UCO (Unilateral Contract Action)

What is UCO (Unilateral Contract Action)?

A Unilateral Contract Action (UCO) is a formal contract modification issued and implemented by the government's Contracting Officer (CO) without requiring the contractor's consent or signature. This occurs when the government believes it has the contractual right to take action under the existing terms of the contract, even if the contractor disagrees. UCOs are a critical aspect of government contract management, impacting how changes, terminations, and other actions are executed.

Definition

A UCO is a legally binding modification to a government contract initiated and executed solely by the government. It is often used when the government believes the contract already provides them the authority to make a change, such as through clauses like Changes, Options, or Termination for Convenience. Because the contractor does not agree with the action, it's crucial for government contractors to understand the basis for the UCO, the specific contractual clauses cited, and the implications for performance and payment. The UCO will cite the specific authority (e.g., FAR clause) that permits the government to take the action unilaterally. Understanding UCOs is vital because they directly affect a contractor's obligations, rights, and potential recourse under the contract.

Key Points

• Contractual Authority: The government must have a valid contractual basis (e.g., specific clause) within the existing contract to issue a UCO.
• Common Uses: Typical UCOs involve exercising options, issuing stop-work orders, terminations for convenience, or making changes under the Changes clause.
• Dispute Resolution: Contractors have the right to dispute a UCO and pursue remedies through mechanisms like the Contract Disputes Act (CDA).
• Documentation is Key: Contractors must meticulously document their position, costs incurred, and any potential impacts on schedule and performance when a UCO is issued.

Practical Examples

1. Exercising an Option: The government exercises an option year for continued services via a UCO when the contractor disagrees with the pricing or terms but the government asserts its right to exercise the option per the contract.
2. Implementing a Change: The government issues a UCO directing a change to the technical specifications of a deliverable, relying on the Changes clause in the contract, even though the contractor argues the change is beyond the scope of the original contract.
3. Termination for Convenience: The government issues a UCO terminating the contract for convenience when the contractor believes the termination is actually for default and contests the government's right to terminate.