[Request for Guidance on Recording Total Obligation]

The Department of Justice requested guidance regarding the correct manner of recording the total obligation for letter contracts when an annual appropriation is involved and the letter contracts may not be definitized before the end of the fiscal year. GAO held that it is appropriate to obligate only the maximum liability which may be incurred against the appropriation current when the letter contract is entered into and that the superseding contract is obligated against the appropriation current when the contract is definitized and entered into.