

creating a potential for wasted taxpayer dollars. Therefore, DOD needs to 

ensure that it is using UCAs only when necessary and that these contract 

actions are then negotiated as quickly as possible. 

The House of Representatives report on the National Defense 

Authorization Act for Fiscal Year 2007 required us to review whether DOD 

is properly using UCAs and negotiating them on time.2

 Accordingly, we 

 1

The 40 percent requirement as set forth in Federal Acquisition Regulation (FAR) 16.603-2

(c) (3) applies to letter contracts, one type of UCA. 

2

H.R. Report No. 109-452, p. 353, May 5, 2006. 

Page 1 GAO-07-559 Undefinitized Contract Actions 
assessed (1) the level of insight DOD has into its use of UCAs, (2) how and 

when DOD is using UCAs, (3) whether DOD is definitizing UCAs in a 

timely fashion, and (4) whether contracting officers are documenting the 

basis for negotiated profit or fee. 

For the purposes of this report, we define UCAs as including letter 

contracts, undefinitized task and delivery orders,3

 and undefinitized 

contract modifications (that is, modifications that significantly expand or 

otherwise change the scope of the work). To determine the level of insight 

DOD has into its use of UCAs, we analyzed information from the DOD 

DD350 procurement database and interviewed senior-level acquisition 

officials. We also met with officials from the Office of Management and 

Budget’s Office of Federal Procurement Policy (OFPP) to discuss the data 

available for oversight of UCAs. OFPP is responsible for collecting, 

developing, and disseminating government procurement data. The most 

significant governmentwide data collection tool is the Federal 

Procurement Data System-Next Generation (FPDS-NG).4

 To identify how 

and when DOD is using UCAs and whether DOD is definitizing these 

actions in a timely manner, we reviewed a randomly selected sample of 

77 UCAs from the six military locations that awarded the majority of 

dollars for letter contracts during fiscal years 2004 and 2005 and one non 

military defense agency that issued several UCAs during that time period. 

The specific locations selected for our review were 

• Air Force: Aeronautical Systems Center and Warner Robins Air 

Logistics Center, 

• Army: Aviation and Missile Command and TACOM Life Cycle 

Management Command, 

• Navy: Naval Air Systems Command and Naval Sea Systems Command, 

and 

• National Geospatial-Intelligence Agency. 

For purposes of this report, we refer to these seven locations as the local

commands.

 3

Task and delivery orders are placed against a preexisting contract for supplies or services

that does not procure or specify a firm quantity (other than a minimum or a maximum 

quantity) and that provides for the issuance of orders for the delivery of supplies or

performance of tasks during the period of the contract. FAR 16.501-1. 

4

Beginning with fiscal year 2007, DOD’s procurement data are fed directly into the FPDSNG; the DD350 database is no longer separately maintained. 

Page 2 GAO-07-559 Undefinitized Contract Actions 
At each location, we reviewed contract files and interviewed officials from 

the local acquisition office as well as the contracting officers responsible 

for the UCAs we reviewed and selected program office officials. We also 

reviewed relevant federal and defense acquisition regulations regarding 

the appropriate use of and definitization requirements for UCAs. In 

addition, we interviewed representatives from four companies who 

entered into UCAs with either military services or the National GeospatialIntelligence Agency. Appendix I provides details on our scope and 

methodology and Appendix II lists the contracts and orders we reviewed. 

We conducted our work from August 2006 through April 2007 in 

accordance with generally accepted government auditing standards. 

DOD faces a potentially large gap in its data and thus does not know the 

extent to which it is using UCAs. DOD’s reported obligations for UCAs 

increased from $5.98 billion in fiscal year 2001 to $6.53 billion in fiscal year 

2005. However, the government’s procurement system does not identify 

undefinitized task or delivery orders or undefinitized contract

modifications. In light of DOD’s reported increase in its use of task and 

delivery orders in recent years, the data gap could be large. For example, 

one location we visited had 91 undefinitized orders with $525 million in 

obligations during fiscal years 2004 and 2005. Given the manner in which 

the data are recorded, these orders would not be identified, at award, as 

UCAs in the procurement system. Because DOD’s oversight of its UCAs is 

decentralized, the department would have to manually obtain data from 

each of its local commands in order to obtain a complete picture. The 

local commands we visited performed oversight of their UCAs to varying

degrees. 

Results in Brief 

DOD is generally using UCAs to rapidly fill urgent needs, as permitted, in a 

variety of circumstances at the locations we visited. The local 

managements’ message to the contracting community is to not use a UCA 

unless absolutely necessary. However, this message seems to have 

resonated to different degrees with the frontline acquisition staff who 

requested and awarded the UCAs we reviewed. The UCAs we reviewed 

ranged from providing supplies or services directly to warfighters to 

procuring long lead items for larger programs.5

 In fact, about half of the 

 5

For purposes of this report, long lead items are defined as those components of a system 

or piece of equipment for which the times to design and fabricate are the longest, and 

therefore, to which an early commitment of funds may be desirable in order to meet the

earliest possible date of system completion. 

Page 3 GAO-07-559 Undefinitized Contract Actions 
77 UCAs we reviewed were for direct or indirect support of ongoing war 

efforts. The remaining UCAs were generally awarded to maintain program 

schedules. In addition, 10 of the UCAs we reviewed were attributable to

inadequate planning. For example, one UCA for the continuation of 

ongoing services was awarded the day after the previous contract expired. 

DOD did not meet the definitization time frame requirement of 180 days 

after award on 60 percent of the UCAs we reviewed. On average, the

military services took an additional 2 months, and the National GeospatialIntelligence Agency took about 31⁄2 extra months to definitize its UCAs. 

Sixteen of the UCAs we reviewed had remained undefinitized for a year or

more. Contracting officers cited many reasons for the delays, but the most 

common were untimely receipt of an adequate proposal from the 

contractor, acquisition workforce shortfalls, and changing requirements. 

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. We also found that DOD 

tends to obligate the maximum amount of funding permitted—up to 

50 percent of the not-to-exceed amount—immediately at award of UCAs. 

As a result, contractors may have little incentive to quickly submit 

proposals, and agencies have little incentive to demand their prompt 

submission, since funds are available to proceed with the work. In 

addition, since DOD does not track whether it meets the Federal 

Acquisition Regulation (FAR) requirement to definitize letter contracts 

before 40 percent of the work is complete, we were unable to assess 

compliance with this requirement. 

Contracting officers are not documenting, as required by federal 

regulations, the basis for the profit or fee prenegotiation objective and the 

profit or fee negotiated. Specifically, they are not generally documenting, 

when applicable, whether profit or fee is adjusted for work performed by 

the contractor at a lower level of risk during the undefinitized period. In 

the absence of such documentation, it is unclear whether the costs 

incurred prior to definitization are considered when computing the profit

rates or fee amounts. For the 40 fixed-price contracts we reviewed, profit 

ranged from 3 to 17 percent, and for the 37 cost-type contracts in our 

sample, fees ranged from 4 to 15 percent. Generally the rate was applied 

equally over the entire contract term, including the undefinitized period. 

This report contains recommendations to the Secretary of Defense and the 

Administrator of the Office of Management and Budget’s Office of Federal

Procurement Policy that are intended to improve DOD’s oversight of its 

use of UCAs, to help ensure UCAs are definitized on time, and to mitigate 

Page 4 GAO-07-559 Undefinitized Contract Actions 
the risks associated with delays in definitization. In written comments on a 

draft of this report, DOD concurred with the recommendations and noted 

actions underway that are directly responsive. Officials from the Office of

Federal Procurement Policy, in oral comments, agreed with the 

recommendation to add a data field in FPDS-NG to identify undefinitized 

orders and contract modifications. DOD’s comments are included in 

appendix III. 

DOD is increasingly relying on contractor services to accomplish its 

missions. In fiscal year 2006, DOD awarded more than $294 billion in 

contracts. Despite this huge investment in buying goods and services, our 

work and the work of the DOD Inspector General (IG) has found that 

DOD’s spending sometimes is inefficient and not managed effectively. Too 

often, requirements are not clearly defined; rigorous price analyses are not 

performed, and contractors’ performance is not sufficiently overseen. In 

fact, we have identified overall DOD contract management as a high-risk 

area for the past several years. 

Background 

When a requirement needs to be met quickly and there is insufficient time 

to use normal contracting vehicles, federal regulations permit the use of a 

UCA. UCAs are binding commitments used when the government needs 

the contractor to start work immediately and there is insufficient time to 

negotiate all of the terms and conditions for a contract. UCAs can be 

entered into via different contract vehicles, such as a letter contract 

(a stand-alone contract), a task or delivery order issued against a preestablished umbrella contract, or a modification to an already established 

contract. 

The FAR and the Defense Federal Acquisition Regulation Supplement 

(DFARS) govern how and when UCAs can be used. The regulations also 

establish requirements as to how quickly UCAs must be definitized. 

Although each regulation contains two criteria, they are not the same. The 

FAR states that a letter contract needs to be definitized within 180 days 

after the award date or before 40 percent of the work is complete, 

whichever occurs first. While the DFARS includes the 180-day time frame, 

it addresses all UCAs (including undefinitized task and delivery orders and 

contract modifications) and adds a requirement to definitize before more 

than 50 percent of funds are obligated. It does not mention the 40 percent

of work completed. Under FAR and DFARS respectively, a waiver of the 

180-day requirement can be granted for extreme circumstances or when 

the agency is supporting a contingency or peacekeeping operation. The 

definitization time frame can also be extended an additional 180 days 

Page 5 GAO-07-559 Undefinitized Contract Actions 
when a qualifying proposal is received from the contractor. The contractor

does not receive profit or fee during the undefinitized period, but can 

recoup it once the contract is definitized. 

Under UCAs, the government risks paying unnecessary costs. For 

example, in a September 2006 report on contracts in support of Iraq 

reconstruction, we found that the timeliness of definitization can affect the 

government’s costs.6

 We reported that DOD contracting officials were 

more likely to adhere to the Defense Contract Audit Agency’s advice

regarding the disposition of questioned and unsupported costs when 

negotiations were timely and occurred before contractors had incurred 

substantial costs under UCAs. On the other hand, contracting officials 

were less likely to remove questioned costs from a contract proposal when 

the contractor had already incurred these costs during the undefinitized 

period. Similarly, the DOD IG found that untimely definitization of 

contracts transfers additional cost and performance risk from the 

contractors to the government.7

Contractors should bear an equitable share of contract cost risk and 

receive compensation for bearing additional risk based on the degree of 

risk assumed. Costs that have already been incurred on an unpriced 

action, such as a letter contract, have virtually no cost risk associated with

them. As such, when negotiating profit with the contractor, the 

government may attribute a zero risk factor to the undefinitized period.8

DOD faces a potentially large gap in its data and thus does not know the 

extent to which it is using UCAs. The federal procurement data system is 

only able to identify UCAs that are awarded via letter contracts. 

Undefinitized task or delivery orders, as well as contract modifications, 

are not identified. DOD also lacks high-level oversight of its UCA activity 

since UCA monitoring has been delegated to the local commands, with 

upward reporting no longer required. At the local commands we visited, 

DOD Does Not Know 

the Full Extent of Its 

UCA Usage 

 6

GAO, Iraq Contract Costs: DOD Consideration of Defense Contract Audit Agency’s

Findings, GAO-06-1132 (Washington, D.C.: Sept. 25, 2006). 

7

Department of Defense, Office of the Inspector General, Audit Report: Undefinitized 

Contract Actions. Report Number D-2004-112, Arlington, Virginia: Aug. 30, 2004. 

8

In addition to contract cost risk, other factors are also considered when determining 

profit, including the contractor’s effort, use of federal socioeconomic programs, capital 

investments, cost control and other past accomplishments, and independent development.

Page 6 GAO-07-559 Undefinitized Contract Actions 
monitoring of UCAs varied in both detail of information and frequency of 

review. 

Data on UCAs Are

Incomplete 

DOD understates its UCA usage due to a potentially significant gap in data. 

Because the government’s federal procurement data system—managed by

the Office of Federal Procurement Policy—only identifies letter contracts 

as undefinitized at award and does not identify undefinitized task or 

delivery orders or contract modifications, DOD does not know the extent 

of its UCA activity.9

As figure 1 shows, DOD’s reported obligations for letter contracts have

increased from $5.98 billion in fiscal year 2001 to $6.53 billion in fiscal year 

2005. These obligations for letter contracts as a percentage of DOD’s total 

obligations remained 4 percent or less during this time period. 

Figure 1: DOD Reported Obligations on Letter Contracts for Fiscal Years 2001-2005

0

1

2

3

4

5

6

7

2001 2002 2003 2004 2005

Dollars in billions

Source: GAO analysis of DD350 data.

Fiscal year

5.98

6.66

5.73

6.49 6.53

 9

This same issue also pertains to other federal agencies. However, we are limiting our 

discussion to DOD because that agency is the focus of this report. 

Page 7 GAO-07-559 Undefinitized Contract Actions 
At the same time, DOD’s task and delivery order obligations have 

increased significantly, as shown in figure 2. 

Figure 2: DOD Obligations on Task and Delivery Orders for Fiscal Years 2001-2005 

0

10

20

30

40

50

60

70

80

90

100

2001 2002 2003 2004 2005

Dollars in billions

Source: GAO analysis of DD350 data.

Fiscal year

32.9

39.9

58.8

71.2

91.5

A DOD senior acquisition official stated that if DOD wanted to know the 

amount obligated under undefinitized task and delivery orders, it would 

have to ask for the information from all of the local commands. According 

to information maintained at the local commands we visited, most have 

issued some undefinitized task or delivery orders. As table 1 illustrates, 

one command obligated over $500 million in UCA orders during the 2-year 

period we reviewed. 

Page 8 GAO-07-559 Undefinitized Contract Actions 
Table 1: Obligations on Undefinitized Task and Delivery Orders during Fiscal Years

2004-2005 at Locations Visited

Location 

Obligations

(dollars in millions)

Number of 

actions

Aeronautical Systems Center $524.7 91

Aviation and Missile Command 81.0 12

Naval Air Systems Command 8.0 5

Naval Sea Systems Command 49.3 1

Warner Robins Air Logistics Center 14.9 2

Total $677.9 111

Source: GAO analysis of DOD data. 

Note: The Army’s TACOM Life Cycle Management Command reported no UCA orders during this 

period. The National Geospatial-Intelligence Agency had undefinitized orders during this period but 

does not track this information for its DOD contracts. 

DOD Lacks Centralized 

Oversight of UCAs 

UCA oversight takes place at local commands, without any centralized 

reporting at the DOD headquarters or military services levels. Although 

UCA oversight was centralized in the past, a senior DOD acquisition 

official told us that DOD does not believe that UCA usage is a significant 

concern, given that letter contracts have represented no more than 4

percent of DOD’s total obligations over the past several years. As such, 

DOD relies on its local commands to oversee the use of UCAs and inform 

upper management if any issues arise. 

The Air Force is the only military service that has a reporting requirement 

for UCA activity. A June 2002 policy requires commands to report to the 

headquarters acquisition office on UCAs that have remained undefinitized 

for more than 1 year. However, the acquisition office has not received any

reports on delinquent UCAs, despite the fact that we found 9 UCAs that 

had remained undefinitized for over 1 year at the two Air Force commands 

we visited. An official from one of the commands told us it reported one of

its delinquent UCAs, but, according to an Air Force headquarters 

acquisition official, it was never received. Since the reporting of delinquent 

UCAs is by a manual self-reporting system, it is possible that other 

delinquent UCAs have gone unreported. 

The local commands we visited performed oversight of their UCA usage to 

varying degrees. All of the military locations had some sort of reporting of

UCA activity to the local acquisition management on a regular basis, 

ranging from monthly to quarterly reporting. The local commands also 

Page 9 GAO-07-559 Undefinitized Contract Actions 
varied in whether all UCAs were tracked versus only those that remain 

undefinitized after the 180-day time frame. We found that the National 

Geospatial-Intelligence Agency was not tracking or monitoring its DOD 

UCAs,10 even though its acquisition regulation requires a monthly report on

UCA activity.11 After we raised this issue, National Geospatial-Intelligence 

Agency officials stated that they will begin monitoring their UCA activity. 

DOD is using UCAs to rapidly fill needs in a variety of circumstances, 

many of which are directly or indirectly related to the war in Iraq. The 

message from management at the locations we visited is to limit the use of 

UCAs. However, this message seems to have resonated to different 

degrees with the frontline acquisition staff who requested and awarded the 

UCAs we reviewed. In some instances, inadequate acquisition planning 

drove the need for the UCA. 

The UCAs we reviewed were for a range of goods and services—from 

providing immediate support to the warfighter in theater to procuring long 

lead items to keep weapon system program schedules on time. The 

military services’ commands awarded about half of the UCAs we reviewed 

for support of war efforts and one third to meet schedules on production 

contracts. In one instance, a UCA was awarded to immediately provide 

body armor on combat vehicles already in use in operations in the Middle 

East. In another, a UCA was awarded to obtain a jamming system that was 

needed to avoid grounding F-15 aircraft. The National GeospatialIntelligence Agency awarded over half of the UCAs we reviewed for 

immediate intelligence needs and about half to avoid disruptions of 

services it was receiving under expiring contracts.

UCAs Used to Quickly 

Fill Needs in a Variety 

of Circumstances 

UCAs Are Awarded for a 

Variety of Goods and 

Services 

Table 2 provides a summary of the reasons presented by the contract files 

and discussed with the contracting officers specifically for the 77 UCAs we 

reviewed. 

 10The National Geospatial-Intelligence Agency also has authority to contract under the 

Central Intelligence Agency’s procurement authority; our review included the agency’s

DOD activity only. 

11National Geospatial-Intelligence Agency Instruction for Acquisition Regulation 

Implementation 5X217.7403-91. 

Page 10 GAO-07-559 Undefinitized Contract Actions 
Table 2: Reasons Cited for Issuance on UCAs Reviewed

Reasons for issuance of UCA 

Number of 

instances

Maintaining program schedules 28

Direct support of war efforts 22

Indirect support of war efforts (e.g. replacing depleted spare parts) 16

Timing of funding 11

Inadequate acquisition planning 10

Other 12

Source: GAO analysis of DOD data. 

Note: We reviewed 77 UCAs. However, multiple reasons were cited for the same action. 

“Other” reasons include actions to avoid costs for future upgrades or changes required due to factors 

external to the program office. 

Poor acquisition planning is not an appropriate reason to award a UCA. 

However, for 10 of the UCAs we reviewed, the government may have been

able to prevent the use of a UCA with better planning. These included, for 

example, 4 UCAs issued to procure long lead items that could have been 

contracted for earlier. The requirement for long lead items is typically

established early in a program and is normally provided advanced funding 

in the annual budget process, which should provide sufficient time to 

acquire the items through normal acquisition procedures. Other 

inadequate planning situations included 4 UCAs—1 at the Naval Sea 

Systems Command and 3 at the National Geospatial-Intelligence Agency—

that we believe could have been prevented by the program office. In each 

instance, the requirement was known in a significant amount of time 

before the UCA was issued. These situations ranged from late issuance of 

the request for proposals (which had been planned earlier) to awards that 

were issued quickly to avoid disruptions in services (which could have 

been anticipated). For example, one National Geospatial-Intelligence 

Agency UCA for the continuation of ongoing services was awarded the day

after the services from the prior contract ended. The agency should have 

been able to reasonably estimate the requirement and prices in advance 

based on the terms and work of the ongoing contract, which were already 

known. The remaining three inadequate planning situations were due to 

circumstances that were beyond the control of the program office. For 

example, a Navy UCA was issued because the senior acquisition executive, 

external to the program office, delayed the approval of the program’s 

acquisition plan. Furthermore, one UCA added requirements that 

expanded the work beyond what was originally planned. Specifically, the 

National Geospatial-Intelligence Agency awarded a UCA to quickly obtain 

Page 11 GAO-07-559 Undefinitized Contract Actions 
aerial data from the regions affected by hurricanes, but subsequently 

augmented it to establish a permanent facility that had been planned for 

some time. Several contracting officers across DOD expressed concern 

that program office staff need training on the appropriate use of UCAs 

because they do not always seem to be aware of the risks that these 

contract actions pose to the government. 

The “tone at the top” provided by the local commands we visited is to not 

use UCAs unless absolutely necessary. However, this message is 

emphasized differently from one location to another and has only recently 

come about in some locations. For example, an April 2000 Naval Air 

Systems Command memorandum says that the use of UCAs is to be kept

to the “absolute minimum” and that they should not be used if the 

requirements are not fully defined. On the other hand, the National 

Geospatial-Intelligence Agency allowed its contracting officers to use 

UCAs without the need for higher-level approval until a May 2006

memorandum elevated the approval authority to the senior procurement 

executive. 

Representatives from the four companies we spoke with use UCAs with 

DOD to different degrees—ranging from considering UCAs to be a “normal 

part of business” to rarely using UCAs in recent years. One company said 

that its UCAs are mostly used for short duration work needed to maintain

critical schedules in the development or production processes of other 

contracts. Another company recently entered into several indefinite 

delivery/indefinite quantity contracts with the government so that UCAs 

could be avoided in that area of work. 

DOD did not meet the definitization time frame requirement of 180 days 

after award for over half the UCAs we reviewed. This situation places the

government at risk of paying increased costs, thus potentially wasting 

taxpayers’ money. On average, the UCAs we reviewed were definitized 

more than 2 months past the required period, with 16 remaining 

undefinitized for a year or more. While DOD regulations allow up to half of 

the funding to be provided before definitization, we found that DOD tends 

to obligate this maximum amount of funding immediately at award—a 

practice that could provide a disincentive for the timely definitization of 

the UCA. In addition, DOD does not monitor its compliance with the FAR 

requirement to definitize letter contracts when 40 percent of the work is 

complete. 

Local Command Policies 

Generally Focus on 

Limiting UCAs 

DOD is Often Not 

Meeting Definitization 

Time Frame 

Requirements 

Page 12 GAO-07-559 Undefinitized Contract Actions 
Sixty percent of the UCAs we reviewed—46 of 77—were not definitized 

within the 180-day time frame required by FAR and DFARS. Table 3 shows 

the number of days elapsed before the UCAs were definitized. 

Most UCAs Were Not 

Definitized within 

Required Time Frames 

Table 3: Elapsed Days before Definitization on UCAs Reviewed 

Days until definitized

0-180 181-365 366-500 Over 500 Total

Air Force 12 7 3 2 24

Army 10 9 3 1 23

Navy 7 11 5 0 23

National GeospatialIntelligence Agency 2 3 2 0 7

Total 31 30 13 3 77

Source: GAO analysis of DOD data. 

We found 16 UCAs that took more than a year to definitize, with the 

longest taking over 600 days. Each location we visited had at least 1 UCA 

in effect for over a year. In addition, we found no discernable relationship 

between the dollar value or contract type of the UCAs and the length of 

time it took to definitize. Approximately the same proportion of small and 

large dollar value UCAs were definitized in less than 180 days as were 

definitized in more than 180 days. Likewise, the final contract type did not 

appear to influence the timeliness of definitization. Approximately the 

same proportion of UCAs with final contract types of fixed-price and costtype were definitized in less than 180 days as were definitized in more than 

180 days. 

We also identified a number of UCAs that met provisions that allow an 

extension or waiver of the 180-day definitization requirement. FAR and 

DFARS allow an additional 180-day extension of the definitization time 

frame from the date a qualifying proposal (one that is complete and 

auditable) is received from the contractor.12 Our review showed that 

definitization occurred during this extended time frame in only 7 of the 

36 cases. Two UCAs were permitted waivers of the 180-day requirement 

since they were in support of contingency operations, pursuant to a 

 12A “qualifying proposal” means a proposal containing sufficient information for DOD to do

complete and meaningful analyses and audits of the information in the proposal and any

other information that the contracting officer has determined DOD needs to review in 

connection with the contract. DFARS 217.7401(c). 

Page 13 GAO-07-559 Undefinitized Contract Actions 
September 2003 Air Force memorandum waiving the time frame for 

actions related to Operation Iraqi Freedom. 

Figure 3 illustrates the average time frames and the range of days that 

lapsed before definitization. 

Figure 3: Average Time Frame for Definitization of UCAs 

0

Average time frame for military sites:

245 days (8 months)

Average time frame for

National Geospatial-Intelligence Agency:

284 days (9.5 months)

Number of days for military sites ranged from 22 to 606

Number of days for 

National Geospatial-Intelligence Agency

ranged from 155 to 426

180-DAY

REQUIREMENT

630

Source: DOD (data); GAO (analysis and presentation).

Note: The average time frame includes 9 UCAs that took more than 180 days to definitize but were 

provided extensions due to receipt of a qualifying proposal or were authorized waivers when the 

requirement was for contingency operations. 

Delays in Definitization 

Occur for a Variety of 

Reasons 

Contracting officials provided more than a dozen reasons for not 

definitizing UCAs within the original 180-day time frame. Based on our 

review of the contract files and discussions with contracting and program 

officials, the most common reasons for the delays were (1) delays in 

obtaining a qualifying proposal from the contractor, (2) acquisition 

workforce shortages that led to overly heavy workloads, and 

(3) complexity of requirements at award of the UCA or changing 

requirements after award. In many cases, multiple reasons contributed to 

the definitization delay. Some of the longest delayed definitizations 

occurred because of a combination of the three reasons stated above. 

Page 14 GAO-07-559 Undefinitized Contract Actions 
Table 4 provides a summary of the number of instances each reason was 

provided as an explanation of the delay. 

Table 4: Definitization Delays Cited for UCAs Reviewed 

Reasons for delays Number of instances

Untimely receipt of qualifying proposal 23

Government acquisition workforce shortages/workloads 11

Changing or complex requirements 10

Changes in funding availability 6

Contracting officer’s inadequate performance 4

Required audits 4

Protracted negotiations 3

Hurricanes 3

Other 13

Source: GAO analysis of DOD data. 

Note: “Other” reasons include data rights issues, waiting for program milestone decisions, and delays 

in obtaining certified cost and pricing data. 

Contracting officers stated that delays in obtaining a qualifying proposal 

were sometimes caused by the program office’s changing requirements. 

Many contracting officials stated the government’s requirement was 

inadequately described when the UCA was awarded or was subsequently 

changed after award once the requirement was better understood. 

Contractor representatives and contracting officers noted that it is difficult

for a contractor to timely submit an adequate proposal when the 

government is unsure about the specifications of the product or service it 

requires. Officials at two companies noted that they attempt to submit 

qualifying proposals on time, but must redo them—sometimes multiple 

times—to reflect the government’s revised requirements. 

In addition to timeliness of proposals and changing requirements, 

shortfalls in the government’s acquisition workforce were another key 

reason for definitization delays. This issue was manifest in different ways, 

including inadequate numbers of contracting officials, the heavy workload

of the Defense Contract Audit Agency, which is frequently called upon to 

perform audits of the proposal’s pricing structure, and, in four cases, 

contracting officials who did not perform their duties to definitize the 

UCAs. Some contracting officers commented that UCAs require twice the 

work that a normal contract award does, because in essence they go 

through the contracting process twice—once for the undefinitized period 

Page 15 GAO-07-559 Undefinitized Contract Actions 
and once for the definitized period. Problems with acquisition staff or 

workloads at the commands resulted, in some instances, in a UCA 

remaining undefinitized until someone turned attention to it. Some 

contracting officers told us that their focus is on getting the UCA awarded; 

after that, they often must turn to other pressing awards so that following 

up on definitizations becomes less of a priority. We also found one 

situation where a UCA simply fell through the cracks because it dropped 

off the local reporting system due to a computer error. In one case, the

contracting officer awarded a UCA but took another job before it was 

definitized, and the contracting officer who inherited it was not aware for 

some time that it had not been definitized; thus, no one acted on it for over 

a year. 

UCAs Are Usually 

Awarded with Maximum 

Obligations Allowed 

Most of the UCAs we reviewed were awarded with the maximum 

obligations allowed. Specifically, 60 of the 77 UCAs—78 percent—were 

obligated with approximately 50 percent or more of the not-to-exceed 

price at award. As a result, contractors may have less incentive to hasten 

the submission of qualifying proposals and agencies have little incentive to

demand their prompt submission, since funds are available to proceed 

with the work, leading to a protracted negotiation process. One 

contracting officer obligated a smaller percentage initially, but as time 

went by and various issues arose that slowed definitization, he raised the 

obligated amount little by little until it reached 50 percent. In hindsight, he

said it would have been easier to just obligate the 50 percent at the 

beginning. Company officials said that the minimum amount needed to

begin work under a UCA depends on the circumstances of the work. 

Officials from all four companies told us they usually receive 50 percent of 

the not-to-exceed price at award. 

While we found some evidence of monitoring the percentage of funds 

obligated, in accordance with the DFARS requirement to definitize UCAs 

before 50 percent of the funding is obligated, none of the commands we 

visited act proactively to ensure the obligations do not exceed this 

maximum amount. As a result, DOD is at risk of increasing the potential

that it is paying additional unnecessary costs during the undefinitized 

period. The monitoring that does occur, at three local commands we 

visited, is not effective in ensuring compliance with the requirement 

because no alerts are generated if a UCA goes beyond the maximum 

obligations before definitization. An official at one command that does not 

monitor this requirement stated that the command does not do so because

it is the responsibility of the contracting officer to ensure it is met. 

Page 16 GAO-07-559 Undefinitized Contract Actions 
DOD is not monitoring compliance with the FAR requirement to definitize 

letter contacts when 40 percent of the work is complete. None of the local 

commands we visited had procedures in place to track this provision. 

Officials at two commands were not familiar with the requirement. As 

such, we were unable to assess whether DOD is in compliance with this 

requirement. Many contracting officers stated that the amount of work 

completed before definitization could not readily be determined because 

under a UCA there is no established baseline against which to measure the 

percentage of work completed. Policy officials at several locations we 

visited also stated that the FAR requirement would be difficult to 

implement. Based on our findings, a DFARS case was initiated in April 

2007 to clarify defense acquisition regulations. 

Contracting officers are not usually documenting, when applicable, 

whether profit or fee is adjusted for work performed by the contractor at a 

lower level of risk during the undefinitized period. All UCAs are essentially 

cost-reimbursement contracts until definitized, as contractors are 

reimbursed for all incurred costs that are reasonable, allocable, and 

allowable during the undefinitized period. This contract type places the 

greatest cost risk on the government. When the UCA is definitized, the 

ultimate contract type is determined. Our sample included a variety of 

final contract types, including firm-fixed-price, cost-plus-award-fee, costplus-incentive-fee, and cost-plus-fixed-fee. Each contract type includes 

either profit (fixed-price contracts) or fee (cost-type contracts) for the 

contractor. During the undefinitized period, however, profit or fee is not 

paid. The profit rate or fee is derived at definitization and then applied 

across the entire period of performance, including the undefinitized 

period. 

Requirement to Definitize 

Before 40 Percent of Work 

Is Completed Is Not 

Tracked 

Little Insight into 

Whether Reduced 

Risk Is Taken into 

Account when 

Negotiating Profit or 

Fee 

When calculating the negotiating position on profit or fee for a UCA, the 

FAR and DFARS require contracting officers to assess the relative risk 

borne by the contractor versus the government. The amount of profit or 

fee available to the contractor is usually determined via a structured 

calculation that is a function of several different factors, such as the 

complexity of the work, resources required to perform, independent 

efforts by the contractor to bring about improved performance, and 

contract type. Specifically, the DFARS states that when determining a 

profit or fee position during negotiations to definitize a UCA, contracting 

officers must consider any reduced risk on the portion of the contract 

performed before definitization and any reduced risk on the remaining 

portion that will be performed after definitization. For example, the 

DFARS states that 

Page 17 GAO-07-559 Undefinitized Contract Actions 
“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.”

13

When costs have been incurred prior to definitization, contracting officers 

are to generally regard the contract type risk to be in the low end of the 

designated range. If a substantial portion of the costs have been incurred 

prior to definitization, the contracting officer may assign a value as low as

0 percent, regardless of contract type.14

Table 5 shows the range of profit and fee rates negotiated at definitization

for the UCAs we reviewed. We did not assess the reasonableness of the 

profit or fee percentages determined by the contracting officers. 

Table 5: Range of Negotiated Profit or Fee Rates for UCAs Reviewed

Profit or fee percentage

Fixed-price Cost-type

Low High Low High

Air Force 3.0 15.0 5.2 14.5

Army 6.0 17.2 9.0 15.0

Navy 7.9 13.9 7.0 15.0

National Geospatial-Intelligence Agency none none 4.0 15.0

Source: GAO analysis of DOD data. 

We found that these adjustments to profit or fee were usually not 

documented in the price negotiation memorandum, a contract document 

that sets forth the results of the negotiations and contains the contracting 

officer’s determination that the negotiated price is fair and reasonable. 

Specifically, the memorandums for only 14 of the 77 UCAs we reviewed 

discussed how the negotiated profit or fee was affected by the UCA. As a 

result, for the majority of the UCAs we reviewed, no determination can be

made whether the costs incurred during the undefinitized period were 

considered when the allowable profit or fee was determined. Similarly, in 

 13DFARS 217.7404-6. 

14DFARS 215.404-71-3(d)(2). 

Page 18 GAO-07-559 Undefinitized Contract Actions 
a 2004 report, the DOD IG found that contract records did not contain 

evidence that allowable profit factors, such as the reduced cost risk, were 

considered in the final profit rate awarded to the contractor. It was also 

not evident that already incurred costs were taken into account when 

determining profit.15

The majority of the contracting officers responsible for the UCAs we 

reviewed acknowledged that they are required to document how the shift 

in risk associated with the undefinitized period was accounted for in 

determining the profit or fee calculated for negotiations. 

UCAs are a necessary tool for DOD to use to meet urgent contracting 

needs, but DOD must ensure that their use is limited to appropriate 

circumstances. Even when UCAs are used appropriately, increased 

management attention is needed regarding definitization time frames so 

the government’s position during subsequent negotiations is not overly 

weakened. Existing regulations and guidance governing UCAs are not 

always understood or followed. Actions are needed to strengthen 

management controls and oversight of UCAs; otherwise the department 

will remain at risk of paying unnecessary costs and potentially excessive 

profit rates. 

To improve oversight of UCAs, we recommend that 

• the Administrator of the Office of Management and Budget’s Office of 

Federal Procurement Policy assess whether the Federal Procurement 

Data System-Next Generation data fields need to be modified to require 

coding that will identify undefinitized task and delivery orders and 

undefinitized contract modifications, and 

Conclusions 

Recommendations for 

Executive Action 

• the Secretary of Defense issue guidance to program and contracting 

officials on how to comply with the FAR requirement to definitize 

when 40 percent of the work is complete. 

To help ensure that UCAs are definitized in accordance with regulations, 

we recommend that the Secretary of Defense take the following two 

actions: 

 15DOD IG Report Number D-2004-112. 

Page 19 GAO-07-559 Undefinitized Contract Actions 
• put in place a reporting channel to headquarters that includes 

information on UCAs in place for 180 days or more and that outlines 

plans and time frames for definitization, and 

• supplement acquisition personnel on an as-needed basis to quickly 

definitize UCAs once they are awarded. 

To mitigate the risks of paying increased costs under UCAs, we 

recommend that the Secretary of Defense set forth supplemental guidance 

to accomplish the following two actions: 

• direct contracting officers, where feasible, to obligate less than the 

maximum allowed at UCA award to incentivize contractors to expedite 

the definitization process, and 

• specify that the effect of contractor’s reduced risk during the 

undefinitized period on profit or fee be documented in the price 

negotiation memorandum or its equivalent. 

We provided a draft of this report to DOD and the Office of Federal 

Procurement Policy for comment. In written comments, DOD concurred 

with our findings and recommendations and noted actions underway that 

are directly responsive. The department’s comments are reproduced in 

appendix III. The Office of Federal Procurement Policy provided oral 

comments, stating that it had no concerns regarding our recommendation 

to add a data field in FPDS-NG that would identify undefinitized task and

delivery orders and contract modifications at award. Such data are needed 

to provide DOD (and other agencies) more complete information on 

UCAs, which can then be used to improve oversight of their use. 

Agency Comments 

and Our Evaluation 

Although DOD concurred with our recommendation to issue guidance 

addressing the FAR definitization requirement, in its comments, DOD 

stated that our reference to the FAR requirements for UCA definitization 

schedules did not consider the difference in requirements for DOD that are 

specified in the U.S. Code. However, our report does address those 

differences. DOD also stated that the Defense Acquisition Regulation 

Council has initiated a DFARS case, based upon our discussions during 

this review, to clarify that DOD contracting officers should use the DOD 

definitization schedule criteria. DOD agreed that the need for enhanced 

oversight of UCAs is appropriate and said it will consider requiring the 

military departments to enhance oversight of UCAs and to provide 

periodic reports, with remediation plans, for those past the definitization 

time frames. The Department also published two notices in the Federal 

Register on May 22, 2007, seeking public comments on current DOD 

Page 20 GAO-07-559 Undefinitized Contract Actions 
contract financing and funding policies, including the weighted guidelines 

that are used to determine appropriate profit or fee based on an 

assessment of contractor risk. 

We are sending copies of this report to the Secretary of Defense, the 

Director of the Office of Management and Budget, the Administrator of the 

Office of Federal Procurement Policy, and other interested congressional 

committees. We will also make copies available to others upon request. In

addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

If you have any questions about this report or need additional information, 

please contact me at (202) 512-6986 or calvaresibarra@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Key contributors to this report 

were Michele Mackin, Assistant Director; R. Eli DeVan; Lily Chin; Matthew 

T. Drerup; Victoria Klepacz; John Krump; Jean K. Lee; and Lynn Milan. 

Ann Calvaresi-Barr 

Director, Acquisition and Sourcing Management 

Page 21 GAO-07-559 Undefinitized Contract Actions 
Appendix I: Scope and Methodology 

Page 22 GAO-07-559 Undefinitized Contract Actions 

Appendix I: Scope and Methodology 

To determine the level of insight the Department of Defense (DOD) has 

into its use of undefinitized contract actions (UCA), we interviewed DOD 

senior-level acquisition officials and service-level acquisition officials to 

identify any additional policies specifically addressing the use of 

undefinitized contract actions at the locations selected for our review. We 

analyzed information from DOD’s procurement system (DD350) and local 

commands for undefinitized contract actions from fiscal year 2001 through 

fiscal year 2005. We also reviewed the relevant sections of the Federal 

Acquisition Regulation and the Defense Federal Acquisition Regulation 

Supplement, as well as service-level guidance pertaining to the use of 

undefinitized contract actions. 

To identify how and when DOD is using UCAs and whether DOD is 

definitizing these actions in a timely manner, we reviewed a random 

sample of undefinitized contract actions from six military commands and 

one non military defense agency. While undefinitized contract actions may 

include letter contracts, task or delivery orders, and contract 

modifications, only letter contracts are recorded by DD350 in a manner 

that allowed GAO to identify them as undefinitized at the time of award. 

Therefore, the specific locations for our review were selected based on the 

total dollar value and volume of letter contracts issued during fiscal years 

2004 and 2005 by various DOD buying organizations as recorded in the 

DD350 system. On the basis of this data, we selected the two commands 

with the largest dollar volume of letter contracts within each of the three 

military services (Air Force, Army, and Navy). As such, the six military 

locations represented over 75 percent of the total dollars awarded for 

letter contracts during the period. We also selected the non military 

defense agency with the largest number of letter contracts. The specific 

locations selected for our review were: 

U.S. Air Force 

Aeronautical Systems Center, Dayton, Ohio 

Warner Robins Air Logistics Center, Warner Robins, Georgia 

U.S. Army 

TACOM Life Cycle Management Command, Warren, Michigan

Aviation and Missile Command, Huntsville, Alabama 

U.S. Navy 

Naval Sea Systems Command, Washington, D.C .

Naval Air Systems Command, Patuxent River, Maryland 
Appendix I: Scope and Methodology 

Non military defense agency 

National Geospatial-Intelligence Agency, Washington, D.C. 

To include other types of undefinitized contract actions in our review, we 

requested a listing of task and delivery order and contract modifications 

issued as undefinitized contract actions during fiscal years 2004 and 2005 

from each of the seven locations that we planned to visit. This request was 

necessary because these types of undefinitized actions are not identified in 

the federal procurement data system. We then established a population of 

undefinitized contract actions at each location and selected a random 

sample of contract actions to review. Not every location could provide us

with a listing of other undefinitized contract actions prior to our site visit, 

and in some cases there were an insufficient number of such actions to 

meet our sampling needs. In such cases we reviewed additional letter 

contracts selected at random to achieve similar sample sizes at each 

location. A total of 77 undefinitized contract actions were sampled for this 

review. The six Army, Navy, and Air Force contracting organizations that 

we selected for our review initiated 70 of the undefinitized contract 

actions that we reviewed. The National Geospatial-Intelligence Agency

initiated 7 of the undefinitized contract actions that we reviewed. 

Observations made from our review cannot be generalized to the entire 

population of undefinitized contract actions issued by DOD. 

We omitted undefinitized contractual actions for foreign military sales, 

purchases that did not exceed the simplified acquisition threshold, special 

access programs, and congressionally mandated long lead procurement 

contracts since these actions are not subject to compliance with the 

definitization requirements we were reviewing. We also excluded all 

undefinitized task orders issued under basic ordering agreements. The 

majority of pricing and contract terms are established under basic 

ordering agreements, leaving few terms and conditions to be definitized 

after award when orders are issued under this type of contract. 

At each location, we reviewed contract document files and interviewed 

officials from the local program office as well as the cognizant contracting 

officers. In a few cases the contracting officer could not speak to the 

reasons for definitization delays because that officer was not involved with 

the award or definitization of the UCA selected for our review. We relied

on data provided to us by DOD and the buying commands we visited, 

which we verified where practical. For example, in determining the length

of time to definitize the sampled actions, we verified the data reported in 

DD350 by tracing the reported award and definitization dates to the 

contract file documentation. We also verified contract obligation and notPage 23 GAO-07-559 Undefinitized Contract Actions 
Appendix I: Scope and Methodology 

to-exceed amounts reported in DD350 by reviewing contract file 

documentation available in hard copy at the sites we visited and 

electronically from DOD’s Electronic Data Access Web-based system. 

To obtain insight into the issues surrounding the use of UCAs from a 

contractor’s point of view, we interviewed representatives from four 

companies who entered into undefinitized contract actions with one or 

more of the buying organizations that were selected for this review. 

We conducted our work from August 2006 through April 2007 in 

accordance with generally accepted government auditing standards. 

Page 24 GAO-07-559 Undefinitized Contract Actions 
Appendix II: Undefinitized Contract Actions 

Reviewed 

Page 25 GAO-07-559 Undefinitized Contract Actions 

Description of goods or

services 

Award

date

Definitization 

date

Not-toexceed amount

Obligation

amount at

award

Total dollar 

value at 

award

Contract/ 

order 

pricing typea

Air Force

Aeronautical Systems Center

1 B-2 aircraft aft deck inner mold 

kits 

2/17/04 8/17/04 $16,737,000 $8,368,500 N/AbCPFF 

2 Required navigational

performance link for C-17 aircraft 

9/5/02 12/23/03 5,250,000 2,146,118 N/AbCPAF 

3 Common crypto appliqué for F-15 

aircraft 

2/20/04 7/1/04 1, 366, 402 683,201 N/AbCPFF 

4 Enterprise support infrastructure 5/28/04 7/24/04 1,508,938 1,131,704 N/AbFFP 

5 Threat Situational Awareness

System for B-1 aircraft 

12/19/03 6/1/05 23,100,000 10,781,000 N/AbCPFF 

6 Aircraft Defense Systems for Army 

C-37A aircraft 

12/8/04 5/2/05 6,038,000 3,019,000 N/AbFFP 

7 Receiver/exciter controller

upgrade kits 

9/30/05 5/18/06 1,287,000 965,250 $965,250 FFP

8 9 Lynx radar upgrade for Predator 

unmanned aerial vehicle 

7/29/05 9/29/06 13,867,301 10,400,476 10,400,476 FFP

9 Tactical Micro Unmanned Aerial 

Vehicle improvements 

2/8/05 5/18/05 2,202,337 1,101,169 2,202,337 FFP/T&M 

10 Receiver/exciter controller

upgrade kits for ASARS-2A radar 

system 

5/19/04 2/25/05 5,938,414 4,453,811 8,889,104 FFP 

11 Readiness spare package kits for 

Predator unmanned aerial vehicle 

7/1/04 8/24/05 26,427,245 26,427,245 131,028,443 FFP 

12 Battlefield Air Targeting Camera 

Autonomous Micro-Air Vehicles

9/29/05 3/8/06 619,852 309,925 309,925 FFP

Warner Robins Air Logistics Center

13 Remotely Operated Video 

Enhanced Receiver upgrade 

6/30/04 10/29/04 9,473,313 9,473,313c9,739,688 CPFF 

14 Engineering services for C-130 

aircraft 

7/22/04 3/20/06 3,240,000 720,000 1,739,934 CPFF 

15 Repair of low power color radar 6/2/04 9/28/04 2,900,000 1,450,000 3,648,606 FFP/T&M 

16 Upgrade factory test equipment 

for Joint Helmet Mounted Cueing 

System 

8/2/05 7/27/06 4,102,751 3,077,063 3,077,063 FFP 

17 Purchase power supplies for 

repair 

5/3/04 8/11/04 1,500,000 750,000 1,565,250 FFP

18 Multi-functional Information

Distribution System initial spares 

9/29/05 5/26/06 7,800,000 3,900,000 3,900,000 FFP

Appendix II: Undefinitized Contract Actions 

Reviewed 
Appendix II: Undefinitized Contract Actions 

Reviewed 

Description of goods or

services 

Award

date

Definitization 

date

Not-toexceed amount

Obligation

amount at

award

Total dollar 

value at 

award

Contract/ 

order 

pricing typea

19 Replace fire suppression system 3/22/04 6/30/04 2,052,092 1,026,046 1,943,807 FFP 

20 Interim support for repair of radar 

systems for C-130 aircraft 

5/5/05 9/28/05 4,372,865 2,186,433 4,372,865 FFP/T&M/ 

CPFF 

21 Develop and upgrade transponder 

software for C-5 aircraft 

3/3/04 7/23/04 350,000 175,000 336,814 CPFF 

22 Joint Surveillance Target Attack 

Radar System initial spares 

3/25/04 9/30/04 11,840,000 10,763,636 N/AbCPAF 

23 Joint Surveillance Target Attack 

Radar System initial spares for 

programmed depot maintenance 

9/1/05 8/28/06 4,110,537 4,110,537cN/AbCPAF 

24 Replace floor in hangar for C-17 

aircraft 

1/26/05 2/17/05 1,433,000 716,500 1,425,906 FFP

Army 

Aviation and Missile Command 

25 Periscope head assembly for 

Bradley fighting vehicle system

2/25/04 6/22/05 2,500,000 1,250,000 1,597,656 CPFF

26 Improved data modems for 

avionics targeting communication 

system 

8/27/04 6/22/05 3,060,000 1,530,000 2,703,497 FFP 

27 Patriot missile rack spares 4/7/05 9/28/05 1,699,323 832,668 1,419,925 FFP

28 Battery assembly 3/3/05 8/05/05 1,227,425 601,438 1,159,705 FFP

29 Integrated sight repair 12/20/04 2/28/06 7,120,000 3,488,800 3,488,800 CPFF 

30 Motion picture camera 9/28/05 6/8/06 11,430,000 5,715,000 2,857,500 FFP

31 Auxiliary Power Unit kits and 

Auxiliary Power Unit spare filter 

assembly 

3/11/05 9/20/05 8,541,860 4,185,511 N/AbFFP 

32 Engines for Blackhawk helicopters 

for State Department 

6/2/04 9/28/04 4,118,648 2,018,138 N/AbFFP 

33 Auxiliary Power Unit for UH-60 

aircraft 

7/19/05 9/21/05 2,183,893 2,183,893 N/AbFFP 

34 Laser range finders for Avenger 

vehicles 

9/13/04 2/6/06 7,064,844 1,305,691 N/AbFFP 

35 Engines for Blackhawk helicopters 1/12/04 9/28/04 46,426,934 22,749,198 N/AbFFP 

36 Cargo hooks for CH-47 Chinhook 

helicopters 

4/26/05 3/15/06 7,760,000 3,802,400 N/AbFFP 

TACOM Life Cycle Management Command 

37 Purchase air conditioning units for 

trucks located in Southwest Asia 

3/5/04 9/24/04 12,321,566 6,160,783 50,222,433 FFP 

38 Performance of system technical 

support services on M707 

KNIGHT vehicle program 

12/8/04 2/17/05 1,103,200 551,600 14,516,695 CPFF

Page 26 GAO-07-559 Undefinitized Contract Actions 
Appendix II: Undefinitized Contract Actions 

Reviewed 

Description of goods or

services 

Award

date

Definitization 

date

Not-toexceed amount

Obligation

amount at

award

Total dollar 

value at 

award

Contract/ 

order 

pricing typea

39 Conversion of existing contract for 

remaining system development 

efforts for Future Combat System 

9/30/05 3/28/06 17,350,000,000 219,245,691 254,245,691 CPFF/CPIF

40 Procurement of cargo/troop carrier 

armor kits and underbody blast 

protection kits 

5/3/04 9/27/04 33,453,860 25,090,387 43,031,578 FFP 

41 Rebuild of Medium Tactical 

Vehicles to repair damage 

sustained in overseas 

deployments 

2/10/04 8/11/04 20,000,000 10,000,000 31,178,228 CPFF 

42 Procurement of the M1117 

Armored Security Vehicle

6/30/05 10/31/06 517,660,000 258,830,000 388,245,000 FFP

43 Rebuild of well drilling equipment 3/4/05 7/8/05 200,000 100,000 180,000 FFP 

44 Procure ballistic protection armor 

systems for M-1062 and M-978

fuel tankers 

3/31/05 9/22/05 12,840,178 6,420,089 41,030,715 FFP

45 Add-on-armor spare parts for 

Family of Heavy Tactical Vehicles 

2/8/05 12/5/05 1,080,650 540,325 540,325 FFP 

46 Procurement of Automatic Fire 

Suppression System kits for U.S. 

Marine Corps light armored 

vehicles 

9/29/05 5/26/06 17,827,685 8,913,843 8,913,843 FFP 

47 Procurement of armor protection 

for M-978 fuel tankers 

8/2/05 1/26/06 3,559,485 1,779,743 1,779,743 FFP 

Navy 

Naval Air Systems Command

48 Unmanned Aerial Vehicle services 

for Navy deployments and Gulf oil 

platform security 

4/18/05 9/16/05 14,500,000 7,250,000 28,360,209 FFP 

49 Low Rate Initial Production for the 

8X10 displays for F/A-18 aircraft 

12/12/03 8/9/04 9,075,300 4,537,650 8,157,609 FFP

50 Support of the purchase of Fiber 

Channel Network Switches for 

F/A-18 aircraft 

3/31/04 10/25/04 3,840,000 1,920,000 12,118,512 FFP 

51 Upgrades to the USQ-113

communications receiver/jammer 

installed on EA-6B aircraft 

9/19/05 12/20/06 9,500,000 4,750,000 4,750,000 CPFF

52 Test version of Digital Flight 

Control System replacement unit 

for the EA-6B aircraft 

6/18/04 2/11/05 1,400,000 700,000 1,855,115 FFP

53 Development and demonstration 

of upgrades to AN/SPN-46 landing 

system 

2/11/05 6/29/05 4,370,815 2,185,408 4,393,755 CPIF/CPFF 

Page 27 GAO-07-559 Undefinitized Contract Actions 
Appendix II: Undefinitized Contract Actions 

Reviewed 

Description of goods or

services 

Award

date

Definitization 

date

Not-toexceed amount

Obligation

amount at

award

Total dollar 

value at 

award

Contract/ 

order 

pricing typea

54 MA-31 aerial targets and related 

equipment that represent anti-ship 

cruise missile threats 

6/22/04 12/16/04 16,364,000 8,182,000 N/AbFPIF 

55 Digital Map Computer and Video 

Map Computer units for 

installation on F/A-18 aircraft 

3/2/04 9/30/04 9,325,397 6,994,048 N/AbFFP 

56 Accelerate the Wing Center 

Sections improvement for EA-6B 

aircraft 

11/26/03 6/21/04 3,118,057 3,118,057dN/AbFFP 

57 Redesign of specific EA-6B 

aircraft parts that support 

upgraded electronic attack 

capabilities 

2/12/04 2/22/05 1,800,000 882,000 N/AbCPFF 

58 Implement additional fault isolation 

for ALQ-218 receiver and wing tip 

pods on the EA-18G aircraft 

9/27/04 9/26/05 7,000,000 3,500,000 N/AbCPAF 

Naval Sea Systems Command

59 Allow contractor to continue detail 

design and integration efforts on 

the DD(X) destroyer program

5/25/05 5/28/06 2,951,200,000 123,720,000 136,768,931 CPAF 

60 Begin work that supports the start 

of the DD(X) destroyer detail 

design activities

9/30/05 12/22/05 53,400,000 26,700,000 26,700,000 CPAF

61 Advanced planning services and 

long lead items for dry-docking of 

a Navy aircraft carrier 

12/2/03 6/18/04 27,866,659 7,299,338 323,177,007 CPFF/CPIF 

62 Design and purchase of 

Affordable Weapon System 

guided missile system 

3/19/04 8/24/04 22,500,000 11,250,000 51,222,594 CPIF

63 Production and support of Remote 

Minehunting System to operate 

from Navy surface ships 

9/30/05 10/20/06 30,200,000 14,569,800 14,569,800 FFP/CPFF 

64 Support of AEGIS missile 

guidance system development

sites in New Jersey 

5/14/04 3/7/05 250,000,000 18,867,529 167,991,564 CPFF/CPIF

65 AN/SPS-48 radar system 

refurbishment 

7/22/05 12/6/05 9,765,598 4,882,799 4,882,812 FFP 

66 Design and production of 

Submarine Rescue System 

9/28/05 12/22/06 27,873,202 477,994 477,994 CPFF/FFP

67 AN/SPQ-9B radar systems and 

related change kit equipment 

7/1/04 3/31/05 8,943,742 4,471,871 41,248,398 FFP 

68 Migration of Ship Self Defense

System software and hardware 

to Navy compliant open 

architecture form 

5/11/04 8/30/04 38,699,471 10,182,000 26,442,884 CPAF 

Page 28 GAO-07-559 Undefinitized Contract Actions 
Appendix II: Undefinitized Contract Actions 

Reviewed 

Description of goods or

services 

Award

date

Definitization 

date

Not-toexceed amount

Obligation

amount at

award

Total dollar 

value at 

award

Contract/ 

order 

pricing typea

69 Purchase of AN/BPS-16(V) 

4 radar sets 

6/22/04 3/25/05 13,266,978 6,633,489 21,040,136 FFP 

70 Design and development for 

Pacific Fleet Tactical Component 

Network 

11/18/04 3/23/06 8,801,797 3,760,400 3,760,400 CPFF

National Geospatial-Intelligence Agency

71 Commercial data services 9/30/05 7/26/06 9,043,024 4,521,512 4,521,512 CPFF

72 High-bandwidth portable hardware 

prototype for Secure, Portable, 

Accessible, Remote, 

Communications System 

8/5/05 9/25/06 5,036,147 2,301,692 N/AbCPFF 

73 Low-bandwidth hardware services 

for Secure, Portable, Accessible, 

Remote, Communications System 

7/26/05 9/25/06 2,934,315 1,467,158 N/Ab CPFF 

74 Deployable Transit-Case

System/Video Processing

Capability to support research

program 

8/23/05 2/16/06 12,000,000 3,414,074 3,414,074 FFP/CPAF/ 

LOE 

75 Provide support services at the 

agency’s Virginia facility 

12/24/03 8/31/04 24,269,846 3,770,000 54,872,580 CPFF/CPIF 

76 Utility assessment and tools 

development support program

12/1/04 8/19/05 3,300,000 550,000 2,516,000 CPFF

77 Procurement of Mobile Integrated 

Geospatial Systems vehicles 

11/12/03 4/15/04 6,550,000 4,950,000 1,619,973 CPAF 

Source: GAO analysis of DOD contract files. 

a

CPAF – Cost Plus Award Fee 

CPFF – Cost Plus Fixed Fee 

CPIF – Cost Plus Incentive Fee 

FFP – Firm Fixed Price 

FPIF – Firm Fixed Price Incentive Fee 

LOE – Level of Effort 

T&M – Time-and-materials 

b

N/A – Not available from DD350 database 

c

These two UCAs were permitted waivers of 50 percent obligation requirement since they were in 

support of contingency operations, pursuant to an Air Force memorandum waiving the requirement 

for actions in support of the Global War on Terror. 

d

This UCA was awarded via a contract modification. The obligations at award for this UCA do not 

include obligations for the entire contract amount—only for the undefinitized portion. 

Page 29 GAO-07-559 Undefinitized Contract Actions 
Appendix III: Comments from the Department 

of Defense 

Page 30 GAO-07-559 Undefinitized Contract Actions 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 31 GAO-07-559 Undefinitized Contract Actions 
Appendix III: Comments from the Department 

of Defense 

(120637) Page 32 GAO-07-559 Undefinitized Contract Actions 
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