52.216-25
Contract Definitization
FAR 52.216-25 mandates prompt negotiation and submission of proposals to definitize letter contracts, with strict schedules and the risk of unilateral government pricing if deadlines are missed.
Overview
FAR 52.216-25, Contract Definitization, governs the process for converting a letter contract into a definitive contract. It requires contractors to promptly negotiate the terms of the final contract, submit detailed proposals (including cost or pricing data), and adhere to a set schedule for definitization. If the parties cannot reach agreement by the target date, the Contracting Officer may unilaterally determine a reasonable price or fee, subject to contractor appeal. The clause also specifies which contract clauses will govern after definitization and provides an alternate for contracts awarded via price competition, requiring a negotiated price ceiling or firm fixed price.
Key Rules
- Negotiation of Definitive Contract
- Contractors must begin negotiations promptly and submit a comprehensive proposal with supporting data.
- Definitization Schedule
- The contract must specify target dates for proposal submission, negotiations, and other required plans.
- Unilateral Determination
- If no agreement is reached by the target date, the Contracting Officer can set the price or fee, with the contractor retaining appeal rights.
- Applicable Clauses
- The definitive contract will include all required FAR and legal clauses as of the relevant dates, plus mutually agreed terms.
- Alternate I (Price Competition)
- For letter contracts awarded via price competition, a price ceiling or firm fixed price must be negotiated and included.
Responsibilities
- Contracting Officers: Set and enforce definitization schedules, negotiate terms, and determine prices if needed.
- Contractors: Submit timely, complete proposals and negotiate in good faith; comply with all data and schedule requirements.
- Agencies: Approve unilateral determinations and oversee compliance with definitization procedures.
Practical Implications
- Ensures timely conversion of letter contracts to definitive contracts, reducing risk and uncertainty.
- Requires disciplined proposal preparation and negotiation by contractors.
- Failure to meet deadlines can result in unilateral government pricing, which may not favor the contractor.