Glossary / Contracts, Finance
Undefinitized contract actionUCA
An undefinitized contract action is an award in which the government authorizes the contractor to begin performance before the contract's terms, specifications or price are agreed. The common form is a letter contract. DFARS 217.74 sets the limits for defense: definitization within 180 days or before 50 percent of the not-to-exceed amount is obligated, and a cap on how much may be obligated before then. Civilian agencies use letter contracts under FAR 16.603 with similar controls. UCAs are reserved for urgent needs, and the contractor's leverage falls once work has started.
Why it matters to your pipeline
A letter contract gets a company working and paid quickly on an urgent requirement, which can be a first break with a buyer. It also carries risk: costs incurred before definitization may be scrutinized, and the final negotiation happens when the contractor has already committed. A firm that accepts one needs its cost records in order from the first day.
When this term shows up in an opening GovSmith finds for you, your vCM explains what it means for that pursuit and does whatever it calls for. You decide; we do the work.
Example
After a hurricane, FEMA issues a letter contract to a generator supplier with a $4M not-to-exceed amount so deliveries start within days. The definitive firm-fixed-price contract is negotiated and signed five months later.
Find out what applies to you
Some terms will matter to your business right away and some won’t for years. A vCM can tell you which are which.