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Understated and Definitization Time Frames Often Not Met' which was 
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GAO: 

June 2007: 

United States Government Accountability Office: 

Report to Congressional Committees: 

Defense Contracting: 

Use of Undefinitized Contract Actions Understated and Definitization 
Time Frames Often Not Met: 

GAO-07-559: 

GAO Highlights: 

Highlights of GAO-07-559, a report to congressional committees 

Why GAO Did This Study: 

To meet urgent needs, the Department of Defense (DOD) can issue 
undefinitized contract actions (UCA), which authorize contractors to 
begin work before reaching a final agreement on contract terms. The 
contractor has little incentive to control costs during this period, 
creating a potential for wasted taxpayer dollars. 

Pursuant to the House of Representatives report on the National Defense 
Authorization Act for Fiscal Year 2007, we assessed (1) the level of 
insight DOD has into its use of UCAs, (2) how and when DOD is using 
UCAs, (3) whether DOD is definitizing UCAs in a timely fashion, and (4) 
whether contracting officers are documenting the basis for negotiated 
profit or fee. GAO reviewed 77 randomly-selected contracts at seven 
locations and interviewed DOD officials. 

What GAO Found: 

DOD faces a potentially large gap in its data and thus does not know 
the extent to which it is using UCAs. DOD’s reported obligations for 
UCAs increased from $5.98 billion in 2001 to $6.53 billion in 2005. 
However, the government’s procurement system does not identify 
undefinitized task or delivery orders or undefinitized contract 
modifications. In light of DOD’s reported increase in its use of task 
and delivery orders in recent years, the data gap could be large. 
Because DOD decentralizes oversight of its UCAs, the department would 
have to manually obtain data from each of its local commands in order 
to obtain a complete picture. The local commands GAO visited performed 
oversight of their UCAs to varying degrees. 

DOD is generally using UCAs to rapidly fill urgent needs, as permitted, 
in a variety of circumstances. Local managements’ message to the 
contracting community is to not use a UCA unless absolutely necessary, 
but this message is emphasized differently from one location to 
another. GAO found 10 instances in the 77 UCAs we reviewed where UCAs 
could have been avoided with better acquisition planning. For example, 
one UCA for the continuation of ongoing services was awarded the day 
after the previous contract expired. 

DOD did not meet the definitization time frame requirement of 180 days 
after award on 60 percent of the 77 UCAs reviewed. The most common 
reasons for the delays were untimely receipt of an adequate proposal 
from the contractor, acquisition workforce shortfalls, and changing 
requirements. GAO also found that DOD tends to obligate the maximum 
amount of funding permitted—up to 50 percent of the not-to-exceed 
amount—immediately at award of UCAs. As a result, contractors may have 
little incentive to quickly submit proposals. In addition, since DOD 
does not track whether it meets the Federal Acquisition Regulation 
requirement to definitize letter contracts (one type of UCA) before 40 
percent of the work is complete, GAO was unable to assess compliance 
with this requirement. 

Contracting officers are not documenting, as required, the basis for 
the profit or fee prenegotiation objective and the profit or fee 
negotiated. As such, it is unclear whether the costs incurred prior to 
definitization are considered when computing the profit rates or fee 
amounts. For the 40 fixed-price contracts GAO reviewed, profit ranged 
from 3 to 17 percent, and for the 37 cost-type contracts in our sample, 
fees ranged from 4 to 15 percent. Generally the rate was applied 
equally over the entire contract term, including the undefinitized 
period. 

What GAO Recommends: 

GAO recommends that the Secretary of Defense take actions to help 
ensure UCAs are definitized on time and to mitigate associated risks. 
GAO also recommends that the Administrator of the Office of Federal 
Procurement Policy, which sets government contracting requirements, 
improve the level of information needed to oversee UCAs. In written and 
oral comments, respectively, DOD and the Office of Federal Procurement 
Policy agreed with the recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-559]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Ann Calvaresi-Barr at 
(202) 512-4841 or calvaresibarra@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

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

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

DOD is Often Not Meeting Definitization Time Frame Requirements: 

Little Insight into Whether Reduced Risk Is Taken into Account when 
Negotiating Profit or Fee: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Undefinitized Contract Actions Reviewed: 

Appendix III: Comments from the Department of Defense: 

Tables: 

Table 1: Obligations on Undefinitized Task and Delivery Orders during 
Fiscal Years 2004-2005 at Locations Visited: 

Table 2: Reasons Cited for Issuance on UCAs Reviewed: 

Table 3: Elapsed Days before Definitization on UCAs Reviewed: 

Table 4: Definitization Delays Cited for UCAs Reviewed: 

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

Figures: 

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

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

Figure 3: Average Time Frame for Definitization of UCAs: 

Abbreviations: 

DFARS: Defense Federal Acquisition Regulation Supplement: 
DOD: Department of Defense: 
FAR: Federal Acquisition Regulation: 
FPDS-NG: Federal Procurement Data System--Next Generation: 
IG: Inspector General: 
OFPP: Office of Federal Procurement Policy: 
UCA: Undefinitized Contract Action: 

United States Government Accountability Office: 

Washington, DC 20548: 

June 19, 2007: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

To meet urgent needs, the Department of Defense (DOD) can authorize 
contractors to begin work and incur costs before reaching a final 
agreement on contract terms and conditions, including price. Such 
agreements are called undefinitized contract actions (UCA). The terms 
and conditions of UCAs are generally required to be definitized within 
180 days, before more than 50 percent of the estimated contract price 
is obligated, or before more than 40 percent of the work is completed, 
whichever occurs first.[Footnote 1] Although UCAs may be necessary to 
support urgent needs, these actions are not a desirable form of 
contracting. The government bears the majority of the cost and risk 
during the undefinitized period. The government risks paying increased 
costs during this period because the contractor has little incentive to 
control costs, creating a potential for wasted taxpayer dollars. 
Therefore, DOD needs to ensure that it is using UCAs only when 
necessary and that these contract actions are then negotiated as 
quickly as possible. 

The House of Representatives report on the National Defense 
Authorization Act for Fiscal Year 2007 required us to review whether 
DOD is properly using UCAs and negotiating them on time.[Footnote 2] 
Accordingly, we assessed (1) the level of insight DOD has into its use 
of UCAs, (2) how and when DOD is using UCAs, (3) whether DOD is 
definitizing UCAs in a timely fashion, and (4) whether contracting 
officers are documenting the basis for negotiated profit or fee. 

For the purposes of this report, we define UCAs as including letter 
contracts, undefinitized task and delivery orders,[Footnote 3] and 
undefinitized contract modifications (that is, modifications that 
significantly expand or otherwise change the scope of the work). To 
determine the level of insight DOD has into its use of UCAs, we 
analyzed information from the DOD DD350 procurement database and 
interviewed senior-level acquisition officials. We also met with 
officials from the Office of Management and Budget's Office of Federal 
Procurement Policy (OFPP) to discuss the data available for oversight 
of UCAs. OFPP is responsible for collecting, developing, and 
disseminating government procurement data. The most significant 
governmentwide data collection tool is the Federal Procurement Data 
System-Next Generation (FPDS-NG).[Footnote 4] To identify how and when 
DOD is using UCAs and whether DOD is definitizing these actions in a 
timely manner, we reviewed a randomly selected sample of 77 UCAs from 
the six military locations that awarded the majority of dollars for 
letter contracts during fiscal years 2004 and 2005 and one non military 
defense agency that issued several UCAs during that time period. The 
specific locations selected for our review were: 

* Air Force: Aeronautical Systems Center and Warner Robins Air 
Logistics Center, 

* Army: Aviation and Missile Command and TACOM Life Cycle Management 
Command, 

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

* National Geospatial-Intelligence Agency. 

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

At each location, we reviewed contract files and interviewed officials 
from the local acquisition office as well as the contracting officers 
responsible for the UCAs we reviewed and selected program office 
officials. We also reviewed relevant federal and defense acquisition 
regulations regarding the appropriate use of and definitization 
requirements for UCAs. In addition, we interviewed representatives from 
four companies who entered into UCAs with either military services or 
the National Geospatial-Intelligence Agency. Appendix I provides 
details on our scope and methodology and Appendix II lists the 
contracts and orders we reviewed. We conducted our work from August 
2006 through April 2007 in accordance with generally accepted 
government auditing standards. 

Results in Brief: 

DOD faces a potentially large gap in its data and thus does not know 
the extent to which it is using UCAs. DOD's reported obligations for 
UCAs increased from $5.98 billion in fiscal year 2001 to $6.53 billion 
in fiscal year 2005. However, the government's procurement system does 
not identify undefinitized task or delivery orders or undefinitized 
contract modifications. In light of DOD's reported increase in its use 
of task and delivery orders in recent years, the data gap could be 
large. For example, one location we visited had 91 undefinitized orders 
with $525 million in obligations during fiscal years 2004 and 2005. 
Given the manner in which the data are recorded, these orders would not 
be identified, at award, as UCAs in the procurement system. Because 
DOD's oversight of its UCAs is decentralized, the department would have 
to manually obtain data from each of its local commands in order to 
obtain a complete picture. The local commands we visited performed 
oversight of their UCAs to varying degrees. 

DOD is generally using UCAs to rapidly fill urgent needs, as permitted, 
in a variety of circumstances at the locations we visited. The local 
managements' message to the contracting community is to not use a UCA 
unless absolutely necessary. However, this message seems to have 
resonated to different degrees with the frontline acquisition staff who 
requested and awarded the UCAs we reviewed. The UCAs we reviewed ranged 
from providing supplies or services directly to warfighters to 
procuring long lead items for larger programs.[Footnote 5] In fact, 
about half of the 77 UCAs we reviewed were for direct or indirect 
support of ongoing war efforts. The remaining UCAs were generally 
awarded to maintain program schedules. In addition, 10 of the UCAs we 
reviewed were attributable to inadequate planning. For example, one UCA 
for the continuation of ongoing services was awarded the day after the 
previous contract expired. 

DOD did not meet the definitization time frame requirement of 180 days 
after award on 60 percent of the UCAs we reviewed. On average, the 
military services took an additional 2 months, and the National 
Geospatial-Intelligence Agency took about 3½ extra months to definitize 
its UCAs. Sixteen of the UCAs we reviewed had remained undefinitized 
for a year or more. Contracting officers cited many reasons for the 
delays, but the most common were untimely receipt of an adequate 
proposal from the contractor, acquisition workforce shortfalls, and 
changing requirements. Delayed definitization of UCAs transfers 
additional cost and performance risk to the government, since 
contractors are normally reimbursed for all allowable costs incurred 
before definitization. We also found that DOD tends to obligate the 
maximum amount of funding permitted--up to 50 percent of the not-to- 
exceed amount--immediately at award of UCAs. As a result, contractors 
may have little incentive to quickly submit proposals, and agencies 
have little incentive to demand their prompt submission, since funds 
are available to proceed with the work. In addition, since DOD does not 
track whether it meets the Federal Acquisition Regulation (FAR) 
requirement to definitize letter contracts before 40 percent of the 
work is complete, we were unable to assess compliance with this 
requirement. 

Contracting officers are not documenting, as required by federal 
regulations, the basis for the profit or fee prenegotiation objective 
and the profit or fee negotiated. Specifically, they are not generally 
documenting, when applicable, whether profit or fee is adjusted for 
work performed by the contractor at a lower level of risk during the 
undefinitized period. In the absence of such documentation, it is 
unclear whether the costs incurred prior to definitization are 
considered when computing the profit rates or fee amounts. For the 40 
fixed-price contracts we reviewed, profit ranged from 3 to 17 percent, 
and for the 37 cost-type contracts in our sample, fees ranged from 4 to 
15 percent. Generally the rate was applied equally over the entire 
contract term, including the undefinitized period. 

This report contains recommendations to the Secretary of Defense and 
the Administrator of the Office of Management and Budget's Office of 
Federal Procurement Policy that are intended to improve DOD's oversight 
of its use of UCAs, to help ensure UCAs are definitized on time, and to 
mitigate the risks associated with delays in definitization. In written 
comments on a draft of this report, DOD concurred with the 
recommendations and noted actions underway that are directly 
responsive. Officials from the Office of Federal Procurement Policy, in 
oral comments, agreed with the recommendation to add a data field in 
FPDS-NG to identify undefinitized orders and contract modifications. 
DOD's comments are included in appendix III. 

Background: 

DOD is increasingly relying on contractor services to accomplish its 
missions. In fiscal year 2006, DOD awarded more than $294 billion in 
contracts. Despite this huge investment in buying goods and services, 
our work and the work of the DOD Inspector General (IG) has found that 
DOD's spending sometimes is inefficient and not managed effectively. 
Too often, requirements are not clearly defined; rigorous price 
analyses are not performed, and contractors' performance is not 
sufficiently overseen. In fact, we have identified overall DOD contract 
management as a high-risk area for the past several years. 

When a requirement needs to be met quickly and there is insufficient 
time to use normal contracting vehicles, federal regulations permit the 
use of a UCA. UCAs are binding commitments used when the government 
needs the contractor to start work immediately and there is 
insufficient time to negotiate all of the terms and conditions for a 
contract. UCAs can be entered into via different contract vehicles, 
such as a letter contract (a stand-alone contract), a task or delivery 
order issued against a pre-established umbrella contract, or a 
modification to an already established contract. 

The FAR and the Defense Federal Acquisition Regulation Supplement 
(DFARS) govern how and when UCAs can be used. The regulations also 
establish requirements as to how quickly UCAs must be definitized. 
Although each regulation contains two criteria, they are not the same. 
The FAR states that a letter contract needs to be definitized within 
180 days after the award date or before 40 percent of the work is 
complete, whichever occurs first. While the DFARS includes the 180-day 
time frame, it addresses all UCAs (including undefinitized task and 
delivery orders and contract modifications) and adds a requirement to 
definitize before more than 50 percent of funds are obligated. It does 
not mention the 40 percent of work completed. Under FAR and DFARS 
respectively, a waiver of the 180-day requirement can be granted for 
extreme circumstances or when the agency is supporting a contingency or 
peacekeeping operation. The definitization time frame can also be 
extended an additional 180 days when a qualifying proposal is received 
from the contractor. The contractor does not receive profit or fee 
during the undefinitized period, but can recoup it once the contract is 
definitized. 

Under UCAs, the government risks paying unnecessary costs. For example, 
in a September 2006 report on contracts in support of Iraq 
reconstruction, we found that the timeliness of definitization can 
affect the government's costs.[Footnote 6] We reported that DOD 
contracting officials were more likely to adhere to the Defense 
Contract Audit Agency's advice regarding the disposition of questioned 
and unsupported costs when negotiations were timely and occurred before 
contractors had incurred substantial costs under UCAs. On the other 
hand, contracting officials were less likely to remove questioned costs 
from a contract proposal when the contractor had already incurred these 
costs during the undefinitized period. Similarly, the DOD IG found that 
untimely definitization of contracts transfers additional cost and 
performance risk from the contractors to the government.[Footnote 7] 

Contractors should bear an equitable share of contract cost risk and 
receive compensation for bearing additional risk based on the degree of 
risk assumed. Costs that have already been incurred on an unpriced 
action, such as a letter contract, have virtually no cost risk 
associated with them. As such, when negotiating profit with the 
contractor, the government may attribute a zero risk factor to the 
undefinitized period.[Footnote 8] 

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

DOD faces a potentially large gap in its data and thus does not know 
the extent to which it is using UCAs. The federal procurement data 
system is only able to identify UCAs that are awarded via letter 
contracts. Undefinitized task or delivery orders, as well as contract 
modifications, are not identified. DOD also lacks high-level oversight 
of its UCA activity since UCA monitoring has been delegated to the 
local commands, with upward reporting no longer required. At the local 
commands we visited, monitoring of UCAs varied in both detail of 
information and frequency of review. 

Data on UCAs Are Incomplete: 

DOD understates its UCA usage due to a potentially significant gap in 
data. Because the government's federal procurement data system--managed 
by the Office of Federal Procurement Policy--only identifies letter 
contracts as undefinitized at award and does not identify undefinitized 
task or delivery orders or contract modifications, DOD does not know 
the extent of its UCA activity.[Footnote 9] 

As figure 1 shows, DOD's reported obligations for letter contracts have 
increased from $5.98 billion in fiscal year 2001 to $6.53 billion in 
fiscal year 2005. These obligations for letter contracts as a 
percentage of DOD's total obligations remained 4 percent or less during 
this time period. 

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

[See PDF for image] 

Source: GAO analysis of D350 data. 

[End of figure] 

At the same time, DOD's task and delivery order obligations have 
increased significantly, as shown in figure 2. 

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

[See PDF for image] 

Source: GAO analysis of DD350 data. 

[End of figure] 

A DOD senior acquisition official stated that if DOD wanted to know the 
amount obligated under undefinitized task and delivery orders, it would 
have to ask for the information from all of the local commands. 
According to information maintained at the local commands we visited, 
most have issued some undefinitized task or delivery orders. As table 1 
illustrates, one command obligated over $500 million in UCA orders 
during the 2-year period we reviewed. 

Table 1: Obligations on Undefinitized Task and Delivery Orders during 
Fiscal Years 2004-2005 at Locations Visited: 

Location: Aeronautical Systems Center; 
Obligations (dollars in millions): $524.7; 
Number of actions: 91. 

Location: Aviation and Missile Command; 
Obligations (dollars in millions): 81.0; 
Number of actions: 12. 

Location: Naval Air Systems Command; 
Obligations (dollars in millions): 8.0; 
Number of actions: 5. 

Location: Naval Sea Systems Command; 
Obligations (dollars in millions): 49.3; 
Number of actions: 1. 

Location: Warner Robins Air Logistics Center; 
Obligations (dollars in millions): 14.9; 
Number of actions: 2. 

Location: Total; 
Obligations (dollars in millions): $677.9; 
Number of actions: 111. 

Source: GAO analysis of DOD data. 

Note: The Army's TACOM Life Cycle Management Command reported no UCA 
orders during this period. The National Geospatial-Intelligence Agency 
had undefinitized orders during this period but does not track this 
information for its DOD contracts. 

[End of table] 

DOD Lacks Centralized Oversight of UCAs: 

UCA oversight takes place at local commands, without any centralized 
reporting at the DOD headquarters or military services levels. Although 
UCA oversight was centralized in the past, a senior DOD acquisition 
official told us that DOD does not believe that UCA usage is a 
significant concern, given that letter contracts have represented no 
more than 4 percent of DOD's total obligations over the past several 
years. As such, DOD relies on its local commands to oversee the use of 
UCAs and inform upper management if any issues arise. 

The Air Force is the only military service that has a reporting 
requirement for UCA activity. A June 2002 policy requires commands to 
report to the headquarters acquisition office on UCAs that have 
remained undefinitized for more than 1 year. However, the acquisition 
office has not received any reports on delinquent UCAs, despite the 
fact that we found 9 UCAs that had remained undefinitized for over 1 
year at the two Air Force commands we visited. An official from one of 
the commands told us it reported one of its delinquent UCAs, but, 
according to an Air Force headquarters acquisition official, it was 
never received. Since the reporting of delinquent UCAs is by a manual 
self-reporting system, it is possible that other delinquent UCAs have 
gone unreported. 

The local commands we visited performed oversight of their UCA usage to 
varying degrees. All of the military locations had some sort of 
reporting of UCA activity to the local acquisition management on a 
regular basis, ranging from monthly to quarterly reporting. The local 
commands also varied in whether all UCAs were tracked versus only those 
that remain undefinitized after the 180-day time frame. We found that 
the National Geospatial-Intelligence Agency was not tracking or 
monitoring its DOD UCAs,[Footnote 10] even though its acquisition 
regulation requires a monthly report on UCA activity.[Footnote 11] 
After we raised this issue, National Geospatial-Intelligence Agency 
officials stated that they will begin monitoring their UCA activity. 

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

DOD is using UCAs to rapidly fill needs in a variety of circumstances, 
many of which are directly or indirectly related to the war in Iraq. 
The message from management at the locations we visited is to limit the 
use of UCAs. However, this message seems to have resonated to different 
degrees with the frontline acquisition staff who requested and awarded 
the UCAs we reviewed. In some instances, inadequate acquisition 
planning drove the need for the UCA. 

UCAs Are Awarded for a Variety of Goods and Services: 

The UCAs we reviewed were for a range of goods and services--from 
providing immediate support to the warfighter in theater to procuring 
long lead items to keep weapon system program schedules on time. The 
military services' commands awarded about half of the UCAs we reviewed 
for support of war efforts and one third to meet schedules on 
production contracts. In one instance, a UCA was awarded to immediately 
provide body armor on combat vehicles already in use in operations in 
the Middle East. In another, a UCA was awarded to obtain a jamming 
system that was needed to avoid grounding F-15 aircraft. The National 
Geospatial-Intelligence Agency awarded over half of the UCAs we 
reviewed for immediate intelligence needs and about half to avoid 
disruptions of services it was receiving under expiring contracts. 

Table 2 provides a summary of the reasons presented by the contract 
files and discussed with the contracting officers specifically for the 
77 UCAs we reviewed. 

Table 2: Reasons Cited for Issuance on UCAs Reviewed: 

Reasons for issuance of UCA: Maintaining program schedules; 
Number of instances: 28. 

Reasons for issuance of UCA: Direct support of war efforts; 
Number of instances: 22. 

Reasons for issuance of UCA: Indirect support of war efforts (e.g. 
replacing depleted spare parts); 
Number of instances: 16. 

Reasons for issuance of UCA: Timing of funding; 
Number of instances: 11. 

Reasons for issuance of UCA: Inadequate acquisition planning; 
Number of instances: 10. 

Reasons for issuance of UCA: Other; 
Number of instances: 12. 

Source: GAO analysis of DOD data. 

Note: We reviewed 77 UCAs. However, multiple reasons were cited for the 
same action. "Other" reasons include actions to avoid costs for future 
upgrades or changes required due to factors external to the program 
office. 

[End of table] 

Poor acquisition planning is not an appropriate reason to award a UCA. 
However, for 10 of the UCAs we reviewed, the government may have been 
able to prevent the use of a UCA with better planning. These included, 
for example, 4 UCAs issued to procure long lead items that could have 
been contracted for earlier. The requirement for long lead items is 
typically established early in a program and is normally provided 
advanced funding in the annual budget process, which should provide 
sufficient time to acquire the items through normal acquisition 
procedures. Other inadequate planning situations included 4 UCAs--1 at 
the Naval Sea Systems Command and 3 at the National Geospatial- 
Intelligence Agency--that we believe could have been prevented by the 
program office. In each instance, the requirement was known in a 
significant amount of time before the UCA was issued. These situations 
ranged from late issuance of the request for proposals (which had been 
planned earlier) to awards that were issued quickly to avoid 
disruptions in services (which could have been anticipated). For 
example, one National Geospatial-Intelligence Agency UCA for the 
continuation of ongoing services was awarded the day after the services 
from the prior contract ended. The agency should have been able to 
reasonably estimate the requirement and prices in advance based on the 
terms and work of the ongoing contract, which were already known. The 
remaining three inadequate planning situations were due to 
circumstances that were beyond the control of the program office. For 
example, a Navy UCA was issued because the senior acquisition 
executive, external to the program office, delayed the approval of the 
program's acquisition plan. Furthermore, one UCA added requirements 
that expanded the work beyond what was originally planned. 
Specifically, the National Geospatial-Intelligence Agency awarded a UCA 
to quickly obtain aerial data from the regions affected by hurricanes, 
but subsequently augmented it to establish a permanent facility that 
had been planned for some time. Several contracting officers across DOD 
expressed concern that program office staff need training on the 
appropriate use of UCAs because they do not always seem to be aware of 
the risks that these contract actions pose to the government. 

Local Command Policies Generally Focus on Limiting UCAs: 

The "tone at the top" provided by the local commands we visited is to 
not use UCAs unless absolutely necessary. However, this message is 
emphasized differently from one location to another and has only 
recently come about in some locations. For example, an April 2000 Naval 
Air Systems Command memorandum says that the use of UCAs is to be kept 
to the "absolute minimum" and that they should not be used if the 
requirements are not fully defined. On the other hand, the National 
Geospatial-Intelligence Agency allowed its contracting officers to use 
UCAs without the need for higher-level approval until a May 2006 
memorandum elevated the approval authority to the senior procurement 
executive. 

Representatives from the four companies we spoke with use UCAs with DOD 
to different degrees--ranging from considering UCAs to be a "normal 
part of business" to rarely using UCAs in recent years. One company 
said that its UCAs are mostly used for short duration work needed to 
maintain critical schedules in the development or production processes 
of other contracts. Another company recently entered into several 
indefinite delivery/indefinite quantity contracts with the government 
so that UCAs could be avoided in that area of work. 

DOD is Often Not Meeting Definitization Time Frame Requirements: 

DOD did not meet the definitization time frame requirement of 180 days 
after award for over half the UCAs we reviewed. This situation places 
the government at risk of paying increased costs, thus potentially 
wasting taxpayers' money. On average, the UCAs we reviewed were 
definitized more than 2 months past the required period, with 16 
remaining undefinitized for a year or more. While DOD regulations allow 
up to half of the funding to be provided before definitization, we 
found that DOD tends to obligate this maximum amount of funding 
immediately at award--a practice that could provide a disincentive for 
the timely definitization of the UCA. In addition, DOD does not monitor 
its compliance with the FAR requirement to definitize letter contracts 
when 40 percent of the work is complete. 

Most UCAs Were Not Definitized within Required Time Frames: 

Sixty percent of the UCAs we reviewed--46 of 77--were not definitized 
within the 180-day time frame required by FAR and DFARS. Table 3 shows 
the number of days elapsed before the UCAs were definitized. 

Table 3: Elapsed Days before Definitization on UCAs Reviewed: 

Air Force; 
Days until definitized: 0-180: 12; 
Days until definitized: 181-365: 7; 
Days until definitized: 366-500: 3; 
Days until definitized: Over 500: 2; 
Total: 24. 

Army; 
Days until definitized: 0-180: 10; 
Days until definitized: 181- 365: 9; 
Days until definitized: 366-500: 3; 
Days until definitized: Over 500: 1; 
Total: 23. 

Navy; 
Days until definitized: 0-180: 7; 
Days until definitized: 181- 365: 11; 
Days until definitized: 366-500: 5; 
Days until definitized: Over 500: 0; 
Total: 23. 

National Geospatial-Intelligence Agency; 
Days until definitized: 0- 180: 2; 
Days until definitized: 181-365: 3; 
Days until definitized: 366-500: 2; 
Days until definitized: Over 500: 0; 
Total: 7. 

Total; 
Days until definitized: 0-180: 31; 
Days until definitized: 181- 365: 30; 
Days until definitized: 366-500: 13; 
Days until definitized: Over 500: 3; 
Total: 77. 

Source: GAO analysis of DOD data. 

[End of table] 

We found 16 UCAs that took more than a year to definitize, with the 
longest taking over 600 days. Each location we visited had at least 1 
UCA in effect for over a year. In addition, we found no discernable 
relationship between the dollar value or contract type of the UCAs and 
the length of time it took to definitize. Approximately the same 
proportion of small and large dollar value UCAs were definitized in 
less than 180 days as were definitized in more than 180 days. Likewise, 
the final contract type did not appear to influence the timeliness of 
definitization. Approximately the same proportion of UCAs with final 
contract types of fixed-price and cost-type were definitized in less 
than 180 days as were definitized in more than 180 days. 

We also identified a number of UCAs that met provisions that allow an 
extension or waiver of the 180-day definitization requirement. FAR and 
DFARS allow an additional 180-day extension of the definitization time 
frame from the date a qualifying proposal (one that is complete and 
auditable) is received from the contractor.[Footnote 12] Our review 
showed that definitization occurred during this extended time frame in 
only 7 of the 36 cases. Two UCAs were permitted waivers of the 180-day 
requirement since they were in support of contingency operations, 
pursuant to a September 2003 Air Force memorandum waiving the time 
frame for actions related to Operation Iraqi Freedom. 

Figure 3 illustrates the average time frames and the range of days that 
lapsed before definitization. 

Figure 3: Average Time Frame for Definitization of UCAs: 

[See PDF for image] 

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

Note: The average time frame includes 9 UCAs that took more than 180 
days to definitize but were provided extensions due to receipt of a 
qualifying proposal or were authorized waivers when the requirement was 
for contingency operations. 

[End of figure] 

Delays in Definitization Occur for a Variety of Reasons: 

Contracting officials provided more than a dozen reasons for not 
definitizing UCAs within the original 180-day time frame. Based on our 
review of the contract files and discussions with contracting and 
program officials, the most common reasons for the delays were (1) 
delays in obtaining a qualifying proposal from the contractor, (2) 
acquisition workforce shortages that led to overly heavy workloads, and 
(3) complexity of requirements at award of the UCA or changing 
requirements after award. In many cases, multiple reasons contributed 
to the definitization delay. Some of the longest delayed 
definitizations occurred because of a combination of the three reasons 
stated above. Table 4 provides a summary of the number of instances 
each reason was provided as an explanation of the delay. 

Table 4: Definitization Delays Cited for UCAs Reviewed: 

Reasons for delays: Untimely receipt of qualifying proposal; 
Number of instances: 23. 

Reasons for delays: Government acquisition workforce shortages/ 
workloads; 
Number of instances: 11. 

Reasons for delays: Changing or complex requirements; 
Number of instances: 10. 

Reasons for delays: Changes in funding availability; 
Number of instances: 6. 

Reasons for delays: Contracting officer's inadequate performance; 
Number of instances: 4. 

Reasons for delays: Required audits; 
Number of instances: 4. 

Reasons for delays: Protracted negotiations; 
Number of instances: 3. 

Reasons for delays: Hurricanes; 
Number of instances: 3. 

Reasons for delays: Other; 
Number of instances: 13. 

Source: GAO analysis of DOD data. 

Note: "Other" reasons include data rights issues, waiting for program 
milestone decisions, and delays in obtaining certified cost and pricing 
data. 

[End of table] 

Contracting officers stated that delays in obtaining a qualifying 
proposal were sometimes caused by the program office's changing 
requirements. Many contracting officials stated the government's 
requirement was inadequately described when the UCA was awarded or was 
subsequently changed after award once the requirement was better 
understood. Contractor representatives and contracting officers noted 
that it is difficult for a contractor to timely submit an adequate 
proposal when the government is unsure about the specifications of the 
product or service it requires. Officials at two companies noted that 
they attempt to submit qualifying proposals on time, but must redo 
them--sometimes multiple times--to reflect the government's revised 
requirements. 

In addition to timeliness of proposals and changing requirements, 
shortfalls in the government's acquisition workforce were another key 
reason for definitization delays. This issue was manifest in different 
ways, including inadequate numbers of contracting officials, the heavy 
workload of the Defense Contract Audit Agency, which is frequently 
called upon to perform audits of the proposal's pricing structure, and, 
in four cases, contracting officials who did not perform their duties 
to definitize the UCAs. Some contracting officers commented that UCAs 
require twice the work that a normal contract award does, because in 
essence they go through the contracting process twice--once for the 
undefinitized period and once for the definitized period. Problems with 
acquisition staff or workloads at the commands resulted, in some 
instances, in a UCA remaining undefinitized until someone turned 
attention to it. Some contracting officers told us that their focus is 
on getting the UCA awarded; after that, they often must turn to other 
pressing awards so that following up on definitizations becomes less of 
a priority. We also found one situation where a UCA simply fell through 
the cracks because it dropped off the local reporting system due to a 
computer error. In one case, the contracting officer awarded a UCA but 
took another job before it was definitized, and the contracting officer 
who inherited it was not aware for some time that it had not been 
definitized; thus, no one acted on it for over a year. 

UCAs Are Usually Awarded with Maximum Obligations Allowed: 

Most of the UCAs we reviewed were awarded with the maximum obligations 
allowed. Specifically, 60 of the 77 UCAs--78 percent--were obligated 
with approximately 50 percent or more of the not-to-exceed price at 
award. As a result, contractors may have less incentive to hasten the 
submission of qualifying proposals and agencies have little incentive 
to demand their prompt submission, since funds are available to proceed 
with the work, leading to a protracted negotiation process. One 
contracting officer obligated a smaller percentage initially, but as 
time went by and various issues arose that slowed definitization, he 
raised the obligated amount little by little until it reached 50 
percent. In hindsight, he said it would have been easier to just 
obligate the 50 percent at the beginning. Company officials said that 
the minimum amount needed to begin work under a UCA depends on the 
circumstances of the work. Officials from all four companies told us 
they usually receive 50 percent of the not-to-exceed price at award. 

While we found some evidence of monitoring the percentage of funds 
obligated, in accordance with the DFARS requirement to definitize UCAs 
before 50 percent of the funding is obligated, none of the commands we 
visited act proactively to ensure the obligations do not exceed this 
maximum amount. As a result, DOD is at risk of increasing the potential 
that it is paying additional unnecessary costs during the undefinitized 
period. The monitoring that does occur, at three local commands we 
visited, is not effective in ensuring compliance with the requirement 
because no alerts are generated if a UCA goes beyond the maximum 
obligations before definitization. An official at one command that does 
not monitor this requirement stated that the command does not do so 
because it is the responsibility of the contracting officer to ensure 
it is met. 

Requirement to Definitize Before 40 Percent of Work Is Completed Is Not 
Tracked: 

DOD is not monitoring compliance with the FAR requirement to definitize 
letter contacts when 40 percent of the work is complete. None of the 
local commands we visited had procedures in place to track this 
provision. Officials at two commands were not familiar with the 
requirement. As such, we were unable to assess whether DOD is in 
compliance with this requirement. Many contracting officers stated that 
the amount of work completed before definitization could not readily be 
determined because under a UCA there is no established baseline against 
which to measure the percentage of work completed. Policy officials at 
several locations we visited also stated that the FAR requirement would 
be difficult to implement. Based on our findings, a DFARS case was 
initiated in April 2007 to clarify defense acquisition regulations. 

Little Insight into Whether Reduced Risk Is Taken into Account when 
Negotiating Profit or Fee: 

Contracting officers are not usually documenting, when applicable, 
whether profit or fee is adjusted for work performed by the contractor 
at a lower level of risk during the undefinitized period. All UCAs are 
essentially cost-reimbursement contracts until definitized, as 
contractors are reimbursed for all incurred costs that are reasonable, 
allocable, and allowable during the undefinitized period. This contract 
type places the greatest cost risk on the government. When the UCA is 
definitized, the ultimate contract type is determined. Our sample 
included a variety of final contract types, including firm-fixed-price, 
cost-plus-award-fee, cost-plus-incentive-fee, and cost-plus-fixed-fee. 
Each contract type includes either profit (fixed-price contracts) or 
fee (cost-type contracts) for the contractor. During the undefinitized 
period, however, profit or fee is not paid. The profit rate or fee is 
derived at definitization and then applied across the entire period of 
performance, including the undefinitized period. 

When calculating the negotiating position on profit or fee for a UCA, 
the FAR and DFARS require contracting officers to assess the relative 
risk borne by the contractor versus the government. The amount of 
profit or fee available to the contractor is usually determined via a 
structured calculation that is a function of several different factors, 
such as the complexity of the work, resources required to perform, 
independent efforts by the contractor to bring about improved 
performance, and contract type. Specifically, the DFARS states that 
when determining a profit or fee position during negotiations to 
definitize a UCA, contracting officers must consider any reduced risk 
on the portion of the contract performed before definitization and any 
reduced risk on the remaining portion that will be performed after 
definitization. For example, the DFARS states that: 

"When the final price of a UCA is negotiated after a substantial 
portion of the required performance has been completed, the head of the 
contracting activity shall ensure the profit allowed reflects (a) Any 
reduced cost risk to the contractor for costs incurred during contract 
performance before negotiation of the final price; and (b) The 
contractor's reduced cost risk for costs incurred during performance of 
the remainder of the contract."[Footnote 13] 

When costs have been incurred prior to definitization, contracting 
officers are to generally regard the contract type risk to be in the 
low end of the designated range. If a substantial portion of the costs 
have been incurred prior to definitization, the contracting officer may 
assign a value as low as 0 percent, regardless of contract 
type.[Footnote 14] 

Table 5 shows the range of profit and fee rates negotiated at 
definitization for the UCAs we reviewed. We did not assess the 
reasonableness of the profit or fee percentages determined by the 
contracting officers. 

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

Air Force; 
Profit or fee percentage: Fixed-price: Low: 3.0; 
Profit or fee percentage: Fixed-price: High: 15.0; 
Profit or fee percentage: Cost-type: Low: 5.2; 
Profit or fee percentage: Cost-type: High: 14.5. 

Army; 
Profit or fee percentage: Fixed-price: Low: 6.0; 
Profit or fee percentage: Fixed-price: High: 17.2; 
Profit or fee percentage: Cost- type: Low: 9.0; 
Profit or fee percentage: Cost-type: High: 15.0. 

Navy; 
Profit or fee percentage: Fixed-price: Low: 7.9; 
Profit or fee percentage: Fixed-price: High: 13.9; 
Profit or fee percentage: Cost- type: Low: 7.0; 
Profit or fee percentage: Cost-type: High: 15.0. 

National Geospatial-Intelligence Agency; 
Profit or fee percentage: Fixed-price: Low: none; 
Profit or fee percentage: Fixed-price: High: none; 
Profit or fee percentage: Cost-type: Low: 4.0; 
Profit or fee percentage: Cost-type: High: 15.0. 

Source: GAO analysis of DOD data. 

[End of table] 

We found that these adjustments to profit or fee were usually not 
documented in the price negotiation memorandum, a contract document 
that sets forth the results of the negotiations and contains the 
contracting officer's determination that the negotiated price is fair 
and reasonable. Specifically, the memorandums for only 14 of the 77 
UCAs we reviewed discussed how the negotiated profit or fee was 
affected by the UCA. As a result, for the majority of the UCAs we 
reviewed, no determination can be made whether the costs incurred 
during the undefinitized period were considered when the allowable 
profit or fee was determined. Similarly, in a 2004 report, the DOD IG 
found that contract records did not contain evidence that allowable 
profit factors, such as the reduced cost risk, were considered in the 
final profit rate awarded to the contractor. It was also not evident 
that already incurred costs were taken into account when determining 
profit.[Footnote 15] 

The majority of the contracting officers responsible for the UCAs we 
reviewed acknowledged that they are required to document how the shift 
in risk associated with the undefinitized period was accounted for in 
determining the profit or fee calculated for negotiations. 

Conclusions: 

UCAs are a necessary tool for DOD to use to meet urgent contracting 
needs, but DOD must ensure that their use is limited to appropriate 
circumstances. Even when UCAs are used appropriately, increased 
management attention is needed regarding definitization time frames so 
the government's position during subsequent negotiations is not overly 
weakened. Existing regulations and guidance governing UCAs are not 
always understood or followed. Actions are needed to strengthen 
management controls and oversight of UCAs; otherwise the department 
will remain at risk of paying unnecessary costs and potentially 
excessive profit rates. 

Recommendations for Executive Action: 

To improve oversight of UCAs, we recommend that: 

* the Administrator of the Office of Management and Budget's Office of 
Federal Procurement Policy assess whether the Federal Procurement Data 
System-Next Generation data fields need to be modified to require 
coding that will identify undefinitized task and delivery orders and 
undefinitized contract modifications, and: 

* the Secretary of Defense issue guidance to program and contracting 
officials on how to comply with the FAR requirement to definitize when 
40 percent of the work is complete. 

To help ensure that UCAs are definitized in accordance with 
regulations, we recommend that the Secretary of Defense take the 
following two actions: 

* put in place a reporting channel to headquarters that includes 
information on UCAs in place for 180 days or more and that outlines 
plans and time frames for definitization, and: 

* supplement acquisition personnel on an as-needed basis to quickly 
definitize UCAs once they are awarded. 

To mitigate the risks of paying increased costs under UCAs, we 
recommend that the Secretary of Defense set forth supplemental guidance 
to accomplish the following two actions: 

* direct contracting officers, where feasible, to obligate less than 
the maximum allowed at UCA award to incentivize contractors to expedite 
the definitization process, and: 

* specify that the effect of contractor's reduced risk during the 
undefinitized period on profit or fee be documented in the price 
negotiation memorandum or its equivalent. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD and the Office of Federal 
Procurement Policy for comment. In written comments, DOD concurred with 
our findings and recommendations and noted actions underway that are 
directly responsive. The department's comments are reproduced in 
appendix III. The Office of Federal Procurement Policy provided oral 
comments, stating that it had no concerns regarding our recommendation 
to add a data field in FPDS-NG that would identify undefinitized task 
and delivery orders and contract modifications at award. Such data are 
needed to provide DOD (and other agencies) more complete information on 
UCAs, which can then be used to improve oversight of their use. 

Although DOD concurred with our recommendation to issue guidance 
addressing the FAR definitization requirement, in its comments, DOD 
stated that our reference to the FAR requirements for UCA 
definitization schedules did not consider the difference in 
requirements for DOD that are specified in the U.S. Code. However, our 
report does address those differences. DOD also stated that the Defense 
Acquisition Regulation Council has initiated a DFARS case, based upon 
our discussions during this review, to clarify that DOD contracting 
officers should use the DOD definitization schedule criteria. DOD 
agreed that the need for enhanced oversight of UCAs is appropriate and 
said it will consider requiring the military departments to enhance 
oversight of UCAs and to provide periodic reports, with remediation 
plans, for those past the definitization time frames. The Department 
also published two notices in the Federal Register on May 22, 2007, 
seeking public comments on current DOD contract financing and funding 
policies, including the weighted guidelines that are used to determine 
appropriate profit or fee based on an assessment of contractor risk. 

We are sending copies of this report to the Secretary of Defense, the 
Director of the Office of Management and Budget, the Administrator of 
the Office of Federal Procurement Policy, and other interested 
congressional committees. We will also make copies available to others 
upon request. In addition, the report will be available at no charge on 
the GAO Web site at http://www.gao.gov. 

If you have any questions about this report or need additional 
information, please contact me at (202) 512-6986 or 
calvaresibarra@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. Key contributors to this report were Michele Mackin, Assistant 
Director; R. Eli DeVan; Lily Chin; Matthew T. Drerup; Victoria Klepacz; 
John Krump; Jean K. Lee; and Lynn Milan. 

Signed by: 

Ann Calvaresi-Barr: 
Director, Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine the level of insight the Department of Defense (DOD) has 
into its use of undefinitized contract actions (UCA), we interviewed 
DOD senior-level acquisition officials and service-level acquisition 
officials to identify any additional policies specifically addressing 
the use of undefinitized contract actions at the locations selected for 
our review. We analyzed information from DOD's procurement system 
(DD350) and local commands for undefinitized contract actions from 
fiscal year 2001 through fiscal year 2005. We also reviewed the 
relevant sections of the Federal Acquisition Regulation and the Defense 
Federal Acquisition Regulation Supplement, as well as service-level 
guidance pertaining to the use of undefinitized contract actions. 

To identify how and when DOD is using UCAs and whether DOD is 
definitizing these actions in a timely manner, we reviewed a random 
sample of undefinitized contract actions from six military commands and 
one non military defense agency. While undefinitized contract actions 
may include letter contracts, task or delivery orders, and contract 
modifications, only letter contracts are recorded by DD350 in a manner 
that allowed GAO to identify them as undefinitized at the time of 
award. Therefore, the specific locations for our review were selected 
based on the total dollar value and volume of letter contracts issued 
during fiscal years 2004 and 2005 by various DOD buying organizations 
as recorded in the DD350 system. On the basis of this data, we selected 
the two commands with the largest dollar volume of letter contracts 
within each of the three military services (Air Force, Army, and Navy). 
As such, the six military locations represented over 75 percent of the 
total dollars awarded for letter contracts during the period. We also 
selected the non military defense agency with the largest number of 
letter contracts. The specific locations selected for our review were: 

U.S. Air Force: 
Aeronautical Systems Center, Dayton, Ohio: 
Warner Robins Air Logistics Center, Warner Robins, Georgia: 

U.S. Army: 
TACOM Life Cycle Management Command, Warren, Michigan: 
Aviation and Missile Command, Huntsville, Alabama: 

U.S. Navy: 
Naval Sea Systems Command, Washington, D.C . 
Naval Air Systems Command, Patuxent River, Maryland: 

Non military defense agency: 
National Geospatial-Intelligence Agency, Washington, D.C. 

To include other types of undefinitized contract actions in our review, 
we requested a listing of task and delivery order and contract 
modifications issued as undefinitized contract actions during fiscal 
years 2004 and 2005 from each of the seven locations that we planned to 
visit. This request was necessary because these types of undefinitized 
actions are not identified in the federal procurement data system. We 
then established a population of undefinitized contract actions at each 
location and selected a random sample of contract actions to review. 
Not every location could provide us with a listing of other 
undefinitized contract actions prior to our site visit, and in some 
cases there were an insufficient number of such actions to meet our 
sampling needs. In such cases we reviewed additional letter contracts 
selected at random to achieve similar sample sizes at each location. A 
total of 77 undefinitized contract actions were sampled for this 
review. The six Army, Navy, and Air Force contracting organizations 
that we selected for our review initiated 70 of the undefinitized 
contract actions that we reviewed. The National Geospatial-Intelligence 
Agency initiated 7 of the undefinitized contract actions that we 
reviewed. Observations made from our review cannot be generalized to 
the entire population of undefinitized contract actions issued by DOD. 

We omitted undefinitized contractual actions for foreign military 
sales, purchases that did not exceed the simplified acquisition 
threshold, special access programs, and congressionally mandated long 
lead procurement contracts since these actions are not subject to 
compliance with the definitization requirements we were reviewing. We 
also excluded all undefinitized task orders issued under basic ordering 
agreements. The majority of pricing and contract terms are established 
under basic ordering agreements, leaving few terms and conditions to be 
definitized after award when orders are issued under this type of 
contract. 

At each location, we reviewed contract document files and interviewed 
officials from the local program office as well as the cognizant 
contracting officers. In a few cases the contracting officer could not 
speak to the reasons for definitization delays because that officer was 
not involved with the award or definitization of the UCA selected for 
our review. We relied on data provided to us by DOD and the buying 
commands we visited, which we verified where practical. For example, in 
determining the length of time to definitize the sampled actions, we 
verified the data reported in DD350 by tracing the reported award and 
definitization dates to the contract file documentation. We also 
verified contract obligation and not-to-exceed amounts reported in 
DD350 by reviewing contract file documentation available in hard copy 
at the sites we visited and electronically from DOD's Electronic Data 
Access Web-based system. 

To obtain insight into the issues surrounding the use of UCAs from a 
contractor's point of view, we interviewed representatives from four 
companies who entered into undefinitized contract actions with one or 
more of the buying organizations that were selected for this review. 

We conducted our work from August 2006 through April 2007 in accordance 
with generally accepted government auditing standards. 

[End of section] 

Appendix II: Undefinitized Contract Actions Reviewed: 

Air Force. 

Aeronautical Systems Center. 

1; 
Description of goods or services: B-2 aircraft aft deck inner mold 
kits; 
Award date: 2/17/04; 
Definitization date: 8/17/04; 
Not-to-exceed amount: $16,737,000; 
Obligation amount at award: $8,368,500; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPFF. 

2; 
Description of goods or services: Required navigational performance 
link for C-17 aircraft; 
Award date: 9/5/02; 
Definitization date: 12/23/03; 
Not-to-exceed amount: 5,250,000; 
Obligation amount at award: 2,146,118; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPAF. 

3; 
Description of goods or services: Common crypto appliqué for F-15 
aircraft; 
Award date: 2/20/04; 
Definitization date: 7/1/ 04; 
Not-to-exceed amount: 1, 366, 402; 
Obligation amount at award: 683,201; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPFF. 

4; 
Description of goods or services: Enterprise support infrastructure; 
Award date: 5/28/04; 
Definitization date: 7/24/04; 
Not-to-exceed amount: 1,508,938; 
Obligation amount at award: 1,131,704; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

5; 
Description of goods or services: Threat Situational Awareness System 
for B-1 aircraft; 
Award date: 12/19/03; 
Definitization date: 6/1/05; 
Not-to-exceed amount: 23,100,000; 
Obligation amount at award: 10,781,000; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPFF. 

6; 
Description of goods or services: Aircraft Defense Systems for Army C-
37A aircraft; 
Award date: 12/8/04; 
Definitization date: 5/2/05; 
Not-to-exceed amount: 6,038,000; 
Obligation amount at award: 3,019,000; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

7; 
Description of goods or services: Receiver/exciter controller upgrade 
kits; 
Award date: 9/30/05; 
Definitization date: 5/18/ 06; 
Not-to-exceed amount: 1,287,000; 
Obligation amount at award: 965,250; 
Total dollar value at award: $965,250; 
Contract/ order pricing type[A]: FFP. 

8; 
Description of goods or services: Air Force: Aeronautical Systems 
Center: 9 Lynx radar upgrade for Predator unmanned aerial vehicle; 
Award date: 7/29/05; 
Definitization date: 9/29/06; 
Not-to-exceed amount: 13,867,301; 
Obligation amount at award: 10,400,476; 
Total dollar value at award: 10,400,476; 
Contract/ order pricing type[A]: FFP. 

9; 
Description of goods or services: Tactical Micro Unmanned Aerial 
Vehicle improvements; 
Award date: 2/8/05; 
Definitization date: 5/18/05; 
Not-to-exceed amount: 2,202,337; 
Obligation amount at award: 1,101,169; 
Total dollar value at award: 2,202,337; 
Contract/ order pricing type[A]: FFP/T&M. 

10; 
Description of goods or services: Receiver/exciter controller upgrade 
kits for ASARS-2A radar system; 
Award date: 5/19/04; 
Definitization date: 2/25/05; 
Not-to-exceed amount: 5,938,414; 
Obligation amount at award: 4,453,811; 
Total dollar value at award: 8,889,104; 
Contract/ order pricing type[A]: FFP. 

11; 
Description of goods or services: Readiness spare package kits for 
Predator unmanned aerial vehicle; 
Award date: 7/1/04; 
Definitization date: 8/24/05; 
Not-to-exceed amount: 26,427,245; 
Obligation amount at award: 26,427,245; 
Total dollar value at award: 131,028,443; 
Contract/ order pricing type[A]: FFP. 

12; 
Description of goods or services: Battlefield Air Targeting Camera 
Autonomous Micro-Air Vehicles; 
Award date: 9/29/05; 
Definitization date: 3/8/06; 
Not-to-exceed amount: 619,852; 
Obligation amount at award: 309,925; 
Total dollar value at award: 309,925; 
Contract/ order pricing type[A]: FFP. 

Warner Robins Air Logistics Center. 

13; 
Description of goods or services: Remotely Operated Video Enhanced 
Receiver upgrade; 
Award date: 6/30/04; 
Definitization date: 10/29/04; 
Not-to-exceed amount: 9,473,313; 
Obligation amount at award: 9,473,313[C]; 
Total dollar value at award: 9,739,688; 
Contract/ order pricing type[A]: CPFF. 

14; 
Description of goods or services: Engineering services for C-130 
aircraft; 
Award date: 7/22/04; 
Definitization date: 3/20/06; 
Not-to-exceed amount: 3,240,000; 
Obligation amount at award: 720,000; 
Total dollar value at award: 1,739,934; 
Contract/ order pricing type[A]: CPFF. 

15; 
Description of goods or services: Repair of low power color radar; 
Award date: 6/2/04; 
Definitization date: 9/28/04; 
Not- to-exceed amount: 2,900,000; 
Obligation amount at award: 1,450,000; 
Total dollar value at award: 3,648,606; 
Contract/ order pricing type[A]: FFP/T&M. 

16; 
Description of goods or services: Upgrade factory test equipment for 
Joint Helmet Mounted Cueing System; 
Award date: 8/2/05; 
Definitization date: 7/27/06; 
Not-to-exceed amount: 4,102,751; 
Obligation amount at award: 3,077,063; 
Total dollar value at award: 3,077,063; 
Contract/ order pricing type[A]: FFP. 

17; 
Description of goods or services: Purchase power supplies for repair; 
Award date: 5/3/04; 
Definitization date: 8/11/04; 
Not- to-exceed amount: 1,500,000; 
Obligation amount at award: 750,000; 
Total dollar value at award: 1,565,250; 
Contract/ order pricing type[A]: FFP. 

18; 
Description of goods or services: Multi-functional Information 
Distribution System initial spares; 
Award date: 9/29/05; 
Definitization date: 5/26/06; 
Not-to-exceed amount: 7,800,000; 
Obligation amount at award: 3,900,000; 
Total dollar value at award: 3,900,000; 
Contract/ order pricing type[A]: FFP. 

19; 
Description of goods or services: Replace fire suppression system; 
Award date: 3/22/04; 
Definitization date: 6/30/04; 
Not-to-exceed amount: 2,052,092; 
Obligation amount at award: 1,026,046; 
Total dollar value at award: 1,943,807; 
Contract/ order pricing type[A]: FFP. 

20; 
Description of goods or services: Interim support for repair of radar 
systems for C-130 aircraft; 
Award date: 5/5/05; 
Definitization date: 9/28/05; 
Not-to-exceed amount: 4,372,865; 
Obligation amount at award: 2,186,433; 
Total dollar value at award: 4,372,865; 
Contract/ order pricing type[A]: FFP/T&M/ CPFF. 

21; 
Description of goods or services: Develop and upgrade transponder 
software for C-5 aircraft; 
Award date: 3/3/04; 
Definitization date: 7/23/04; 
Not-to-exceed amount: 350,000; 
Obligation amount at award: 175,000; 
Total dollar value at award: 336,814; 
Contract/ order pricing type[A]: CPFF. 

22; 
Description of goods or services: Joint Surveillance Target Attack 
Radar System initial spares; 
Award date: 3/25/04; 
Definitization date: 9/30/04; 
Not-to-exceed amount: 11,840,000; 
Obligation amount at award: 10,763,636; 
Total dollar value at award: N/ A[B]; 
Contract/ order pricing type[A]: CPAF. 

23; 
Description of goods or services: Joint Surveillance Target Attack 
Radar System initial spares for programmed depot maintenance; 
Award date: 9/1/05; 
Definitization date: 8/28/06; 
Not-to-exceed amount: 4,110,537; 
Obligation amount at award: 4,110,537[C]; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPAF. 

24; 
Description of goods or services: Replace floor in hangar for C-17 
aircraft; 
Award date: 1/26/05; 
Definitization date: 2/17/ 05; 
Not-to-exceed amount: 1,433,000; 
Obligation amount at award: 716,500; 
Total dollar value at award: 1,425,906; 
Contract/ order pricing type[A]: FFP. 

Army. 

Aviation and Missile Command. 

25; 
Description of goods or services: Periscope head assembly for Bradley 
fighting vehicle system; 
Award date: 2/25/04; 
Definitization date: 6/22/05; 
Not-to-exceed amount: 2,500,000; 
Obligation amount at award: 1,250,000; 
Total dollar value at award: 1,597,656; 
Contract/ order pricing type[A]: CPFF. 

26; 
Description of goods or services: Improved data modems for avionics 
targeting communication system; 
Award date: 8/27/04; 
Definitization date: 6/22/05; 
Not-to-exceed amount: 3,060,000; 
Obligation amount at award: 1,530,000; 
Total dollar value at award: 2,703,497; 
Contract/ order pricing type[A]: FFP. 

27; 
Description of goods or services: Patriot missile rack spares; 
Award date: 4/7/05; 
Definitization date: 9/28/05; 
Not- to-exceed amount: 1,699,323; 
Obligation amount at award: 832,668; 
Total dollar value at award: 1,419,925; 
Contract/ order pricing type[A]: FFP. 

28; 
Description of goods or services: Battery assembly; 
Award date: 3/3/05; 
Definitization date: 8/05/05; 
Not-to-exceed amount: 1,227,425; 
Obligation amount at award: 601,438; 
Total dollar value at award: 1,159,705; 
Contract/ order pricing type[A]: FFP. 

29; 
Description of goods or services: Integrated sight repair; 
Award date: 12/20/04; 
Definitization date: 2/28/06; 
Not-to-exceed amount: 7,120,000; 
Obligation amount at award: 3,488,800; 
Total dollar value at award: 3,488,800; 
Contract/ order pricing type[A]: CPFF. 

30; 
Description of goods or services: Motion picture camera; 
Award date: 9/28/05; 
Definitization date: 6/8/06; 
Not-to-exceed amount: 11,430,000; 
Obligation amount at award: 5,715,000; 
Total dollar value at award: 2,857,500; 
Contract/ order pricing type[A]: FFP. 

31; 
Description of goods or services: Auxiliary Power Unit kits and 
Auxiliary Power Unit spare filter assembly; 
Award date: 3/11/05; 
Definitization date: 9/20/05; 
Not-to-exceed amount: 8,541,860; 
Obligation amount at award: 4,185,511; 
Total dollar value at award: N/ A[B]; 
Contract/ order pricing type[A]: FFP. 

32; 
Description of goods or services: Engines for Blackhawk helicopters for 
State Department; 
Award date: 6/2/04; 
Definitization date: 9/28/04; 
Not-to-exceed amount: 4,118,648; 
Obligation amount at award: 2,018,138; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

33; 
Description of goods or services: Auxiliary Power Unit for UH-60 
aircraft; 
Award date: 7/19/05; 
Definitization date: 9/21/05; 
Not-to-exceed amount: 2,183,893; 
Obligation amount at award: 2,183,893; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

34; 
Description of goods or services: Laser range finders for Avenger 
vehicles; 
Award date: 9/13/04; 
Definitization date: 2/6/ 06; 
Not-to-exceed amount: 7,064,844; 
Obligation amount at award: 1,305,691; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

35; 
Description of goods or services: Engines for Blackhawk helicopters; 
Award date: 1/12/04; 
Definitization date: 9/28/04; 
Not-to-exceed amount: 46,426,934; 
Obligation amount at award: 22,749,198; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

36; 
Description of goods or services: Cargo hooks for CH-47 Chinhook 
helicopters; 
Award date: 4/26/05; 
Definitization date: 3/15/ 06; 
Not-to-exceed amount: 7,760,000; 
Obligation amount at award: 3,802,400; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

TACOM Life Cycle Management Command. 

37; 
Description of goods or services: Purchase air conditioning units for 
trucks located in Southwest Asia; 
Award date: 3/5/04; 
Definitization date: 9/24/04; 
Not-to-exceed amount: 12,321,566; 
Obligation amount at award: 6,160,783; 
Total dollar value at award: 50,222,433; 
Contract/ order pricing type[A]: FFP. 

38; 
Description of goods or services: Performance of system technical 
support services on M707 KNIGHT vehicle program; 
Award date: 12/8/04; 
Definitization date: 2/17/05; 
Not-to-exceed amount: 1,103,200; 
Obligation amount at award: 551,600; 
Total dollar value at award: 14,516,695; 
Contract/ order pricing type[A]: CPFF. 

39; 
Description of goods or services: Conversion of existing contract for 
remaining system development efforts for Future Combat System; 
Award date: 9/30/05; 
Definitization date: 3/28/06; 
Not-to-exceed amount: 17,350,000,000; 
Obligation amount at award: 219,245,691; 
Total dollar value at award: 254,245,691; 
Contract/ order pricing type[A]: CPFF/CPIF. 

40; 
Description of goods or services: Procurement of cargo/troop carrier 
armor kits and underbody blast protection kits; 
Award date: 5/3/04; 
Definitization date: 9/27/04; 
Not-to-exceed amount: 33,453,860; 
Obligation amount at award: 25,090,387; 
Total dollar value at award: 43,031,578; 
Contract/ order pricing type[A]: FFP. 

41; 
Description of goods or services: Rebuild of Medium Tactical Vehicles 
to repair damage sustained in overseas deployments; 
Award date: 2/10/04; 
Definitization date: 8/11/04; 
Not-to-exceed amount: 20,000,000; 
Obligation amount at award: 10,000,000; 
Total dollar value at award: 31,178,228; 
Contract/ order pricing type[A]: CPFF. 

42; 
Description of goods or services: Procurement of the M1117 Armored 
Security Vehicle; 
Award date: 6/30/05; 
Definitization date: 10/31/06; 
Not-to-exceed amount: 517,660,000; 
Obligation amount at award: 258,830,000; 
Total dollar value at award: 388,245,000; 
Contract/ order pricing type[A]: FFP. 

43; 
Description of goods or services: Rebuild of well drilling equipment; 
Award date: 3/4/05; 
Definitization date: 7/8/05; 
Not- to-exceed amount: 200,000; 
Obligation amount at award: 100,000; 
Total dollar value at award: 180,000; 
Contract/ order pricing type[A]: FFP. 

44; 
Description of goods or services: Procure ballistic protection armor 
systems for M-1062 and M-978 fuel tankers; 
Award date: 3/31/ 05; 
Definitization date: 9/22/05; 
Not-to-exceed amount: 12,840,178; 
Obligation amount at award: 6,420,089; 
Total dollar value at award: 41,030,715; 
Contract/ order pricing type[A]: FFP. 

45; 
Description of goods or services: Add-on-armor spare parts for Family 
of Heavy Tactical Vehicles; 
Award date: 2/8/05; 
Definitization date: 12/5/05; 
Not-to-exceed amount: 1,080,650; 
Obligation amount at award: 540,325; 
Total dollar value at award: 540,325; 
Contract/ order pricing type[A]: FFP. 

46; 
Description of goods or services: Procurement of Automatic Fire 
Suppression System kits for U.S. Marine Corps light armored vehicles; 
Award date: 9/29/05; 
Definitization date: 5/26/06; 
Not-to-exceed amount: 17,827,685; 
Obligation amount at award: 8,913,843; 
Total dollar value at award: 8,913,843; 
Contract/ order pricing type[A]: FFP. 

47; 
Description of goods or services: Procurement of armor protection for M-
978 fuel tankers; 
Award date: 8/2/05; 
Definitization date: 1/26/06; 
Not-to-exceed amount: 3,559,485; 
Obligation amount at award: 1,779,743; 
Total dollar value at award: 1,779,743; 
Contract/ order pricing type[A]: FFP. 

Navy. 

Naval Air Systems Command. 

48; 
Description of goods or services: Unmanned Aerial Vehicle services for 
Navy deployments and Gulf oil platform security; 
Award date: 4/18/05; 
Definitization date: 9/16/05; 
Not-to-exceed amount: 14,500,000; 
Obligation amount at award: 7,250,000; 
Total dollar value at award: 28,360,209; 
Contract/ order pricing type[A]: FFP. 

49; 
Description of goods or services: Low Rate Initial Production for the 
8X10 displays for F/A-18 aircraft; 
Award date: 12/12/03; 
Definitization date: 8/9/04; 
Not-to-exceed amount: 9,075,300; 
Obligation amount at award: 4,537,650; 
Total dollar value at award: 8,157,609; 
Contract/ order pricing type[A]: FFP. 

50; 
Description of goods or services: Support of the purchase of Fiber 
Channel Network Switches for F/A-18 aircraft; 
Award date: 3/ 31/04; 
Definitization date: 10/25/04; 
Not-to-exceed amount: 3,840,000; 
Obligation amount at award: 1,920,000; 
Total dollar value at award: 12,118,512; 
Contract/ order pricing type[A]: FFP. 

51; 
Description of goods or services: Upgrades to the USQ-113 
communications receiver/jammer installed on EA-6B aircraft; 
Award date: 9/19/05; 
Definitization date: 12/20/06; 
Not-to-exceed amount: 9,500,000; 
Obligation amount at award: 4,750,000; 
Total dollar value at award: 4,750,000; 
Contract/ order pricing type[A]: CPFF. 

52; 
Description of goods or services: Test version of Digital Flight 
Control System replacement unit for the EA-6B aircraft; 
Award date: 6/18/04; 
Definitization date: 2/11/05; 
Not-to-exceed amount: 1,400,000; 
Obligation amount at award: 700,000; 
Total dollar value at award: 1,855,115; 
Contract/ order pricing type[A]: FFP. 

53; 
Description of goods or services: Development and demonstration of 
upgrades to AN/SPN-46 landing system; 
Award date: 2/11/05; 
Definitization date: 6/29/05; 
Not-to-exceed amount: 4,370,815; 
Obligation amount at award: 2,185,408; 
Total dollar value at award: 4,393,755; 
Contract/ order pricing type[A]: CPIF/CPFF. 

54; 
Description of goods or services: MA-31 aerial targets and related 
equipment that represent anti- ship cruise missile threats; 
Award date: 6/22/04; 
Definitization date: 12/16/04; 
Not-to-exceed amount: 16,364,000; 
Obligation amount at award: 8,182,000; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FPIF. 

55; 
Description of goods or services: Digital Map Computer and Video Map 
Computer units for installation on F/A-18 aircraft; 
Award date: 3/2/04; 
Definitization date: 9/30/04; 
Not-to-exceed amount: 9,325,397; 
Obligation amount at award: 6,994,048; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

56; 
Description of goods or services: Accelerate the Wing Center Sections 
improvement for EA-6B aircraft; 
Award date: 11/26/03; 
Definitization date: 6/21/04; 
Not-to-exceed amount: 3,118,057; 
Obligation amount at award: 3,118,057[D]; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: FFP. 

57; 
Description of goods or services: Redesign of specific EA-6B aircraft 
parts that support upgraded electronic attack capabilities; 
Award date: 2/12/04; 
Definitization date: 2/22/05; 
Not-to-exceed amount: 1,800,000; 
Obligation amount at award: 882,000; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPFF. 

58; 
Description of goods or services: Implement additional fault isolation 
for ALQ-218 receiver and wing tip pods on the EA-18G aircraft; 
Award date: 9/27/04; 
Definitization date: 9/26/05; 
Not-to-exceed amount: 7,000,000; 
Obligation amount at award: 3,500,000; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPAF. 

Naval Sea Systems Command. 

59; 
Description of goods or services: Allow contractor to continue detail 
design and integration efforts on the DD(X) destroyer program; 
Award date: 5/25/05; 
Definitization date: 5/28/06; 
Not-to-exceed amount: 2,951,200,000; 
Obligation amount at award: 123,720,000; 
Total dollar value at award: 136,768,931; 
Contract/ order pricing type[A]: CPAF. 

60; 
Description of goods or services: Begin work that supports the start of 
the DD(X) destroyer detail design activities; 
Award date: 9/30/05; 
Definitization date: 12/22/05; 
Not-to-exceed amount: 53,400,000; 
Obligation amount at award: 26,700,000; 
Total dollar value at award: 26,700,000; 
Contract/ order pricing type[A]: CPAF. 

61; 
Description of goods or services: Advanced planning services and long 
lead items for dry-docking of a Navy aircraft carrier; 
Award date: 12/2/03; 
Definitization date: 6/18/04; 
Not-to-exceed amount: 27,866,659; 
Obligation amount at award: 7,299,338; 
Total dollar value at award: 323,177,007; 
Contract/ order pricing type[A]: CPFF/CPIF. 

62; 
Description of goods or services: Design and purchase of Affordable 
Weapon System guided missile system; 
Award date: 3/19/04; 
Definitization date: 8/24/04; 
Not-to-exceed amount: 22,500,000; 
Obligation amount at award: 11,250,000; 
Total dollar value at award: 51,222,594; 
Contract/ order pricing type[A]: CPIF. 

63; 
Description of goods or services: Production and support of Remote 
Minehunting System to operate from Navy surface ships; 
Award date: 9/30/05; 
Definitization date: 10/20/06; 
Not-to-exceed amount: 30,200,000; 
Obligation amount at award: 14,569,800; 
Total dollar value at award: 14,569,800; 
Contract/ order pricing type[A]: FFP/CPFF. 

64; 
Description of goods or services: Support of AEGIS missile guidance 
system development sites in New Jersey; 
Award date: 5/14/ 04; 
Definitization date: 3/7/05; 
Not-to-exceed amount: 250,000,000; 
Obligation amount at award: 18,867,529; 
Total dollar value at award: 167,991,564; 
Contract/ order pricing type[A]: CPFF/CPIF. 

65; 
Description of goods or services: AN/SPS-48 radar system refurbishment; 
Award date: 7/22/05; 
Definitization date: 12/6/05; 
Not-to-exceed amount: 9,765,598; 
Obligation amount at award: 4,882,799; 
Total dollar value at award: 4,882,812; 
Contract/ order pricing type[A]: FFP. 

66; 
Description of goods or services: Design and production of Submarine 
Rescue System; 
Award date: 9/28/05; 
Definitization date: 12/22/06; 
Not-to-exceed amount: 27,873,202; 
Obligation amount at award: 477,994; 
Total dollar value at award: 477,994; 
Contract/ order pricing type[A]: CPFF/FFP. 

67; 
Description of goods or services: AN/SPQ-9B radar systems and related 
change kit equipment; 
Award date: 7/1/04; 
Definitization date: 3/31/05; 
Not-to-exceed amount: 8,943,742; 
Obligation amount at award: 4,471,871; 
Total dollar value at award: 41,248,398; 
Contract/ order pricing type[A]: FFP. 

68; 
Description of goods or services: Migration of Ship Self Defense System 
software and hardware to Navy compliant open architecture form; 
Award date: 5/11/04; 
Definitization date: 8/30/04; 
Not-to-exceed amount: 38,699,471; 
Obligation amount at award: 10,182,000; 
Total dollar value at award: 26,442,884; 
Contract/ order pricing type[A]: CPAF. 

69; 
Description of goods or services: Purchase of AN/BPS-16(V) 4 radar 
sets; 
Award date: 6/22/04; 
Definitization date: 3/25/05; 
Not-to-exceed amount: 13,266,978; 
Obligation amount at award: 6,633,489; 
Total dollar value at award: 21,040,136; 
Contract/ order pricing type[A]: FFP. 

70; 
Description of goods or services: Design and development for Pacific 
Fleet Tactical Component Network; 
Award date: 11/18/04; 
Definitization date: 3/23/06; 
Not-to-exceed amount: 8,801,797; 
Obligation amount at award: 3,760,400; 
Total dollar value at award: 3,760,400; 
Contract/ order pricing type[A]: CPFF. 

National Geospatial-Intelligence Agency. 

71; 
Description of goods or services: Commercial data services; 
Award date: 9/30/05; 
Definitization date: 7/26/06; 
Not-to-exceed amount: 9,043,024; 
Obligation amount at award: 4,521,512; 
Total dollar value at award: 4,521,512; 
Contract/ order pricing type[A]: CPFF. 

72; 
Description of goods or services: High-bandwidth portable hardware 
prototype for Secure, Portable, Accessible, Remote, Communications 
System; 
Award date: 8/5/05; 
Definitization date: 9/25/ 06; 
Not-to-exceed amount: 5,036,147; 
Obligation amount at award: 2,301,692; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPFF. 

73; 
Description of goods or services: Low-bandwidth hardware services for 
Secure, Portable, Accessible, Remote, Communications System; 
Award date: 7/26/05; 
Definitization date: 9/25/06; 
Not-to-exceed amount: 2,934,315; 
Obligation amount at award: 1,467,158; 
Total dollar value at award: N/A[B]; 
Contract/ order pricing type[A]: CPFF. 

74; 
Description of goods or services: Deployable Transit-Case System/Video 
Processing Capability to support research program; 
Award date: 8/23/05; 
Definitization date: 2/16/06; 
Not-to-exceed amount: 12,000,000; 
Obligation amount at award: 3,414,074; 
Total dollar value at award: 3,414,074; 
Contract/ order pricing type[A]: FFP/CPAF/ LOE. 

75; 
Description of goods or services: Provide support services at the 
agency's Virginia facility; 
Award date: 12/24/03; 
Definitization date: 8/31/04; 
Not-to-exceed amount: 24,269,846; 
Obligation amount at award: 3,770,000; 
Total dollar value at award: 54,872,580; 
Contract/ order pricing type[A]: CPFF/CPIF. 

76; 
Description of goods or services: Utility assessment and tools 
development support program; 
Award date: 12/1/04; 
Definitization date: 8/19/05; 
Not-to-exceed amount: 3,300,000; 
Obligation amount at award: 550,000; 
Total dollar value at award: 2,516,000; 
Contract/ order pricing type[A]: CPFF. 

77; 
Description of goods or services: Procurement of Mobile Integrated 
Geospatial Systems vehicles; 
Award date: 11/12/03; 
Definitization date: 4/15/04; 
Not-to-exceed amount: 6,550,000; 
Obligation amount at award: 4,950,000; 
Total dollar value at award: 1,619,973; 
Contract/ order pricing type[A]: CPAF. 

Source: GAO analysis of DOD contract files. 

[A] CPAF - Cost Plus Award Fee CPFF - Cost Plus Fixed Fee CPIF - Cost 
Plus Incentive Fee FFP - Firm Fixed Price FPIF - Firm Fixed Price 
Incentive Fee LOE - Level of Effort T&M - Time-and-materials: 

[B] N/A - Not available from DD350 database: 

[C] These two UCAs were permitted waivers of 50 percent obligation 
requirement since they were in support of contingency operations, 
pursuant to an Air Force memorandum waiving the requirement for actions 
in support of the Global War on Terror. 

[D] This UCA was awarded via a contract modification. The obligations 
at award for this UCA do not include obligations for the entire 
contract amount--only for the undefinitized portion. 

[End of table] 

[End of section] 

Appendix III: Comments from the Department of Defense: 

Acquisition, Technology AND Logistics: 
Office Of The Under Secretary Of Defense: 
3000 Defense Pentagon: 
Washington, Dc 20301-3000: 

Jun 13 2007: 

Ms. Ann Calvaresi-Barr: 
Director, Acquisition and Sourcing Management: 
Government Accountability Office: 
441 G Street, N. W. 
Washington, D.C. 20548: 

Dear Ms. Calvaresi-Barr: 

This is the Department of Defense (DoD) response to the GAO report 07- 
559, "Defense Contracting: Use of Undefinitized Contract Actions 
Understated and Definitization Time Frames Often Not Met," dated May 
11, 1007, (GAO Code 120637). 

The Department has completed its review of the draft report and in 
general, concurs with GAO's recommendations. We have already taken 
steps to improve the manner in which we address cost, pricing and 
financing issues including the manner in which we incentivize the 
Department's contractors to perform. I have established a Cost, Price 
and Finance Division within the Defense Procurement and Acquisition 
Policy organization and as you will see in our attached responses, they 
are already focusing on current DoD contract financing and funding 
policies as well as profit/fee policies. 

We appreciate the opportunity to review this draft report and provide 
our comments. 

Sincerely, 

Signed by: 

Shay D. Assad: 
Director, Defense Procurement and Acquisition Policy: 

Enclosure: 
As Stated: 

GAO-07-559 (GAO Code 120637): 

"Defense Contracting: Use Of Undefinitized Contract Actions Understated 
And Definitization Time Frames Often Not Met" 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
issue guidance to program and contracting officials on how to comply 
with the FAR requirement to definitize when 40 percent of the work is 
complete. (p. 16/GAO Draft Report): 

DoD Response: Concur. DoD will issue guidance to clarify the 
appropriate definitization schedule criteria that apply to contracts 
for or on behalf of DoD. DoD believes that the GAO's reference to the 
FAR requirements for the definitization schedule does not consider the 
difference in requirements specified for DoD in 10 U.S.C. 2326. While 
FAR 16.63 requires definitzation by the earlier of (1) 180 days after 
award of the Undefinitized Contract Action (UCA), or (2) before 40% of 
the work is performed, 10 U.S.C. 2326 provides DoD with different 
criteria for definitization schedules. The Defense Federal Acquisition 
Regulation Supplement (DFARS) implements the criteria prescribed in 10 
U.SC. 2326, which requires definitization by the earlier of (1) 180 
days after UCA award, or (2) before exceeding 50% of the not-to-exceed 
price. 10 U.S.C. 2326 permits adjustments to the criteria upon receipt 
of a qualifying proposal. 

The DAR Council has initiated DFARS Case 2007-0011, "Letter Contract 
Definitization Schedule Criteria" to clarify that DoD contracting 
officers should use the 10 U.S.C. 2326 definitization schedule criteria 
located at DFARS 217-7404-3(a). 

Recommendation 2: The GAO recommends that the Secretary of Defense put 
in place a reporting channel to headquarters that includes information 
on undefinitized contract actions (UCAs) in place for 180 days or more 
and that outlines plans and timeframes for definitization. (p. 16/GAO 
Draft Report): 

DoD Response: Concur. DoD agrees that enhanced oversight is 
appropriate. We are looking at ways to enhance the efficiency and 
effectiveness of post-award contract management, and will consider a 
policy that requires the Military Departments to enhance oversight of 
UCAs and to provide periodic reports of over-age UCAs, with remediation 
plans. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
supplement acquisition personnel on as as-needed basis to quickly 
definitize UCAs once they are awarded. (p. 16/GAO Draft Report): 

DoD Response: Concur: 

Recommendation 4: The GAO recommends that the Secretary of Defense set 
forth supplemental guidance to direct contracting officers, where 
feasible, to obligate less than the maximum allowed at UCA award to 
incentivize contractors to expedite the definitization process. (p. 16/ 
GAO Draft Report): 

DoD Response: Concur. DoD is currently investigating enhancements to 
current contract financing and funding policies found in DFARS Part 
232. We published a notice in the Federal Register on May 22, 2007 (72 
FR 28663) soliciting comments from the public, including any 
suggestions and recommendations regarding current DoD contract 
financing and funding policies. 

Recommendation 5: The GAO recommends that the Secretary of Defense set 
forth supplemental guidance to specify that the effect of contractor's 
reduced risk during the undefinitized period on profit or fee be 
documented in the price negotiation memorandum or its equivalent. (p. 
16/GAO Draft Report): 

DoD Response: Concur. DoD is currently conducting a study focusing on 
the area of contract profit/fee policies. On May 22, 2007, DoD 
published a notice in the Federal Register (72 FR 28663) soliciting 
input on current DoD contract profit/fee policy. On June 4, 2007, the 
Director, DPAP, signed a memorandum soliciting similar input from 
within DoD and OUSD(AT&L) is conducting a study of private sector 
profit/fee policies and the weighted guidelines guidance. We will 
incorporate GAO's concerns regarding reduced risk associated with 
incurred costs vs. higher risk associated with prospective costs in 
this review. 

In addition, we are in the process of reviewing and updating automated 
tools used to facilitate analysis of profit/fee to ensure that they 
facilitate appropriate tailoring of risk considerations. 

[End of section] 

FOOTNOTES 

[1] The 40 percent requirement as set forth in Federal Acquisition 
Regulation (FAR) 16.603-2 (c) (3) applies to letter contracts, one type 
of UCA. 

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

[3] Task and delivery orders are placed against a preexisting contract 
for supplies or services that does not procure or specify a firm 
quantity (other than a minimum or a maximum quantity) and that provides 
for the issuance of orders for the delivery of supplies or performance 
of tasks during the period of the contract. FAR 16.501-1. 

[4] Beginning with fiscal year 2007, DOD's procurement data are fed 
directly into the FPDS-NG; the DD350 database is no longer separately 
maintained. 

[5] For purposes of this report, long lead items are defined as those 
components of a system or piece of equipment for which the times to 
design and fabricate are the longest, and therefore, to which an early 
commitment of funds may be desirable in order to meet the earliest 
possible date of system completion. 

[6] GAO, Iraq Contract Costs: DOD Consideration of Defense Contract 
Audit Agency's Findings, GAO-06-1132 (Washington, D.C.: Sept. 25, 
2006). 

[7] Department of Defense, Office of the Inspector General, Audit 
Report: Undefinitized Contract Actions. Report Number D-2004-112, 
Arlington, Virginia: Aug. 30, 2004. 

[8] In addition to contract cost risk, other factors are also 
considered when determining profit, including the contractor's effort, 
use of federal socioeconomic programs, capital investments, cost 
control and other past accomplishments, and independent development. 

[9] This same issue also pertains to other federal agencies. However, 
we are limiting our discussion to DOD because that agency is the focus 
of this report. 

[10] The National Geospatial-Intelligence Agency also has authority to 
contract under the Central Intelligence Agency's procurement authority; 
our review included the agency's DOD activity only. 

[11] National Geospatial-Intelligence Agency Instruction for 
Acquisition Regulation Implementation 5X217.7403-91. 

[12] A "qualifying proposal" means a proposal containing sufficient 
information for DOD to do complete and meaningful analyses and audits 
of the information in the proposal and any other information that the 
contracting officer has determined DOD needs to review in connection 
with the contract. DFARS 217.7401(c). 

[13] DFARS 217.7404-6. 

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

[15] DOD IG Report Number D-2004-112. 

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