UCA (Undefinitized Contract Action)

What is UCA (Undefinitized Contract Action)?

An Undefinitized Contract Action (UCA) is a type of contractual agreement used by the U.S. government when there is an urgent need to begin work before all terms, specifications, and pricing are finalized. It allows work to commence rapidly, with the understanding that the contract will be "definitized" – fully defined and priced – at a later date.

Definition

A UCA is defined as any contractual action for which the terms, specifications, or price are not finalized before performance begins. These actions are governed by Federal Acquisition Regulation (FAR) Subpart 17.74. UCAs are typically employed when the government needs to quickly procure goods or services, often in response to emergencies, unforeseen circumstances, or urgent operational requirements. However, because UCAs lack firm pricing and specifications at the outset, they carry inherent risks for both the government and the contractor. For contractors, these risks include uncertainty in pricing and potential cost disallowances during definitization. For the government, the risk is overpaying for the goods or services. Careful management and timely definitization are critical to mitigating these risks.

Key Points

• Limited Use: UCAs are intended for use only when essential to meet the Government's needs, minimizing their application.
• Price Ceiling: UCAs must include a not-to-exceed price to protect the government from excessive costs prior to definitization.
• Definitization Schedule: A firm definitization schedule must be included in the UCA, typically requiring definitization within 180 days of issuance or before 40% of the work is complete, whichever occurs first, unless specific exceptions apply.
• Increased Oversight: UCAs are subject to increased scrutiny from agencies like the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) to ensure costs are reasonable and allocable.

Practical Examples

1. Emergency Supplies: After a natural disaster, a government agency might issue a UCA to a contractor to immediately begin delivering emergency supplies like water and food, with the final quantities and prices to be determined later.
2. Urgent System Upgrades: When critical software vulnerabilities are discovered, a UCA might be used to initiate immediate upgrades to a government IT system, with the precise scope and cost of the upgrade to be finalized as the work progresses.
3. Rapid Prototyping: A defense agency needs a prototype of a new technology. A UCA is used to begin development immediately, recognizing that the final design and cost are uncertain at the start of the project.