Review of the Use of Definitization Requirements for Contracts Supporting Reconstruction in Iraq
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION ARLINGTON VA
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Congress appropriated 18.4 billion for security, relief, rehabilitation, and reconstruction in Iraq. The appropriation is known as the Iraq Relief and Reconstruction Fund IRRF. Overall, as of April 2006, 16.4 billion in IRRF funds had been obligated. Funds are obligated for contracts, grants, local purchases, and agency operating expenses. Regarding contracts, as of April 2006 the United States awarded 1,678 contracts valued at nearly 12.1 billion from IRRF. Of these, the Department of Defense DoD, mostly through the Department of the Army, has awarded 1,647 contracts with a value of nearly 7.5 billion. Other activities funded through IRRF, such as grants, local purchases, and agency operating expenses were outside the scope of this review. A variety of contract actions were used in awarding IRRF reconstruction contracts to meet this mandate, including what is referred to in the Defense Federal Acquisition Regulation Supplement DFARS as an undefinitized contract action. The Federal Acquisition Regulation FAR, from which the DFARS is based, refers to these actions as letter contracts. This type of action is used when the contract terms, specifications, or price are not agreed upon before performance is begun. An undefinitized contract action is used in two cases 1 when there is insufficient time to negotiate for a definitive contract to meet the governments needs and 2 when the governments interest demands that a binding commitment be given so that contract performance can begin immediately. The DFARS requires that definitization occur to agree on the contract terms, specifications, and price the earlier of 1 180 days after the issuance of an undefinitized contract action or 2 the date on which the amount of funds obligated under the contract action is equal to more than 50 of the not-to-exceed price.
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