§1109 Undefinitized Contractual Actions

Summary

The Coast Guard cannot start a contract before the final terms, specs, and price are agreed unless the Coast Guard’s Head of Contracting Activity signs off. Any request for that approval must say what will happen to Coast Guard needs if deciding terms is delayed. Final terms must be agreed by whichever comes first: 180 days after the contractor gives a qualifying proposal, or the day funds obligated go over 50% of the total contract ceiling. Normally the Coast Guard may not obligate more than 50% of the ceiling before terms are final. But if the contractor gives a qualifying proposal before hitting that 50% level, the Coast Guard may obligate up to 75% until terms are final. The Commandant can waive these limits for contingency operations, transportation security incidents, serious health/safety or marine emergencies, or presidential disaster declarations. The rules don’t apply to buying initial spare parts. Nonurgent spares can’t be added to urgent undefinitized actions, and work already started can’t be changed, unless the Commandant approves both as good business and in the U.S. interest. If the final price is set after a lot of work is done, allowed profit must reflect that the contractor had less cost risk for work already done and for remaining work. Definitions: Undefinitized contractual action — a new Coast Guard contract where terms, specs, or price aren’t set before work starts (excludes foreign military sales, purchases at or below the simplified acquisition threshold, and special access programs). Qualifying proposal — a proposal with enough detail for full audits, as the contracting officer decides.