GAO 

United States Government Accountability Office

Report to Congressional Committees

DEFENSE 

CONTRACTING 

DOD Has Enhanced 

Insight into 

Undefinitized 

Contract Action Use, 

but Management at 

Local Commands 

Needs Improvement 

January 2010 

GAO-10-299 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

January 2010

DEFENSE CONTRACTING

DOD Has Enhanced Insight into Undefinitized 

Contract Action Use, but Management at Local 

Highlights of GAO-10-299, a report to Commands Needs Improvement 

congressional committees 

To meet urgent needs, 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. 

Pursuant to the 2008 National 

Defense Authorization Act, GAO 

assessed whether DOD actions 

taken as required by the act have 

(1) improved departmental insight 

and oversight of UCA use and 

(2) resulted in local commands 

meeting DOD’s standards for 

documenting the basis for 

negotiating the contractor profit or 

fee, definitization timelines, and 

obligation amounts. GAO reviewed 

relevant DOD regulations and 

policies, and contract files for 83 

randomly-selected UCAs totaling 

$6.1 billion at eight local 

commands. The findings from this 

contract file review can not be 

generalized across DOD. 

What GAO Recommends

GAO recommends that the 

Secretary of Defense revise defense 

regulations to provide specific 

guidance for how to develop, 

consider, and document 

assessments of cost risk for profit 

or fee for all undefinitized contract 

actions. In written comments, 

DOD agreed with the 

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, 8 actions 

valued at $439 million were unreported by the local commands to DOD. 

Implementation of DOD’s recent policies and guidance on the use of UCAs has 

varied at the local commands GAO visited and the associated management 

standards were not fully met. For the 66 UCAs GAO reviewed that were 

eventually definitized, contracting officers generally did not document their 

consideration of cost risk to the contractor during the undefinitized period of 

work as required. In 34 cases, the weighted guideline worksheets were not 

used when required, nor any other documentation of how any reduced cost 

risk during the undefinitized period of performance was considered in 

determining the negotiation objective. This was particularly the case for costplus-award fee contracts where defense regulations are not clear about how 

any cost risks are to be considered and documented. Even for the remaining 

32 cases in which weighted guideline worksheets were used, the contracting 

officers’ basis for risk calculations were often not clear due to limitations of 

the weighted guideline documentation. Other management standards were 

not always met. Only 41 UCAs--about 50 percent of the actions GAO 

reviewed—met the 180-day definitization requirement. Moreover, 66 of the 83 

UCAs GAO reviewed were awarded with obligations near or above the 50 

percent maximum as shown below. 

Initial Obligation Amounts for 83 UCAs Reviewed 

View GAO-10-299 or key components.

For more information, contact John P. Hutton 

at (202) 512-4841 or huttonj@gao.gov. 
Page i GAO-10-299 

Contents 

Letter 1

Background 4 

DOD Steps to Enhance Insight and Oversight of UCAs Are 

Hampered by Incomplete Data 6 

Local Commands Are Generally Not Meeting DOD’s Management 

Standards 11 

Conclusion 22 

Recommendations for Executive Action 22 

Agency Comments and Our Evaluation 23 

Appendix I Scope and Methodology 26 

Appendix II Undefinitized Contract Actions Reviewed 30 

Appendix III Information for UCAs Omitted from DOD’s 

April 2009 Semi-Annual Report 42 

Appendix IV Comments from the Department of Defense 43 

Appendix V GAO Contact and Staff Acknowledgments 45 

Tables 

Table 1: Differences in Local UCA Management Policies 13 

Table 2: Definitization Status of UCAs Reviewed 17 

Table 3: Categories of Goods and Services Procured with the 

Contract Actions Reviewed at Eight Local Commands, 

October 2008 through February 2009 21 

Figures 

Figure 1: DOD UCA Policy and Associated Guidance 7 

 Undefinitized Contract Actions 
Figure 2: Distribution of Assigned Contract-type Risk Factors for 

Definitized Contract Actions Reviewed 16 

Figure 3: Obligation Amounts for UCAs Reviewed 19 

Abbreviations 

DFARS Defense Federal Acquisition Regulation Supplement 

DOD Department of Defense 

FAR Federal Acquisition Regulation 

NAVICP Naval Inventory Control Point 

NAVSEA Naval Sea Systems Command 

OSD Office of the Secretary of Defense 

OUSD (AT&L) Office of the Under Secretary of Defense for 

 Acquisition, Technology & Logistics 

TACOM Tank-automotive and Armaments Command 

UCA undefinitized contract action 

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Page ii GAO-10-299 Undefinitized Contract Actions
Page 1 GAO-10-299 

 

United States Government Accountability Office

Washington, DC 20548 

 

January 28, 2010 

Congressional Committees 

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

contractors to begin work and incur costs before reaching a final 

agreement on the contract terms and conditions—known as an 

undefinitized contract action (UCA).1

 This type of contract, however, 

poses risk to the taxpayer as contractors lack incentives to control costs 

while contract terms and conditions are negotiated and definitized. UCAs 

are generally required to be definitized within 180 days or before more 

than 50 percent of the estimated contract price is obligated, whichever 

occurs first.2

 DOD must ensure that UCAs are used only when necessary 

and that it negotiates the contract terms and conditions as quickly as 

possible. According to defense regulations, since the cost risk to the 

contractor may be low during the undefinitized period, compensation 

should be adjusted to reflect any reduced cost risk. The department 

reported $18 billion in potential obligations for undefinitized actions 

exceeding $5 million, during fiscal year 2008.3

In June 2007, we reported that DOD did not know the extent to which it 

was using UCAs and identified the need to improve DOD’s (1) oversight of 

UCAs, (2) ability to meet required definitization time frames, and 

(3) contracting officer documentation of the basis for negotiating 

1

 A definitized contract action is one in which all conditions and terms are agreed to by the 

parties to the contract at the time of contract award. 

2

 Defense Federal Acquisition Regulation Supplement (DFARS) 217.7404-3(a) (1) and 

(2). Under the Federal Acquisition Regulation (FAR) 16.603-2(c)(3), letter contracts are to 

be definitized before 180 days or before 40 percent of the work is completed. DOD has 

proposed an amendment to the Defense Federal Acquisition Regulation Supplement 

(DFARS) (Case 2007-D011) to clarify that DOD letter contracts will be definitized using the 

DFARS procedures (before 180 days or prior to 50 percent or more of the not-to-exceed 

amount is obligated) applicable to all other undefinitized contract actions. The proposed 

rule was still pending as of January 21, 2010. 

3

 At the time of this analysis, fiscal year 2008 was the most current year for which 

information was available. $18 billion is the total not-to-exceed amount for the reported 

undefinitized contract actions, exceeding the $5 million reporting threshold, during fiscal 

year 2008 and represents the highest value of obligations the government may have to fund 

for those contract actions once they are definitized. DOD finalized its October 2009 report 

December 22, 2009. 

 Undefinitized Contract Actions 
 

contractor profit or fee.4 In January 2008, these findings were reflected in 

Section 809 of the National Defense Authorization Act (NDAA) for fiscal 

year 2008.5

 The act requires DOD to issue guidance that would include 

(1) circumstances in which it is appropriate for DOD to use UCAs, 

(2) procedures for ensuring compliance with definitization timelines and 

obligation amounts, (3) procedures for compliance with regulatory 

limitations on profit or fee with respect to costs incurred prior to 

definitization, and (4) reporting requirements for UCAs that fail to meet 

required timelines for definitization or regulatory limitations on the 

obligation of funds or on profit or fee. 

In August 2008, the department issued a policy memorandum on UCA 

oversight and management, which required DOD components to report 

semi-annually on contract actions with an estimated value exceeding 

$5 million to the Office of the Under Secretary of Defense for Acquisition, 

Technology & Logistics (OUSD (AT&L)), Defense Procurement and 

Acquisition Policy.6

 In addition, the memorandum advised DOD 

components to obligate funds for the undefinitized period consistent with 

the contractor’s requirements for the anticipated undefinitized period and 

to comply with existing Defense Federal Acquisition Regulation 

Supplement (DFARS) policy on UCA use. The act also required us to 

assess the extent to which DOD’s guidance resulted in improvements to its 

insight and use of UCAs. Accordingly, we assessed whether actions taken 

by DOD have (1) improved departmental insight and oversight of UCA use; 

and (2) resulted in local commands meeting DOD’s UCA management 

standards for documenting the basis for negotiating the contractor profit 

or fee, definitization time lines and obligation percentages, and the 

circumstances in which UCAs are used. 

To identify and assess the actions DOD has taken to improve departmental 

insight and oversight, we reviewed relevant DOD policy memoranda, 

federal and defense acquisition regulations, and proposed changes to 

DFARS; and interviewed senior-level acquisition officials. We selected 

eight local commands and developed and reviewed a random selection of 

 

4

 GAO, Defense Contracting: Use of Undefinitized Contract Actions Understated and 

Definitization Time Frames Often Not Met, GAO-07-559 (Washington, D.C.: June 19, 

2007). 

5

 Pub. L. No. 110-181, § 809, 122 Stat. 217 (2008). 

6

 Management Oversight of Undefinitized Contract Actions memorandum from the 

Director, Office of Defense Procurement and Acquisition Policy (Aug. 29, 2008). 

Page 2 GAO-10-299 Undefinitized Contract Actions
 

83 contract actions reported as UCAs and valued at a total of $6.1 billion. 

The findings from this contract file review can not be generalized across 

DOD but are illustrative of UCA use. We compared information from those 

contract actions to DOD’s semi-annual reports and local commands’ UCA 

reports. We selected four of the local commands based on their placement 

within the top 50 percent of the total dollar value of UCAs issued over 

$100,000 during fiscal year 2008. We selected the remaining four 

commands based on (1) significant UCA use according to the military 

services, (2) geographic location, and (3) the history of UCA use. For the 

purposes of this report we refer to the following eight locations as the 

local commands. 

U.S. Army 

• Tank-automotive and Armaments Command Contracting Center, 

Warren, Michigan 

• Rock Island Contracting Center, Rock Island, Illinois 

U.S. Navy 

• Naval Sea Systems Command, Washington, D.C. 

• Naval Inventory Control Point, Philadelphia, Pennsylvania 

U.S. Air Force 

• 303rd Aeronautical Systems Wing (Reconnaissance Systems Wing), 

Wright-Patterson Air Force Base, Ohio 

• 516th Aeronautical Systems Wing (Mobility Systems Wing), WrightPatterson Air Force Base, Ohio 

Defense Agencies 

• Missile Defense Agency, Redstone Arsenal, Alabama 

• United States Special Operations Command, MacDill Air Force Base, 

Florida 

We selected the 83 UCA contract actions from UCAs reported in the 

Federal Procurement Data System-Next Generation (FPDS-NG) as 

awarded during fiscal year 2008 and the first 5 months of 2009. 7

 We 

 

7

 The Federal Procurement Data System-Next Generation is a comprehensive, Web-based 

tool and database which functions as a clearinghouse of information for all of DOD’s 

contract actions, including UCAs, exceeding the micropurchase threshold, which in most 

cases is $3,000. 

Page 3 GAO-10-299 Undefinitized Contract Actions
 

determined that the FPDS-NG data were sufficiently reliable for the 

purposes of this review by comparing the information in FPDS-NG with 

UCA information from other sources, such as the Electronic Data Access 

program, DOD’s semi-annual reports, local command reports, and 

information in the contract files.8

To determine whether DOD’s recent actions have resulted in local 

commands meeting UCA management standards, we reviewed relevant 

policies and guidance to identify the standards for documenting the basis 

for negotiating contractor profit and fee, timeliness of definitization, 

obligation amounts at the time of contract award, and the circumstances 

that justify the use of a UCA. We then reviewed contract files for the 83 

contract actions in our selection and compared the relevant 

documentation to the management standards. At each local command we 

discussed the circumstances for each UCA with contracting officials. 

We conducted this performance audit from March 2009 to January 2010 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. Appendix I provides details on our scope 

and methodology, appendix II lists the contract actions we reviewed, and 

appendix III lists contract actions we reviewed that were unreported in 

DOD’s April 2009 semi-annual report. 

GAO designated DOD contract management as a high-risk area in 1992.9

The lack of well-defined requirements, the use of ill-suited business 

arrangements, and the lack of an adequate number of trained acquisition 

and contract oversight personnel contribute to unmet expectations and 

schedule delays and place the department at risk of potentially paying 

more than necessary. In fiscal year 2009, DOD spent nearly $384 billion on 

Background 

 

8

 DOD’s Electronic Data Access is a Web-based system that provides secure online access, 

storage, and retrieval of contracts and contract modifications to authorized users 

throughout DOD. 

9

 GAO, High-Risk Series: An Update, GAO-09-271 (Washington, D.C.: January 2009). 

Page 4 GAO-10-299 Undefinitized Contract Actions
 

contracts.10 In response to our prior recommendations and congressional 

direction, DOD has recently emphasized the need to improve its insight 

and management of UCAs. 

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

to use normal contracting vehicles, defense regulations permit the use of 

an undefinitized contract action. These can be quickly entered into, but at 

a later date, the contract’s final price and other terms must be agreed upon 

by the contractor and government, a process known as definitizing the 

contract. UCAs can be entered into via different contract vehicles, such as 

a letter contract (an undefinitized stand-alone contract), a task or delivery 

order issued against a pre-established umbrella contract, an order against 

a basic ordering agreement, or a modification for additional supplies or 

services to an existing contract. 

UCAs are considered risky contract vehicles for the government. Our prior 

work and a DOD Inspector General report found that undefinitized 

contracts transfer additional cost and performance risks from contractors 

to the government because contracting officers normally reimburse 

contractors for all allowable costs they incur.11 With all allowable costs 

covered, contractors bear less risk and have little incentive to control 

costs. The government also risks incurring unnecessary costs as 

requirements may change before the contract is definitized. Contractors 

and the government should bear an equitable share of contract cost risk.12

UCAs shift much of the burden of cost risk onto the government during 

the undefinitized portion of the contract. Because the cost risk to the 

contractor may be reduced during this undefinitized period, compensation 

should be priced accordingly and negotiations should reflect any reduced 

cost risk to the contractor in determining the government’s profit or fee 

objective, according to defense regulations.13

 

10 According to the Federal Procurement Data System-Next Generation, DOD’s total 

obligations in fiscal year 2009 were about $370 billion. However, this figure reflects an 

approximately $13.9 billion downward adjustment made by DOD to correct an 

administrative error made in fiscal year 2008. As this adjustment significantly affected 

DOD's reported obligations in fiscal year 2009, the $384 billion figure we report reflects 

what DOD’s total obligations would have been had the error not occurred. 

11 GAO-07-559 and Department of Defense, Office of the Inspector General, Audit Report: 

Undefinitized Contract Actions. Report Number D-2004-112, Arlington, Va. (Aug. 30, 2004). 

12 GAO-07-559, 6. 

13 DFARS 217.7404-6. 

Page 5 GAO-10-299 Undefinitized Contract Actions
 

DOD’s acquisition organization consists of several levels including 

department, service or agency, and local contracting commands or 

activities where acquisition policy and oversight take place. At the 

departmental level, the Under Secretary of Defense for Acquisition, 

Technology and Logistics is responsible for supervising and establishing 

policy for all DOD matters relating to procurement and acquisition policy 

through the Office of Defense Procurement and Acquisition Policy. At the 

component or agency level, each military service has its own senior 

acquisition executives and acquisition offices that are to establish 

contracting policies and conduct oversight of the local contracting 

commands or activities for each service. The defense agencies and 

combatant commands, such as the Missile Defense Agency and the U.S. 

Special Operations Command, also have procurement or contracting 

directorates within their organization that are to perform similar functions 

as the service senior acquisition executives in terms of establishing policy 

and conducting oversight. Within each military service there are numerous 

local contracting commands or activities that provide contracting support 

to many service acquisition and operational commands. 

DOD has taken a number of steps aimed at enhancing its insight into and 

oversight of UCA use among the components and local commands; 

however, data limitations hinder its full understanding of the extent to 

which UCAs are used. DOD implemented a policy in August 2008 to 

require centralized periodic reporting of UCA information and related 

management plans to the Defense Procurement and Acquisition Policy 

office within OUSD (AT&L). The department’s reporting requirements 

have evolved over time to include other types of contract actions that 

should be reported and DOD has instituted contract peer reviews for 

contracts above $1 billion, which may include UCAs. Although these steps 

have helped increase insight into UCA use, information gaps remain. For 

instance, we found DOD’s centralized reporting did not include 8 of 24 

UCAs we reviewed that should have been reported in the April 2009 semiannual report. 

DOD Steps to 

Enhance Insight and 

Oversight of UCAs 

 Are Hampered by 

Incomplete Data 

Page 6 GAO-10-299 Undefinitized Contract Actions
 

DOD Has Implemented 

Policies and Proposed 

Changes to Enhance UCA 

Insight and Oversight 

DOD has instituted policies and proposed additional changes intended to 

enhance its departmental insight and oversight of UCA use. See Figure 1 

for the recent changes to policies and guidance intended to increase 

insight and oversight of the use of UCAs. 

Figure 1: DOD UCA Policy and Associated Guidance 

August 2008 Policy Memorandum

· Consolidated UCA Management Report

· Semi-annual reporting for UCAs above $5 million

· UCA Management Plans

· Semi-annual plans submitted by components

· UCA reporting format established

DFARS

· DFARS Section 217.74

· Updated in July 2009 to codify August 2008 policy

· DFARS Section 201.170 

· Peer review of contracts above $1 billion

October 2009 Policy, Guidance, and Instructions

· Contract actions exempt from DFARS requirements related to definitization 

schedules and initial obligation amounts should be reported

· Formalized template to report key information including:

· award, definitization, and receipt of qualifying proposal dates

· not-to-exceed and obligation amounts

· reason for award

Source: GAO analysis of DOD information.

DOD’s August 2008 policy memorandum established centralized semiannual reporting for UCAs with a not-to-exceed price above $5 million to 

the OUSD (AT&L) Defense Procurement and Acquisition Policy. 

According to DOD, the purpose of this centralized reporting is to enhance 

departmental insight into and management of UCAs. Starting October 31, 

2008, undefinitized contract actions were required to be reported if the 

contract action’s not-to-exceed value was above $5 million and it was 

undefinitized at any point during a 6-month reporting period— either April 

through September, or October through March. These semi-annual reports 

are to include data on the reason for award, not-to-exceed amounts, 

obligation amounts, date of scheduled definitization, days past 

definitization deadline, and date the qualifying proposal is received. DOD 

finalized its October 2009 semi-annual report December 22, 2009. 

In addition to semi-annual reporting, the August 2008 policy memorandum 

also required each DOD component to update and submit a UCA 

Page 7 GAO-10-299 Undefinitized Contract Actions
 

management plan, each April and October, along with the semi-annual 

report as a way to improve oversight of UCA use. These management 

plans are required to describe the actions taken by DOD components to 

help ensure 

• appropriate use, 

• timely definitization, 

• minimum obligation at time of award (consistent with the contractor’s 

requirements for the undefinitized period), 

• appropriate recognition and documentation of the contractor’s 

reduced risk during the undefinitized period in the profit and fee 

negotiations, and 

• milestones for completing planned actions. 

In October 2009, DOD updated its detailed guidance to clarify that UCAs to 

be recorded in the semi-annual report include undefinitized contracts 

awarded for foreign military sales, congressionally mandated long-lead 

procurement items, initial spares, special access programs, and 

contingency operations. A Defense Procurement and Acquisition Policy 

official also told us that once UCAs over $100 million are definitized, 

components must also submit the weighted guidelines worksheets along 

with their semi-annual report. Weighted guideline worksheets are an 

organized and structured approach to establish and document a 

prenegotiation objective for profit or fee based on an assessment of 

contractor risk. In preparing government estimates where profit is 

negotiated as an element of price, a reasonable profit shall be negotiated 

or determined for each procurement action, according to defense 

regulations. Requiring the worksheets to be submitted is intended to 

provide departmental insight into whether or not contracting officers are 

documenting their assessment of the contractor’s reduced risk when 

determining profit or fee negotiation objectives. Although we were told 

that weighted guidelines are to be submitted for UCAs over $100 million 

once definitized, we could not find documentation of this requirement in 

the UCA management Procedures, Guidance, and Instructions. On 

December 23, 2009, the department revised DFARS procedures, guidance, 

and instruction to require military departments and defense agencies to 

submit, with their semi-annual reports, a copy of the record of weighted 

guidelines for each definitized UCA with a value of $100 million or more. 

DOD also has finalized one amendment to DFARS and has proposed two 

additional changes which will affect how UCAs are managed within DOD. 

In July 2009, DFARS was amended to codify the changes communicated in 

Page 8 GAO-10-299 Undefinitized Contract Actions
 

the August 2008 policy memorandum. Also, in July 2009, DOD proposed a 

change to clarify that the existing DFARS requirement that letter contracts 

be definitized within 180 days or before more than 50 percent of the not-toexceed amount is obligated will apply rather than Federal Acquisition 

Regulation (FAR) policy.14 Finally, although unpriced change orders are 

not UCAs, DOD has proposed a change to DFARS in recognition of the 

need for increased insight into and oversight of unpriced change orders to 

require that unpriced change orders be managed and overseen in a manner 

consistent with UCAs.15

DOD’s recent peer review process initiative may also improve DOD’s 

insight into and oversight of UCAs. Under the peer review process, 

contracts above $1 billion are to be reviewed by senior DOD officials at 

three points prior to contract award and then periodic post-award reviews. 

This peer review process is intended to increase departmental awareness 

of the significant events occurring with contracts valued at $1 billion or 

more across DOD.16 According to a DOD official, at least one UCA contract 

has been selected as part of the peer review process. 

Centralized Reporting Is 

Incomplete 

Despite DOD’s efforts to collect information on UCAs, not all UCAs were 

in the most recent semi-annual report. For example, we found that of the 

83 contract actions we reviewed, 24 met DOD’s criteria for being included 

in the April 2009 semi-annual report—those contracts that exceeded 

$5 million between October 1, 2008, and March 31, 2009. However, only 16 

of them were actually reported in April 2009, leaving 8 contract actions 

valued at $439 million unreported.17 For example, because the Naval Sea 

Systems Command’s (NAVSEA) local list of undefinitized actions was not 

 

14 The FAR requires letter contracts be definitized within 180 days after the award date or 

before 40 percent of the work is complete, whichever occurs first. See FAR 16.603(2)(c)(3). 

15 For purposes of this report, an unpriced change order is a unilateral, within scope order 

on which the parties have not yet reached agreement on an equitable adjustment. It 

includes change orders, administrative changes, funding modifications, or any other 

contract modifications that are within the scope and under the terms of the contract, e.g., 

engineering change proposals, and value engineering change proposals. DFARS 217.7401. 

16 GAO, Defense Acquisitions: Further Actions Needed to Address Weaknesses in DOD’s 

Management of Professional and Management Support Contracts, GAO-10-39 

(Washington, D.C.: Nov. 20, 2009). 

17 For more specific information on the UCAs omitted from the April 2009 semi-annual 

report see appendix III. 

Page 9 GAO-10-299 Undefinitized Contract Actions
 

complete, the local command was not aware it missed four UCAs valued at 

$153 million in its submission to the Defense Procurement and Acquisition 

Policy office for the April 2009 semi-annual report. Also, at the Tankautomotive and Armaments Command (TACOM), we reviewed 4 

undefinitized actions valued at $286 million that were not included in the 

semi-annual report. According to TACOM officials, 2 actions valued at 

$271 million went unreported because local officials did not report actions 

that were definitized during the reporting period despite DOD’s 

requirements to include them. The other 2 contract actions, valued at $15 

million, were overlooked. In contrast, all of the 16 contract actions in our 

selection at the U.S. Special Operations Command and the Army’s Rock 

Island Contracting Center were included in local reports and reported to 

DOD for the April 2009 semi-annual report as required. 

DOD’s reporting requirements are still in flux as it takes steps to gain 

insight into and oversight of UCA use. For example, when DOD introduced 

the new reporting requirements in its August 2008 policy memorandum, 

UCAs over $5 million were required to be reported, but there was some 

confusion at the local commands as to what type of contract action this 

requirement applied. DOD released detailed guidance to commands for 

their use in time for the October 2009 report specifying that contract 

actions exempt from definitization and obligation limitations, such as 

foreign military sales and long-lead procurement items, were to be 

included in the semi-annual report. In addition, the proposed July 2009 

amendment to DFARS is intended to increase DOD’s insight of unpriced 

change orders by requiring these contract actions to be reported semiannually and managed in a manner consistent with UCAs. According to 

DOD, unpriced change orders pose similar risks as UCAs, therefore, 

increased insight and oversight are warranted. While reporting of unpriced 

change orders is not yet required, we identified nine unpriced change 

orders, within the 83 contract actions we reviewed, with a not-to-exceed 

value totaling $499 million, which would fit DOD’s proposed reporting 

criteria. Five of these—totaling $231 million—at the Aeronautical Systems 

Center are being tracked locally similarly to UCAs with regard to approval, 

obligation, and definitization requirements, but these were not included in 

DOD’s semi-annual reporting. Another unpriced change order awarded by 

the Missile Defense Agency for $14 million is also tracked according to 

local command policies but was not included in DOD semi-annual 

reporting. In contrast, we found three unpriced change orders, totaling 

$254 million at the Rock Island Contracting Center, that were tracked 

similarly to UCAs at the local level and reported to DOD. 

Page 10 GAO-10-299 Undefinitized Contract Actions
 

Notwithstanding the inaccurate data and evolving refinement of UCA 

reporting requirements, DOD has begun to use its semi-annual UCA report 

to oversee the extent to which local commands are using UCAs. For 

example, based on increased use reported in the April 2009 semi-annual 

report, the Director, Defense Procurement and Acquisition Policy, visited 

the Aeronautical Systems Center in September 2009 to better understand 

the situation there, reemphasize the importance of UCA management, and 

discuss ideas for how the contracting center can improve. 

Despite DOD’s recent UCA management policy, guidance, and instructions 

designed to improve their use, implementation varied at local commands 

we visited and the management policy standards were not fully met. 

DOD’s August 2008 policy designed to improve UCA management 

reemphasized requirements governing their use, including: 

• allowable profit during the undefinitized period when determining the 

government’s objective for profit or fee, 

Local Commands Are 

Generally Not 

Meeting DOD’s 

Management 

Standards 

• documenting any reduced cost risk and profit or fee determinations in 

the contract file, 

• definitization time frames, and 

• obligation limits. 

For 66 of the 83 UCAs we reviewed that were definitized, contracting 

officers generally did not document the profit or fee negotiation objective 

or consideration of reduced cost risk to the contractor during the 

undefinitized period of work as required.18 In addition, the 180-day 

requirement for UCA definitization was not met in half the UCAs we 

reviewed. Furthermore, despite DOD policy to limit obligations to the 

planned work during the anticipated undefinitized period, the local 

commands typically obligated at or near the maximum amount 

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

 

18 Documentation of the government’s proposed profit or fee is typically found in the 

contract file’s price negotiation memorandum and weighted guideline worksheet. The price 

negotiation memorandum details the negotiations between the government and the 

contractor to reach final terms of definitization and typically includes the government’s 

objective, summaries of the contractor’s proposals, and the profit or fee negotiated. 

Page 11 GAO-10-299 Undefinitized Contract Actions
 

award of UCAs.19 Despite the risks involved, we also found situations when 

the government may have been able to avoid the use of undefinitized 

contract actions. 

Commands Varied in How 

They Implemented DOD’s 

Policy Designed to 

Improve UCA Management 

The local commands we visited managed their UCA use to varying 

degrees. All of the locations used some sort of local management report to 

track information about the contracts awarded. A majority of the locations 

reported UCA awards and status to local acquisition management 

regularly ranging from weekly to monthly. Local commands also varied in 

the dollar threshold amounts requiring higher-level approval, such as the 

head of contracting authority rather than a division chief or department 

head, for their use of UCAs. For example, the Rock Island Contracting 

Center, TACOM Contracting Center, U.S. Special Operations Command, 

and Missile Defense Agency require management approval at the highestlevel, i.e, the head of contracting activity, within the command for all 

UCAs regardless of price, while other commands only require management 

approval at the highest level for UCAs above a $10 million threshold. 

The local commands we visited also emphasized key aspects of UCA 

management standards to varying degrees. Some commands appear to 

have increased their focus in one of the areas identified in the August 2008 

policy. For example, the Rock Island Contracting Center has decreased 

the 180-day requirement for definitization to 150 days. According to local 

command officials, if 150 days from UCA award is surpassed, management 

expects continuous updates on the status of definitization. Table 1 

compares UCA management policies for the commands we visited. 

 

19 DOD may obligate up to 50 percent immediately at award and up to 75 percent upon 

receipt of a qualifying proposal from the contractor. DFARS 217.7404-4. According to DOD 

policy, contracting officers should also limit obligating the maximum permissible funding 

at the time of the award to discourage extended periods of performance prior to 

definitization. DOD may waive limitations on obligations if the head of the agency 

determines a waiver is necessary to support a contingency, humanitarian, or peacekeeping 

operation. DFARS 217.7404-5(b). 

Page 12 GAO-10-299 Undefinitized Contract Actions
 

Table 1: Differences in Local UCA Management Policies 

Local command reporting requirement 

Local command Weekly Monthly 

Highest level contracting 

official approval required 

for all UCAs a

Planned definitization 

schedule under 180 days

303rd Aeronautical Systems Wing √ √

516th Aeronautical Systems Wing √ √

Rock Island Contracting Center √ √ √

TACOM Contracting Center √ √

Naval Inventory Control Point √

Naval Sea Systems Command √

U.S. Special Operations Command √ √ √

Missile Defense Agency b √ √

Source: GAO analysis of local contracting command UCA management policies. 

a All undefinitized contract actions require management approval. However, some commands 

authorize lower level management officials, such as division chiefs or department heads, to approve 

use of undefinitized contract actions under $10 million. 

b Missile Defense Agency requires biweekly and monthly reporting. 

Mandatory Consideration 

of Incurred Cost Prior to 

Contract Definitization Is 

Not Typically Documented 

in the Contract File 

According to DOD regulations, contracting officers are required to 

consider any reduced cost risk to the contractor for costs incurred before 

negotiation of the final price. Further, contracting officers must document 

this risk assessment in the contract files. Sixty-six of the 83 contract 

actions we reviewed were definitized and should have documented a risk 

assessment in their contract file and used the weighted guideline 

worksheet or an alternative method to determine allowable profit or fee 

for negotiation purposes.20

About half of the cases we reviewed—34 of 66—did not use the weighted 

guidelines or document any consideration of cost risk to the contractor 

during the undefinitized period when establishing profit or fee negotiation 

objectives. Instead, we found these contracting officers based their profit 

 

20 Seventeen of the 83 UCAs we selected were not definitized or government negotiation 

objectives had not been prepared before or during our review. Therefore, 66 UCAs should 

have had a weighted guidelines worksheet or a risk assessment in the contract file, 

according to DOD regulations. This number includes the 12 cost-plus-award-fee contracts 

which, although not required to use a weighted guidelines worksheet, were still required to 

consider any reduced risk borne by the contractor during the undefinitized period and 

document this risk assessment in the contract file. 

Page 13 GAO-10-299 Undefinitized Contract Actions
 

or fee negotiation objectives on previously negotiated rates under 

contracts for similar work or other factors. None of these included the 

required consideration of any reduced cost risk to determine whether the 

contractor’s proposal included fair and reasonable prices. For example, in 

12 cost-plus-award-fee contract actions, the contracting officers used the 

base and award fee structure in contracts previously awarded for similar 

work, or in one case, accepted the contractor’s proposal when 

determining their negotiation fee objectives prior to contract 

definitization. However, DOD’s contract pricing reference guide notes that 

automatically applying predetermined profit or fee percentages without 

regard to the unique circumstances of the immediate negotiation is 

inconsistent with government profit or fee goals. Although not required to 

use a weighted guidelines worksheet for cost-plus-award-fee contracts, 

contracting officers are still required to consider and document any 

reduced cost risk borne by the contractor during the undefinitized period.21

For these contract actions we did not see evidence in the contract file that 

there was consideration of any reduced cost risk. However, in one case a 

contracting officer was aware of the requirement to document and 

consider reduced cost risk, but did not know how to account for any 

reduced cost risk because defense regulations do not provide a procedure 

for how to consider any reduced cost risk for cost-plus-award-fee type 

contracts. 

In the remaining 32 of 66 UCAs we reviewed, the contract files included 

weighted guideline worksheets, but it was not always clear whether the 

contracting officers considered any reduced cost risk to the contractor 

during the undefinitized period as a factor when determining allowable 

profit or fee as required.22 Because of the weighted guideline worksheet 

design it did not show the contracting officer’s basis for risk calculations 

or indicate the reason for assigning a particular contract-type risk value. 

The contract-type risk value reflects the relative risk to the government 

associated with the specific contracting method. Therefore, we also 

reviewed the contract files for documentation of a risk assessment. In 15 

of these 32 contract files, we found no risk assessment documentation in 

the file that provided a rationale for the values assigned to the contracttype risk in the weighted guidelines worksheet, making it difficult to verify 

what consideration, if any, the contracting officer made for incurred costs. 

 

21 216.405-2, procedures, guidance, and instruction to DFARS 216.405-2 and DFARS 

217.7404-6. 

22 DFARS 217.7404-6. 

Page 14 GAO-10-299 Undefinitized Contract Actions
 

In addition, within these 15 files the contracting officers did not 

acknowledge the requirement to ensure that the profit or fee negotiation 

objectives reflected any reduced cost risks to the contractor. 

In the remaining 17 of the 32 contract files, the contracting officers’ 

rationale for their decisions on the assigned contract-type risk value and, 

when applicable, their consideration of incurred costs during the 

undefinitized period, were documented in the contract file. Contracting 

officers are required to use the contract-type risk value in the weighted 

guidelines worksheet to reflect any reduced contractor cost risk during 

the undefinitized period. A higher contract-type risk value represents a 

higher risk to the contractor. For example, a contracting officer may 

assign a fixed-price type contract a value ranging from zero to six, while a 

cost-plus type contract will range from zero to two.23 If costs have been 

incurred prior to definitization, the contracting officer should account for 

the shift in risk from the government to the contractor by assigning a 

contract-type risk value that is typically lower than the normal range. 

According to the department’s August 2008 UCA policy, contracting 

officers should generally regard the contract-type risk to be in the low end 

of the designated range when costs have been incurred prior to 

definitization.24 Further, if a substantial portion of the cost has been 

incurred prior to definitization, contracting officers may assign a value as 

low as zero, regardless of contract-type. 

In 8 of these 17 contracts, contracting officers reduced the allowable profit 

or fee negotiation objectives based on costs incurred by the contractor 

during the undefinitized period. For example, in a firm-fixed-price UCA 

awarded by the Navy for compact solid state antennas, the contracting 

officer used the weighted guidelines worksheet to assign low contract-type 

risk values based upon incurred and projected costs resulting in a lower 

profit objective than normal values would have calculated. In the 

remaining 9 cases, the contracting officers considered making an 

adjustment but indicated a reduction to the contractor profit or fee 

negotiation objectives was not warranted. For example, in a cost-plusincentive-fee UCA awarded by the Air Force to develop and test a Global 

Hawk sensor package, the contracting officer acknowledged the 

requirement to consider any reduced cost risk to the contractor during the 

undefinitized period, but determined the government shared responsibility 

 

23 DFARS 215.404-71-3(c). 

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

Page 15 GAO-10-299 Undefinitized Contract Actions
 

for the definitization delay. Therefore, the contracting officer assigned a 

normal contract-type risk value for this contract. 

Despite DOD policy guidance, our analysis of the 32 UCAs that used the 

weighted guideline worksheets indicated that the contract-type risk 

factors were skewed toward the middle and high end of the DFARS 

designated ranges, indicating higher risk for the contractors. In the 

absence of documentation of the contracting officers’ analysis, we were 

unable to determine why the contract risk types were arrayed toward the 

middle and high end of the designated ranges. Our analysis indicated that 

contracting officers tended to assign middle and high values for fixedprice contracts rather than cost reimbursement contracts. Figure 2 shows 

the distribution of the contract-type risk values assigned for those UCA 

contract files containing weighted guideline worksheets. 

Figure 2: Distribution of Assigned Contract-type Risk Factors for Definitized 

Contract Actions Reviewed 

Number of UCAs

Source: GAO analysis of DOD data.

Assigned contract-type risk factor relative to DFARS designated range

0

2

4

6

8

10

12

14

16

18

20

High

end of

range

Mid

range

Low

end of

range

Below

range

Cost plus

Fixed price

2 2

2

10

8

6

2

Page 16 GAO-10-299 Undefinitized Contract Actions
 

Local commands we visited did not meet the 180-day requirement in the 

federal and defense regulations for 51 percent of the UCAs we reviewed. 

We have previously reported that this situation places the government at 

risk of paying increased costs, thus potentially wasting taxpayers’ money.25

Table 2 shows the number and percentage of UCAs we reviewed that were 

not definitized within the 180-day requirement. 

UCAs Were Not Definitized 

within Required Time 

Frames 

Table 2: Definitization Status of UCAs Reviewed 

Component

Definitized 

within 180 

days

Definitized 

beyond 180 

days

Undefinitized 

beyond 180 

days Total

Percentage of 

UCAs not 

definitized 

within 180 

days

Army 23 6 0 29 21%

Air Force 8 10 7 25 68%

Navy 4 4 10 18 78%

USSOCOM 2 3 1 6 67%

MDA 4 1 0 5 20%

Totals 41 24 18 83 51%

Source: GAO analysis of DOD data. 

Note: Information in the table was collected during our on-site contract file reviews from June 2009 

through October 2009. Those UCAs we found to be undefinitized beyond 180 days may have 

subsequently been definitized after our file review. 

We found 24 contract actions that took more than 180 days to be 

definitized, including 4 that took over a year. The longest took over 

582 days to definitize. We also found 18 contract actions that were 

undefinitized beyond 180 days, including one from the Aeronautical 

Systems Center awarded in February 2008, which as of December 2009 

had yet to be definitized after more than 645 days. Officials at the local 

commands stated that they attempt to follow defense acquisition 

requirements for definitization within 180 days. However, we found 

increased management emphasis on definitization time frames at the Rock 

Island Contracting Center. Specifically, the Rock Island Contracting 

Center focused on definitizing UCAs within 150 days. Of the 12 UCAs we 

reviewed at this location, 11 were definitized within the 180-day time 

frame. We found no relationship between the dollar value of the contract 

action and the length of time it took to definitize. Likewise, final contract-

 

25 GAO-07-559, 12. 

Page 17 GAO-10-299 Undefinitized Contract Actions
 

type did not appear to influence the timeliness of definitization. We found 

both fixed-price and cost-reimbursable contracts that exceeded the 

180-day definitization requirement. 

Contracting officers cited several reasons why UCAs may not be 

definitized within the 180-day time frame. The most common reasons cited 

were problems with contractor and subcontractor proposals, protracted 

negotiations between the government and contractor, timeliness of 

government audits, and unstable requirements and funding. Several 

contracting officers told us that delays were the result of a combination of 

these issues. 

The Majority of UCAs 

Were Awarded with 

Maximum Obligation 

Allowed at the Time of 

Award 

Most of the contract actions we reviewed were awarded at or near the 

maximum not-to-exceed price authorized under DFARS.26 Of the 83 UCAs 

we reviewed, 66 had initial obligation amounts of 45 percent or more of 

the not-to-exceed price at award. As we have noted in prior work, 

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.27 Of the 66 actions that 

obligated near 50 percent of the not-to-exceed price, 34—52 percent—

exceeded the 180-day time frame for definitization. By limiting the amount 

of funding obligated at award to reflect contractors’ requirements during 

the anticipated undefinitized period, the contractor may be incentivized to 

work with the government to submit proposals quickly and enter 

negotiations sooner, potentially saving the government money. 

Contracting officers at each of the eight commands we visited told us that 

it was standard practice to obligate at or near the maximum funds allowed 

when issuing the UCA. At one command we visited, one contracting 

officer told us that obligating at 50 percent has become force of habit and 

noted that contractors have come to expect the maximum allowed at 

award. Some commands have issued guidance on assessing the 

contractor’s requirement during the anticipated undefinitized period. For 

example, the Aeronautical Systems Center issued guidance in July 2008 

instructing contracting officers to only obligate the percentage of funds 

needed by the contractor during the undefinitized period. At the 

Aeronautical Systems Center, 17 of the 25 contract actions we reviewed 

 

26 DFARS 217.7404-4. 

27 GAO-07-559, 16. 

Page 18 GAO-10-299 Undefinitized Contract Actions
 

initially obligated 45 percent or more at award—totaling more than 

$335 million—including 2 with 100 percent of funds obligated at award.28

At the Missile Defense Agency, contracting officers told us they are 

encouraged by the Director of Acquisition to obligate only what is needed 

during the undefinitized period; however, formal instructions 

implementing this policy have not been issued. Three of 5 UCAs we 

reviewed at the Missile Defense Agency were obligated with 45 percent or 

more at award—totaling almost $18 million—1 of which was obligated at 

100 percent. Figure 3 shows the distribution of the initial obligation 

percentages of the not-to-exceed amounts for the UCAs we reviewed. 

Figure 3: Obligation Amounts for UCAs Reviewed 

Number of UCAs

Source: GAO analysis of DOD data.

Percentage of not-to-execeed amount obligated at award

0

10

20

30

40

50

60

0-25 26-44 45-50 51-75 76-100

6

11

53

10

3

Although contracting officers are authorized to obligate up to 50 percent 

or more at award, we found instances where it may not have been 

necessary. For example, an Aeronautical Systems Center UCA for aircraft 

modernization kits obligated 50 percent at award. However, the contractor 

 

28 Fifteen of the 17 contract actions were awarded before the Aeronautical Systems 

Center’s guidance that provided additional instructions and reemphasized DFARS 

limitations on obligation amounts at award. In two cases, the Head of Contracting Activity 

approved a waiver allowing for obligating of 100 percent at award for Operation Iraqi 

Freedom /Operation Enduring Freedom requirements. 

Page 19 GAO-10-299 Undefinitized Contract Actions
 

only incurred costs equal to 2.4 percent of the not-to-exceed amount 

during the 13-month undefinitized period. At the same command, a UCA to 

procure ground control stations for unmanned aircraft was given approval 

to obligate 100 percent at award due to the fact this equipment was 

required for contingency operations. However, the contractor incurred 

costs of only slightly more than 1 percent of the not-to-exceed amount 

during the 11-month undefinitized period. Given the low amount of 

incurred costs during the anticipated undefinitized period, obligating at or 

above 50 percent may encourage extended periods of performance prior 

to definitization. 

UCAs Used to Purchase a 

Range of Goods and 

Services but Some Use 

May Have Been Avoided 

The UCAs we reviewed were used to fill a variety of goods and services 

needs, from providing immediate support to the warfighter in theater to 

procuring long-lead items to keep weapon system program schedules on 

time. In several cases UCAs were used to prevent a lapse in service or 

allow for equipment used in contingency operations to be upgraded. In 

one example, the Navy issued a UCA to fund an engineering study on 

spares and repair parts to prevent the grounding of helicopters. In another, 

the U.S. Special Operations Command used a UCA to expand the 

ammunition capacity and add ballistic protective armor on vehicles 

already in theater. In yet another example, the Army issued a UCA to 

create a forward-deployed water packaging system capable of producing 

7,000 bottles of water per day. 

The majority of UCAs we reviewed—64 percent—were used to purchase 

goods. Examples of goods acquired with UCAs include: 

• UCA awarded by Rock Island Contracting Center to fill ammunition 

shortages for the F-15, F-16, F/A-18, and AH-1 Cobra aircraft; 

• UCA awarded by NAVSEA to procure five compact solid state 

antennas to support the Marine Corp’s and the Army’s ground-based 

network radar system; and 

• UCA awarded by the U.S. Special Operations Command to procure a 

small armored vehicle to increase survivability, and guard forces with 

increased protection. 

The other UCAs we reviewed—36 percent—were used to purchase 

services. Examples of services acquired with UCAs include: 

• UCA awarded by the Rock Island Contracting Center for basic life 

support services (e.g., camps, dining facilities, waste, water, other 

services/utilities) necessary to support the Logistics Civil 

Augmentation Program in Iraq; 

Page 20 GAO-10-299 Undefinitized Contract Actions
 

• UCA awarded by TACOM for the design, development, and fabrication 

of a rocket-propelled grenade active protection system for integration 

onto the mine-resistant ambush-protected vehicle; and 

• UCA awarded by the Air Force Aeronautical Systems Center to provide 

contract logistics support for unmanned aerial systems efforts known 

as Predator/Reaper. 

Table 3 provides a list of categories of goods and services, as reported in 

FPDS-NG, procured with UCAs at the eight local commands we visited. 

Table 3: Categories of Goods and Services Procured with the Contract Actions 

Reviewed at Eight Local Commands, October 2008 through February 2009 

Supplies, equipment, and services codes 

Not-to-exceed 

amount

Percentage 

of total

Research & development $4,642,002,079.00 68.40%

Professional, administrative, and management 

support services 

$634,412,427.82 9.35%

Aircraft and airframe structural components $421,031,453.20 6.20%

Ground effect vehicles, motor vehicles, trailers and 

cycles 

$369,459,721.74 5.44%

Communication, detection, and coherent radiation 

equipment 

$275,766,796.00 4.06%

Ammunition and explosives $123,282,074.00 1.82%

Vehicular equipment components $98,476,002.33 1.45%

Other goods $138,549,210.45 2.04%

Other services $83,180,815.00 1.23%

Total $6,786,160,579.54 100.00%

Source: FPDS-NG and GAO analysis of DOD data. 

According to DFARS, UCAs should only be used when the negotiation of a 

definitized contract is not possible to meet government requirements and 

the government’s interest demands the contractor be given a binding 

commitment so contract performance can begin immediately. For the 83 

files we reviewed, it appeared that the use of a UCA may have been 

avoided in some cases. In one example, the Air Force awarded a UCA for 

$54.9 million in April 2008 for an upgrade to the Global Hawk program that 

was necessary to meet the September 30, 2008, initial operational test and 

evaluation deadline. However, as of November 2009, the Global Hawk 

program had yet to undergo that testing and evaluation process due to 

other program delays. In another example, the Army justification for 

awarding a UCA for almost $50 million was to reevaluate a contractor who 

was determined to be performing poorly. It was determined that rather 

Page 21 GAO-10-299 Undefinitized Contract Actions
 

than using provisions in the existing contract allowing for an extension of 

services, it would be best if the contract was extended for a 6-month 

review period using a UCA, a contracting tool that is to be used only when 

time does not permit the negotiation of a contract action and contractor 

performance must begin immediately to meet the government’s 

requirements. 

Undefinitized contract actions can be an important tool for DOD to meet 

urgent contracting needs. However, when UCAs are used the government 

bears the majority of the cost risk during the undefinitized period. DOD 

has issued new policies and guidance and now requires components to 

report semi-annually on UCA use as well as submit updated management 

plans detailing actions taken to ensure appropriate use. Such efforts are 

intended to enable better departmental insight into the extent to which 

UCAs are used and how to manage their use to minimize the risk to the 

government. While DOD’s recent actions are a positive step and are still 

evolving, clear guidance and accurate reporting are key. Further, despite 

DOD’s call for increased management attention of UCA use at DOD 

components, management standards and tools designed to help mitigate 

UCA-related cost risk have not always been met or used. Weighted 

guideline worksheets, a tool designed to help contracting officers 

determine allowable profit or fee for negotiation purposes, have not been 

used consistently or included with information for the semi-annual report 

as required. When guidelines have been used, it was not always clear 

whether contracting officers considered any reduced risk to the contractor 

during the undefinitized period because the required weighted guideline 

worksheet documentation, as designed, does not show the calculation and 

basis for any reduced profit or fee. Also, in instances when cost-plusaward-fee contracts were awarded and weighted guidelines were not 

required, guidance was not clear as to how to consider and document any 

reduced risk borne by the contractor during the undefinitized period. 

DOD’s sustained attention on strengthening its reporting and insight into 

the extent UCAs are used and ensuring UCA management is improved at 

the component level is essential to minimizing the government’s risk of 

paying unnecessary costs and excessive profit or fees. 

We recommend the Secretary of Defense take the following two actions. 

To mitigate the risks of paying increased costs when using an 

undefinitized contract action, revise DFARS to provide specific guidance 

Conclusion 

Recommendations for 

Executive Action 

Page 22 GAO-10-299 Undefinitized Contract Actions
 

on how to perform an assessment of any reduced cost risk for profit or fee 

during the undefinitized period for cost-plus-award-fee UCAs. 

To ensure DOD officials are able to gain insight into the risk assessment 

that is required to be documented in the contract file and the basis for the 

government’s profit or fee negotiation objective, redesign the weighted 

guidelines worksheet to explicitly show the incurred cost calculations and 

a narrative description of the reason for assigning a specific contract-type 

risk value. 

We provided a draft of this report to DOD for review and comment. In 

written comments, DOD concurred with our recommendations and cited 

planned actions to address them. Specifically, DOD plans to revise either 

the DFARS regulations or its corresponding Procedures, Guidance, and 

Instruction to provide specific guidance on how to perform an assessment 

of any reduced cost risk for profit or fee during the undefinitized period 

for cost-plus-award-fee UCAs. In addition, the department plans to 

redesign the weighted guidelines worksheet to explicitly identify the 

incurred cost calculations and justification for the assigned contract-type 

risk value. The draft report also contained a recommendation for DOD to 

clarify that weighted guideline worksheets are to be submitted with the 

semi-annual UCA report submission for all definitized UCAs which equal 

or exceed $100 million. In its written comments, DOD informed us on 

December 23, 2009 they revised the DFARS Procedure, Guidance, and 

Instruction 217.7405 to require military departments and defense agencies 

to submit, in conjunction with their semi-annual UCA reports, weighted 

guideline worksheets for each definitized UCA with a value of $100 million 

or more. Because of DOD’s action on this recommendation, we have 

removed it from the report. In addition, DOD provided technical 

comments, which we incorporated as appropriate. The department’s 

comments are included in their entirety in appendix IV. 

Agency Comments 

and Our Evaluation 

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

Secretaries of the Air Force, Army, and Navy; the Administrator of the 

Office of Federal Procurement Policy; and interested congressional 

committees. In addition, the report will be made available at no charge on 

GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-4841. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

Page 23 GAO-10-299 Undefinitized Contract Actions
 

of this report. GAO staff who made major contributions to this report are 

John P. Hutton 

listed in appendix V. 

 Management 

Director 

Acquisition and Sourcing

Page 24 GAO-10-299 Undefinitized Contract Actions
 

List of Committees 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

United States Senate 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable Howard P. “Buck” McKeon 

Ranking Member 

Committee on Armed Services 

House of Representatives 

The Honorable John P. Murtha 

Chairman 

The Honorable C.W. Bill Young 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Page 25 GAO-10-299 Undefinitized Contract Actions
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To identify and assess the actions the Department of Defense (DOD) has 

taken to improve departmental insight into and oversight of undefinitized 

contract actions (UCA), we interviewed senior DOD and service 

acquisition policy officials as well as local officials at the selected 

commands to identify new policies and guidance that would affect the 

amount of insight senior DOD officials have. We reviewed the August 2008 

Defense Procurement and Acquisition Policy memorandum along with the 

updated October 2009 guidance, which provided additional Office of the 

Secretary of Defense (OSD) policy and guidance for UCAs. In addition, we 

reviewed the relevant sections of the Federal Acquisition Regulation and 

the Defense Federal Acquisition Regulation Supplement (DFARS), as well 

as service-level guidance pertaining to the use and management of UCAs. 

We also reviewed relevant proposed changes to DFARS. 

To determine the accuracy of UCA information available to senior 

officials, we analyzed and compared information on UCAs from the 

Federal Procurement Data System-Next Generation (FPDS-NG), DOD’s 

newly implemented semi-annual UCA reports, and the local acquisition 

command-generated UCA reports. We noted any differences in 

information among the various sources and documented those contract 

actions which did not appear in DOD’s semi-annual report, but were 

recorded in FPDS-NG and the local reports. We also discussed these 

discrepancies with DOD officials at both the local level and OSD level to 

try to understand the underlying cause of these differences. 

To identify whether DOD’s recent actions have resulted in local commands 

meeting DOD’s UCA management standards with regard to documenting 

the basis for negotiating the contractor profit or fee, definitization time 

lines and obligation percentages, and the circumstances in which UCAs 

are used, we conducted a contract file review using a randomized list of 

UCAs from among six military commands, one joint service combatant 

command, and a defense agency. In order to choose the locations of the 

contract file reviews, we analyzed UCA information from FPDS-NG for 

fiscal year 2008. We used these data to compile a random selection of 

UCAs. 

We selected the locations for our UCA file review based on two criteria. 

First, we selected one contracting command from each of the three 

military services (Air Force, Army, and Navy) and one defense agency 

based on its placement within the top 50 percent of total-dollar value of 

UCAs issued during fiscal year 2008 as recorded in the FPDS-NG system. 

Second, for comparative purposes, we selected one contracting command 

from each of the three military services (Air Force, Army, and Navy) and 

Page 26 GAO-10-299 Undefinitized Contract Actions 
Appendix I: Scope and Methodology 

one defense agency that fell outside of the top 50 percent of total-dollar 

value of UCAs issued during fiscal year 2008 as recorded in the FPDS-NG 

system. The contracting commands in this second group were then 

selected using subjective criteria which included commands with 

significant UCA use recommended by the services, the command’s 

geographic location, and the command’s history of UCA use. The specific 

contracting commands we selected for our review were: 

U.S. Army 

• Tank-automotive and Armaments Command Contracting Center, 

Warren, Michigan 

• Rock Island Contracting Center, Rock Island, Illinois 

U.S. Navy 

• Naval Sea Systems Command, Washington, D.C. 

• Naval Inventory Control Point, Philadelphia, Pennsylvania 

U.S. Air Force 

• 303rd Aeronautical Systems Wing (Reconnaissance Systems Wing), 

Wright-Patterson Air Force Base, Ohio 

• 516th Aeronautical Systems Wing (Mobility Systems Wing), WrightPatterson Air Force Base, Ohio 

Defense Agencies 

• Missile Defense Agency, Redstone Arsenal, Alabama 

• United States Special Operations Command, MacDill Air Force Base, 

Florida 

Using the data provided by FPDS-NG, we established a population of 

undefinitized contract actions at each location. We identified all actions 

that were either coded in FPDS-NG as letter contracts or other 

undefinitized actions for fiscal year 2008 and the first 5 months of fiscal 

year 2009. We also identified UCAs in FPDS-NG that referenced an 

undefinitized action in the description of the requirement or reason for 

modification fields. Using these methods, we derived a random selection 

of contract actions to review. For some commands we verified whether or 

not a contract action was a UCA through DOD’s Electronic Document 

Access database, a Web-based system that provides secure online access, 

storage, and retrieval of contracts and contract modifications to 

authorized users throughout DOD. In addition, the selections were also 

Page 27 GAO-10-299 Undefinitized Contract Actions
Appendix I: Scope and Methodology 

checked for accuracy against lists maintained in DOD’s semi-annual report 

as well as those maintained at each local command. Over 200 potential 

UCAs were selected for this review. From this selection, we expected to 

collect data on approximately 10 to 12 at each command we visited for a 

total of 80 to 96 UCAs. In the end, we collected data on 92 UCAs from 

which we eliminated 9 and analyzed the remaining 83 UCAs valued at a 

total of $6.1 billion.1

 Observations made from our review cannot be 

generalized to the entire population of undefinitized contract actions 

issued by DOD. 

We omitted UCAs for foreign military sales, purchases that did not exceed 

the simplified acquisition threshold, special access programs, and initial 

spares purchases, since these actions are not subject to compliance with 

the definitization requirements we were reviewing. To assess the data 

reliability of FPDS-NG for the purpose of selecting locations and 

identifying UCA contracts, we verified UCA information in FPDS-NG with 

other data systems, such as Electronic Data Access, local command UCA 

reports, the semi-annual DOD reports, and with the information recorded 

in the contract files. On the basis of this, we determined that the FPDS-NG 

data were sufficiently reliable for the purposes of this report. 

At each location, we reviewed contract document files and interviewed 

responsible contracting officials. During these interviews we asked the 

contracting officials to explain the rationale for using a UCA and the 

circumstances which led to the decision, as well as the events and 

circumstances involved with definitizing the contract action. We also 

reviewed local command UCA management policies to determine whether 

they were consistent with DOD’s management standards and whether 

these policies differed from one command to another. 

To determine whether contracting officers considered and documented 

the basis for their determination of the government’s profit or fee 

negotiation objective to reflect any reduced risk to the contractor for the 

undefinitized period, we analyzed the contract file documents, including 

 

1

 Eight UCAs at the Naval Inventory Control Point were removed from our analysis because 

they were used to purchase initial spares. One UCA at the Rock Island Contracting Center 

was removed because we found that it was the responsibility of the TACOM Contracting 

Center and should not have been included in our review of UCAs at Rock Island. 

Additionally, at the TACOM Contracting Center and Naval Inventory Control Point 

locations, we reviewed a total of seven UCAs that as of February 2009 had been transferred 

to the Defense Logistics Agency as part of the latest Base Realignment and Closure 

process. 

Page 28 GAO-10-299 Undefinitized Contract Actions
Appendix I: Scope and Methodology 

the price negotiation documentation and weighted guidelines worksheets. 

We used this information to determine whether the contracting officers 

considered and adjusted the contract-type risk factor using incurred cost 

and projected cost information. 

To determine whether UCAs were meeting definitization timelines, we 

recorded data from the contract files on when the contract actions were 

awarded and subsequently definitized. We aggregated these data to 

determine the number of contracts definitized in less than 180 days, 

definitized over 180 days, and those still undefinitized over 180 days. To 

determine how DOD’s policy to limit initial obligations to only the amount 

required for the undefinitized period of work was being implemented, we 

recorded initial obligation amounts from the contract files. We analyzed 

these data to determine how many contract actions in our review were 

obligated at or near the 50 percent limit at the time of award. Finally, to 

determine how and when UCAs were being used, we reviewed the 

contract files and analyzed the types of requirements being filled with 

UCAs and the circumstances behind the decision to use this contracting 

method. We also discussed each case with the contracting officers to 

obtain their rationale for using a UCA. 

We conducted this performance audit from March 2009 to January 2010 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. 

Page 29 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

Page 30 GAO-10-299 

Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

Army

Rock Island 

Contracting Center 

1 W52P1J07D0010

-0015 

LOGCAPb

program 

management 

2/13/09 Definitized 

within 180 

days 

$30,580,953 $15,815,183 $29,715,055 CPAF 

2 W52P1J06D0030

-0003 Mod 22 

Support 

services for left 

behind 

equipment 

1/28/09 Definitized 

within 180 

days 

$49,999,999 $25,000,000 $48,375,366 T&M 

3 DAAA0902D0007

-0147 Mod 22 

LOGCAP b

support 

services in 

Kuwait 

11/30/07 Definitized 

within 180 

days 

$184,820,468 $19,999,489 $171,754,437 CPAF 

4 DAAA0902D0007

-0147 Mod 37 

LOGCAP b

support 

services in 

Kuwait 

12/11/08 Definitized 

within 180 

days 

$56,039,142 $25,000,000 $53,712,769 CPAF 

5 W52P1J05C0072 

- Mod 13 

PGU-28-A/B30A/B and 

PGU-28A/B 

rounds for 

Navy and Air 

Force aircraft 

12/17/07 Definitized 

within 180 

days 

$13,632,524 $6,816,262 $13,047,770 FFP 

6 W52P1J08C0008 Qatar-based 

military 

personnel 

support 

services 

4/1/08 Definitized 

within 180 

days 

$42,000,000 $7,500,000 $37,230,387 CPAF 

7 W52P1J08C0008

Mod 2 

Qatar-based 

postal services 

5/22/08 Definitized 

within 180 

days 

$2,718,707 $1,359,354 $1,747,895 FFP 

8 DAAA0902D0007

-159 

LOGCAP b

support 

services 

9/24/08 Definitized 

within 180 

days 

$4,125,682,123 $618,589,889 $4,031,862,544 CPAF 

9 W52P1J08C0011 Tank 

ammunition for 

training 

activities 

2/21/08 Definitized 

within 180 

days 

$51,849,900 $38,887,425 $52,549,592 FFP 

10 W52P1J08C0010 Tank 

ammunition for 

training 

activities 

3/27/08 Definitized 

beyond 180 

days 

$57,799,650 $28,899,825 $48,227,200 FFP 

Appendix II: Undefinitized Contract Actions 

Reviewed 

 Undefinitized Contract Actions 
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

11 W52P1J08D0063

-0001 Mod 2 

Radioactive 

and hazardous 

waste disposal 

for the Navy 

11/14/08 Definitized 

within 180 

days 

$1,288,414 $966,311 $1,162,037 FFP 

12 W52P1J08C0003 

Mod 3 

Production and 

support of CH47F helicopter 

simulators 

2/29/08 Definitized 

within 180 

days 

$37,479,706 $28,100,000 $37,165,112 CPFF 

TACOM Contracting Center 

1 W56HZV08C0114 Crew 

protection kits 

for M915 

Tactical 

Wheeled 

Vehicle 

11/29/07 Definitized 

beyond 180 

days 

$57,196,000 $28,598,000 $40,823,152 FFP 

2 W56HZV07C0621 

Mod 1 

Procure steel 

armor for Mine 

Resistant 

Ambush 

Protected 

(MRAP) 

vehicles 

11/1/07 Definitized 

within 180 

days 

$21,000,000 $10,499,998 $20,242,872 FFP 

3 W56HZV08C0537 Tires for 

MRAP 

vehicles 

7/16/08 Definitized 

within 180 

days 

$4,288,140 $2,144,070 $4,108,536 FFP 

4 W56HZV08C0447 Procure critical 

spare parts for 

MRAP 

vehicles 

8/7/08 Definitized 

within 180 

days 

$919,333 $450,473 $838,795 FFP 

5 W56HZV05C0313 

Mod 13 

Procure 

Tactical RPG 

Airbag 

Protection 

System units 

for MRAP 

vehicles 

7/21/08 Definitized 

within 180 

days 

$7,200,000 $3,592,800 $7,104,634 CPFF 

6 W56HZV05C0313 

Mod 15 

Procure 

Tactical RPG 

Airbag 

Protection 

System units 

for MRAP 

vehicles 

9/25/08 Definitized 

within 180 

days 

$3,171,000 $1,582,300 $2,996,116 CPFF 

Page 31 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

7 W56HZV08D0072

-0002 

Track Shoe 

Assembly for 

Army Track 

Wheeled 

vehicle fleet 

7/25/08 Definitized 

within 180 

days 

$35,054,057 $17,527,029 $32,438,336 FFP 

8 W56HZV09C0215 Tires for 

MRAP 

vehicles 

12/23/08 Definitized 

within 180 

days 

$1,137,805 $568,903 $1,102,875 FFP 

9 W56HZV07C0576 

Mod 1 

Retrofit of the 

Palletized 

Load System 

and Heavy 

Equipment 

Mobility 

Tactical Truck 

1/8/08 Definitized 

within 180 

days 

$800,000 $400,000 $720,150 FFP 

10 W56HZV05G0005

-0021 Mod 6 

Electronic 

jamming 

systems to 

protect against 

radiocontrolled 

IEDs 

8/8/08 Definitized 

beyond 180 

days 

$5,701,088 $2,850,544 $2,506,609 FFP 

11 W56HZV08C0138 Operation of a 

forwarddeployed 

water 

packaging 

system 

12/10/07 Definitized 

beyond 180 

days 

$2,447,743 $1,223,638 $2,847,498 FFP 

12 DAAE0701CS001 

Mod 1488

Enhanced 

suspension 

and improved 

door handles 

for High 

Mobility 

Multipurpose 

Wheeled 

Vehicle 

(HMMWV) 

5/12/08 Definitized 

beyond 180 

days 

$3,052,200 $1,526,100 $3,004,200 FFP 

13 DAAE0701CS001 

Mod 1489 

Fuel kits for 

HMMWV 

5/22/08 Definitized 

within 180 

days 

$13,847,000 $6,923,500 $13,802,365 FFP 

14 DAAE0701CS001 

Mod 1509 

Frag kit for 

HMMWV 

6/26/08 Definitized 

within 180 

days 

$257,008,930 $128,504,465 $143,105,028 FFP 

Page 32 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

15 DAAE0701CS001 

Mod 1515 

Authorized 

stockage list 

parts and frag 

kit for 

HMMWV 

7/31/08 Definitized 

beyond 180 

days 

$9,260,602 $4,630,301 $6,778,753 FFP 

16 DAAE0701CS001 

Mod 1516 

Enhanced 

armor for 

HMMWV 

7/30/08 Definitized 

within 180 

days 

$493,796 $246,898 $437,892 FFP 

17 DAAE0701CS001 

Mod 1536 

Armored 

personnel 

troop carrier 

kits for 

HMMWV 

8/6/08 Definitized 

within 180 

days 

$73,714,289 $36,857,144 $71,416,828 FFP 

Air Force

ASC/303rd AESW 

1 FA8620-08-C4061 Acquire, pilot, 

modify, repair, 

and support C12 aircraft 

8/5/08 Definitized 

within 180 

days 

$119,600,000 $35,880,000 $117,235,013 FFP 

2 FA8620-08-C3004 Development 

of Airborne 

Signals 

Intelligence 

Payload 

configuration 

to meet 

requirements 

for Predator 

and Reaper 

unmanned 

aircraft 

12/5/07 Definitized 

beyond 180 

days 

$54,900,000 $16,678,757 $71,147,842 CPIF 

3 FA-8620-06-G4033-0006 Mission 

operation and 

logistics 

support for 

Angel Fire 

System 

8/29/08 Definitized 

beyond 180 

days 

$17,102,522 $3,459,832 $17,448,992 CPFF 

4 FA8620-04-C3430 Mod 39 Upgrade to 

Common 

Airborne 

Modem 

Assembly 

communicatio

n link 

3/31/08 Definitized 

within 180 

days 

$332,748 $166,374 $326,550 FFP/FPIF 

Page 33 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

5 FA-8620-06-G4041-0006 Multi-Spectral 

Targeting 

System Target 

Location 

Accuracy 

improvements 

for Predator 

and Reaper 

unmanned 

aircraft 

10/17/07 Definitized 

beyond 180 

days 

$3,200,000 $3,200,000 $3,123,206 CPFF 

6 FA-8620-06-G4026-0057 Procurement 

and 

missionization 

of 3 aircraft 

12/26/07 Definitized 

within 180 

days 

$14,797,440 $10,950,000 $21,171,897 FFP 

7 FA8620-05-

G3028-0050 

Procurement 

of Reaper 

unmanned 

aircraft 

11/26/08 Undefinitized 

beyond 180 

days 

$115,158,656 $52,927,284 N/A FFP 

8 FA8620-05-

G3028-0036 

Ground 

Control 

Stations and 

other related 

equipment for 

Predator and 

Reaper 

unmanned 

aircraft 

10/30/07 Definitized 

beyond 180 

days 

$59,544,953 $59,544,953 $53,444,927 CPFF/FFP 

9 FA8620-08-

C4015 

Provide 

Remote 

Piloted Vehicle 

(RPV) Pilots 

and Sensor 

Operators for 

training 

exercises 

12/21/07 Definitized 

within 180 

days 

$5,031,654 $2,515,827 $5,031,654 FFP 

10 FA8620-06-

G4026-0110 

Procure M-28

aircraft for US 

Special 

Operations 

Command 

12/23/08 Definitized 

within 180 

days 

$16,380,000 $12,121,200 $16,278,109 FFP 

11 FA8620-05-

G3028-0035 

Provide 

Contractor 

Logistics 

Support for 

Predator and 

Reaper 

unmanned 

aircraft 

12/21/07 Definitized 

within 180 

days 

$63,779,273 $47,834,454 $170,253,578 CPFF/T&M

Page 34 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

12 F33657-01-C4600 

Mod 249 

Perform 

durability tests 

to Global 

Hawk 

unmanned 

aircraft 

4/2/08 Definitized 

beyond 180 

days 

$1,800,000 $900,000 $1,793,330 CPAF 

ASC/516th AESW 

1 FA8625-07-C6473 Mod 3 Procurement 

and installation 

of C-5 aircraft 

Large Aircraft 

Infrared 

Countermeasu

res (LAIRCM) 

kits 

1/14/08 Definitized 

beyond 180 

days 

$24,839,778 $12,419,889 $16,339,046 FFP/T&M 

2 FA8625-06-D6453-0010 Guardian 

Laser 

Transmittal 

Assembly 

10/15/07 Definitized 

beyond 180 

days 

$93,239,931 $46,619,966 $83,511,661 FFP 

3 FA8614-04-C2004 Mod 196 Guardian 

Laser 

Transmittal 

Assembly 

2/22/08 Undefinitized 

beyond 180 

days 

$77,000,000 $34,650,000 N/A CPFF/FFP 

4 FA8614-04-C2004 Mod 245 Wing Pylon 

Fairing kits 

6/12/08 Undefinitized 

beyond 180 

days 

$16,300,000 $8,000,000 N/A CPFF/FFP 

5 FA8614-04-C2004 Mod 236 Aeromedical 

Stations Litter 

Augmentation 

System 

3/27/08 Undefinitized 

beyond 180 

days 

$13,769,216 $6,196,147 N/A FFP 

6 FA8625-04-D6452-0003 Mod 8Replace 

aircraft flight 

system to 

include pilot 

vehicle 

interface 

11/24/08 Undefinitized 

beyond 180 

days 

$5,000,000 $1,000,000 N/A CPAF 

7 FA8625-06-D6453-0014 Design, 

installation, 

and flight test 

support of 

LAIRCM pod 

2/22/08 Definitized 

beyond 180 

days 

$923,071 $461,535 $860,843 T&M 

Page 35 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

8 F33657-01-

D2000-0020 

Mod 25 

Develop 

replacement 

for the C-17 

aircraft Global 

Positioning 

System Inertial 

Reference Unit 

12/27/07 Definitized 

within 180 

days 

$6,979,931 $3,489,965 $4,409,376 CPAF 

9 FA8625-05-

C6459 Mod 13 

Upgrade 

current 

Guardian 

Laser 

Transmittal 

Assembly and 

LAIRCM 

processor 

2/29/08 Definitized 

beyond 180 

days 

$2,618,240 $602,000 $2,354,406 CPFF/T&M

10 F33657-98-C0006 

Mod 206 

Procure C-5 

aircraft 

Avionics 

Modernization 

Program kits 

3/14/08 Definitized 

beyond 180 

days 

$66,935,000 $33,467,500 $58,653,217 FFP 

11 FA8625-08-

C6481 

Procure C-130 

aircraft 

Avionics 

Modernization 

Program kits 

9/30/08 Undefinitized 

beyond 180 

days 

$27,200,000 $7,160,000 N/A FFP/T&M/ 

CPIF/ 

CPFF 

12 FA8625-06-

C6456 Mod 49 

C-130J aircraft 

contractor 

support 

equipment 

4/24/08 Definitized 

within 180 

days 

$3,379,105 $1,182,687 $39,070,592 FFP 

13 FA8625-06-

C6456 Mod 68 

Configure C130J aircraft 

into MC-130J 

configuration. 

12/9/08 Undefinitized 

beyond 180 

days 

$56,560,000 $19,634,000 N/A FFP 

Navy

NAVICP 

1 N0038306G067B 

- 5290 

Truss 

assembly 

9/23/08 Undefinitized 

beyond 180 

days 

$5,113,350 $2,556,675 N/A FFP 

2 FA810405G0003 

- GJ72 

TF34 engine 

blades 

5/5/08 Definitized 

within 180 

days 

$1,110,725 $833,044 $1,036,234 FFP 

3 N0038305G003H 

- 0013 

Production 

tooling for F/A18 Inner Wing 

Panels spares 

9/23/08 Undefinitized 

beyond 180 

days 

$4,350,000 $2,175,000 N/A FFP 

Page 36 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

4 N0038304D028N 

- 0007 

Engineering 

study for 

Spares and 

Repair Parts 

for H-60 

overhaul and 

repairs 

7/17/08 Undefinitized 

beyond 180 

days 

$450,000 $225,000 N/A CPAF/ 

CPFF 

5 N0038305G003H 

- 0012 

Production 

tooling for F/A18 Inner Wing 

Panels spares 

9/23/08 Undefinitized 

beyond 180 

days 

$3,250,000 $1,625,000 N/A FFP 

6 N0038306D001J - 

0004 Mod 08

AESA radar 

spares for F/A18 aircraft 

3/31/08 Undefinitized 

beyond 180 

days 

$38,540,436 $19,270,218 N/A FFP 

7 N0038306D001J - 

0004 Mod 18

AESA radar 

repairs for F/A18 aircraft 

9/26/08 Undefinitized 

beyond 180 

days 

$8,010,880 $4,005,440 N/A CPFF 

8 N0038306D001J - 

0004 Mod 25 

AESA radar 

repair lay-in 

material for 

F/A-18 aircraft 

11/26/08 Undefinitized 

beyond 180 

days 

$1,929,649 $964,825 N/A FFP 

9 FA810405G0003 

- GK27 

T34 engine 

blades, 

turbines, and 

rotors 

5/15/08 Definitized 

within 180 

days 

$709,877 $532,460 $633,826 FFP 

NAVSEA 

1 N0002408C5202 Procurement 

of the 

Cooperative 

Engagement 

Capability 

Design Agent 

sensor netting 

system for 

anti-air warfare 

capability 

1/17/08 Definitized 

within 180 

days 

$62,579,000 $24,714,360 $53,967,986 CPFF 

2 N0002409C5103 Evolve and 

maintain the 

Aegis Combat 

System (ACS) 

at the platform 

level for the 

Aegis CG-47 

and DDG-51 

ship classes 

1/9/09 Undefinitized 

beyond 180 

days 

$51,000,000 $25,115,346 N/A CPFF 

Page 37 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

3 N0002405C4208

Mod 19 

Design, 

fabrication, 

testing and 

documentation 

for Submarine 

Decompressio

n Chambers 

12/21/07 Definitized 

beyond 180 

days 

$769,025 $384,512 $1,092,962 CPAF 

4 N0002405C4208

Mod 23 

Procure 

Submarine 

Rescue 

System - 

Rescue 

Capable 

System spares 

2/28/08 Definitized 

within 180 

days 

$121,134 $60,567 $121,134 CPAF 

5 N0002409C5101 Multi-Mission 

Signal 

Processor, 

Ballistic 

Missile 

Defense 

equipment, 

and Aegis 

Weapon 

System 

hardware 

upgrades 

2/9/09 Undefinitized 

beyond 180 

days 

$78,623,236 $38,918,503 N/A CPIF/ 

CPFF/FFP 

6 N0002408C5122 Procurement 

of software, 

maintenance, 

equipment, 

and 

documentation 

necessary to 

support the 

Ship Self 

Defense 

System 

9/30/08 Undefinitized 

beyond 180 

days 

$8,322,695 $4,161,347 N/A CPFF 

7 N0002407D5222 

Mod 4 

Enhancements 

for the 

Common 

Display 

Systems 

System 

10/22/08 Definitized 

beyond 180 

days 

$2,820,097 $1,410,048 $2,271,907 CPAF 

Page 38 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

8 N0002409C5100 Ship Self 

Defense 

System kits to 

support aircraft 

carrier and 

amphibious 

ship 

modernization 

efforts. 

12/23/08 Definitized 

beyond 180 

days 

$14,909,781 $7,084,666 $13,303,184 FFP 

9 N0002408C5203 

Mod 1 

Procurement 

of Compact 

Solid State 

Antennas for 

the 

Cooperative 

Engagement 

Capability 

subsystem of 

both the 

USMC 

Composite 

Tracking 

Network and 

the US Army 

Joint Land 

Attack Cruise 

Missile 

Defense 

Elevated 

Netted Sensor 

System 

11/26/08 Definitized 

beyond 180 

days 

$4,070,000 $2,035,000 $4,058,660 FFP 

U.S. Special 

Operations Command 

1 H9222209C0003 Procure Hatch 

Lighting 

Orientation 

systems for 

the RG31 and 

RG33 

Armored 

Fighting 

Vehicles 

10/31/08 Undefinitized 

beyond 180 

days 

$9,350,750 $3,282,598 N/A FFP 

2 H9222208C0034 Procure 

Remote 

Weapon 

Station 

installation kits 

9/5/08 Definitized 

beyond 180 

days 

$4,303,797 $1,300,000 $3,049,898 FFP 

Page 39 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

3 H9222208C0028 Stealth 

Reconnaissan

ce Assault 

Transport 

System 

vehicles 

8/26/08 Definitized 

beyond 180 

days 

$5,462,484 $2,458,118 $4,624,974 FFP 

4 H9222207D0015-

0014 

Procure 

Psychological 

Operations 

Print System – 

Light, along 

with spares 

and training 

9/5/08 Definitized 

within 180 

days 

$7,508,394 $5,631,295 $7,449,873 FFP 

5 H9222208C0022 Unmanned 

Aircraft 

System 

Information 

Gathering, 

Target 

Surveillance, 

and 

Reconnaissan

ce Services 

4/14/08 Definitized 

within 180 

days 

$8,890,000 $4,445,000 $22,853,974 FFP 

6 H9222207D0015-

0013 

Procure 

Psychological 

Operations 

Print System – 

Light, along 

with spares 

and training 

7/3/08 Definitized 

beyond 180 

days 

$4,110,182 $3,082,637 $4,052,534 FFP 

Missile Defense 

Agency 

1 HQ000603C0047 

Mod 112 

Common XBand Radar 

Software for 

Ballistic 

Missile 

Defense 

System 

10/9/08 Definitized 

within 180 

days 

$14,000,000 $14,000,000 $35,340,206 CPAF 

2 HQ000604C0004 

Mod 61 

Provide 

support for 

Ballistic 

Missile 

Defense 

System 

Requirements 

Review 

2/29/08 Definitized 

within 180 

days 

$24,000,000 $10,000,000 $22,849,959 CPFF 

Page 40 GAO-10-299 Undefinitized Contract Actions
Appendix II: Undefinitized Contract Actions 

Reviewed 

 Contract no. 

Description of 

goods or 

services 

Award 

date 

Definitization 

status 

Not-to-exceed 

amount

Obligation 

amount at 

award 

Total dollar 

value at 

definitization

Contract/ 

order 

pricing 

typea 

3 HQ014707C0196 

Mod 6 

Configuration 

changes to 

Canister Kill 

Vehicle for the 

Terminal High 

Altitude Area 

Defense 

program 

4/16/08 Definitized 

within 180 

days 

$2,500,000 $1,250,000 $1,668,779 CPAF/ 

CPIF 

4 HQ014708C0001 Security 

services for 

the Sea-Based 

X-Band radar 

program 

3/14/08 Definitized 

beyond 180 

days 

$5,000,000 $2,450,000 $6,542,887 CPFF 

5 HQ014709C0008 Bridge 

contract for the 

development 

of the Groundbased 

Midcourse 

Defense 

system 

12/30/08 Definitized 

within 180 

days 

$397,800,000 $175,000,000 $325,308,538 CPFF/ 

CPAF 

Total $6,786,160,580 $1,845,093,925 $6,073,506,557

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 

T&M - Time-and-Materials 

b

The Logistics Civil Augmentation Program (LOGCAP) is a program of the U.S. Army to use civilian 

contractors to provide the Army with an additional means to adequately support the current and 

programmed force by performing selected services in wartime and other operations. 

Page 41 GAO-10-299 Undefinitized Contract Actions
Appendix III: Information for UCAs Omitted Appendix III: Information for UCAs Omitted from DOD’s April 2009 Semi-Annual Report 

from DOD’s April 2009 Semi-Annual Report 

No. Contract number Description of goods or services 

Not-to-exceed 

amount Award date

TACOM Contracting Center 

1 DAAE0701CS001 Mod 1489 Fuel Kits for HMMWV $13,847,000 5/22/2008

2 DAAE0701CS001 Mod 1509 Frag Kit for HMMWV $257,008,930 6/26/2008

3 DAAE0701CS001 Mod 1515 Authorized Stockage List Parts and Frag 

Kit for HMMWV 

$9,260,602 7/31/2008

4 W56HZV05G0005-0021 Electronic Jamming Systems to Protect 

against Radio-Controlled IEDs 

$5,701,088 8/8/2008

NAVSEA 

5 N0002409C5103 Evolve and Maintain the Aegis Combat 

System at the Platform Level for the Aegis 

CG-47 and DDG-51 Ship Classes 

$51,000,000 1/9/2009

6 N0002409C5101 Multi-Mission Signal Processor, Ballistic 

Missile Defense Equipment, and Aegis 

Weapon System Hardware Upgrades 

$78,623,236 2/9/2009

7 N0002408C5122 Procurement of Software, Maintenance, 

Equipment, and Documentation Necessary 

to Support the Ship Self Defense System 

$8,322,695 9/30/2008

8 N0002409C5100 Ship Self Defense System Kits to Support 

Aircraft Carrier and Amphibious Ship 

Modernization Efforts. 

$14,909,781 12/23/2008

Source: GAO analysis of DOD data. 

Page 42 GAO-10-299 Undefinitized Contract Actions 
Appendix IV: Comments from the Department Appendix IV: Comments from the of Defense 

Department of Defense 

Page 43 GAO-10-299 Undefinitized Contract Actions
Appendix IV: Comments from the Department 

of Defense 

Page 44 GAO-10-299 Undefinitized Contract Actions
Appendix V: 

A

GAO Contact and Staff 

cknowledgments 

Page 45 GAO-10-299 

Appendix V: GAO Contact and Staff 

Acknowledgments 

John P. Hutton, (202) 512-4841, huttonj@gao.gov 

In addition to the individual named above, key contributors to this report 

were Penny Berrier Augustine, Assistant Director; Megan Hill; Rob Miller; 

Brian Smith; J. Andrew Walker; Julia Kennon; John Krump; Ken Patton; 

and Bob Swierczek. 

 Undefinitized Contract Actions 

GAO Contact 

Acknowledgments 

(120819) 
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