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

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.