§1109 Undefinitized contractual actions

Summary

The Coast Guard cannot start a contract before the terms, specifications, and price are agreed unless the Head of Contracting Activity directly approves it. Any approval request must say what will happen to Coast Guard needs if finalizing the contract is delayed. A contracting officer must get the contract finalized by the earlier of: the end of 180 days after the contractor gives a qualifying proposal, or the date when funds obligated go over 50 percent of the negotiated overall ceiling price. Normally the Coast Guard may not obligate more than 50 percent of that ceiling until the contract is definitized. If the contractor gives a qualifying proposal before 50 percent is reached, the Coast Guard may obligate up to 75 percent until definitization. The Commandant can waive these limits for contingency operations, transportation security incidents, emergencies that threaten health, safety, or the marine environment, or President-declared natural disasters. The rule does not apply to purchases of initial spares. Non-urgent spare parts and support gear cannot be added to a contract for urgently needed items unless the Commandant approves as good business practice and in the national interest. Changes to the contract scope after work has started need the same Commandant approval. When the final price is set after a lot of work is already done, allowed profit must reflect the contractor’s lower cost risk for costs already spent and for the remaining work. An “undefinitized contractual action” means a new procurement started before terms, specs, or price are agreed, but it does not include foreign military sales, purchases at or below the simplified acquisition threshold, or special access programs. A “qualifying proposal” gives enough information for full audits as the contracting officer decides.