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Defense Contracting: DoD has Enhanced Insight into Undefinitized Contract Action Use, but Management at Local Commands Needs Improvement
John P. Hutton (au)
To meet urgent needs, the DoD can issue undefinitized contract actions (UCA), which authorize contractors to begin work before reaching a final agreement on contract terms. Such actions are a risky contract vehicle for the govít. because contractors lack incentives to control costs during this period. Defense regís. provide that the govít. determination of contractors' allowable profit or fee should reflect reduced cost risk. This report 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. Illustrations.
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