2017 US Code
Title 10 - Armed Forces
Subtitle A - General Military Law
Part IV - Service, Supply, and Procurement
Chapter 137 - Procurement Generally
Sec. 2326 - Undefinitized contractual actions: restrictions

(a) In General.—The head of an agency may not enter into an undefinitized contractual action unless the request to the head of the agency for authorization of the contractual action includes a description of the anticipated effect on requirements of the military department concerned if a delay is incurred for purposes of determining contractual terms, specifications, and price before performance is begun under the contractual action.

(b) Limitations on Obligation of Funds.—(1) A contracting officer of the Department of Defense may not enter into an undefinitized contractual action unless the contractual action provides for agreement upon contractual terms, specifications, and price by the earlier of—

(2) Except as provided in paragraph (3), the contracting officer for an undefinitized contractual action may not obligate with respect to such contractual action an amount that is equal to more than 50 percent of the negotiated overall ceiling price until the contractual terms, specifications, and price are definitized for such contractual action.

(3) If a contractor submits a qualifying proposal (as defined in subsection (h)) to definitize an undefinitized contractual action before an amount equal to more than 50 percent of the negotiated overall ceiling price is obligated on such action, the contracting officer for such action may not obligate with respect to such contractual action an amount that is equal to more than 75 percent of the negotiated overall ceiling price until the contractual terms, specifications, and price are definitized for such contractual action.

(4) The head of an agency may waive the provisions of this subsection with respect to a contract of that agency if that head of an agency determines that the waiver is necessary in order to support any of the following operations:

(5) This subsection does not apply to an undefinitized contractual action for the purchase of initial spares.

(c) Limitation on Unilateral Definitization by Contracting Officer.—With respect to any undefinitized contractual action with a value greater than $50,000,000, if agreement is not reached on contractual terms, specifications, and price within the period or by the date provided in subsection (b)(1), the contracting officer may not unilaterally definitize those terms, specifications, or price over the objection of the contractor until—

(d) Inclusion of Non-Urgent Requirements.—Requirements for spare parts and support equipment that are not needed on an urgent basis may not be included in an undefinitized contractual action for spare parts and support equipment that are needed on an urgent basis unless the head of the agency approves such inclusion as being—

(e) Modification of Scope.—The scope of an undefinitized contractual action under which performance has begun may not be modified unless the head of the agency approves such modification as being—

(f) Allowable Profit.—(1) The head of an agency shall ensure that the profit allowed on an undefinitized contractual action for which the final price is negotiated after a substantial portion of the performance required is completed reflects—

(2) If a contractor submits a qualifying proposal to definitize an undefinitized contractual action and the contracting officer for such action definitizes the contract after the end of the 180-day period beginning on the date on which the contractor submitted the qualifying proposal, the head of the agency concerned shall ensure that the profit allowed on the contract accurately reflects the cost risk of the contractor as such risk existed on the date the contractor submitted the qualifying proposal.

(g) Time Limit.—No undefinitized contractual action may extend beyond 90 days without a written determination by the Secretary of the military department concerned, the head of the Defense Agency concerned, the commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition, Technology, and Logistics (as applicable) that it is in the best interests of the military department, the Defense Agency, the combatant command, or the Department of Defense, respectively, to continue the action.

(h) Foreign Military Contracts.—(1) Except as provided in paragraph (2), a contracting officer of the Department of Defense may not enter into an undefinitized contractual action for a foreign military sale unless the contractual action provides for agreement upon contractual terms, specifications, and price by the end of the 180-day period described in subsection (b)(1)(A).

(2) The requirement under paragraph (1) may be waived in accordance with subsection (b)(4).

(i) Applicability.—This section does not apply to the Coast Guard or the National Aeronautics and Space Administration.

(j) Definitions.—In this section:

(Added Pub. L. 99–500, §101(c) [title X, §908(d)(1)(A)], Oct. 18, 1986, 100 Stat. 1783–82, 1783–140, and Pub. L. 99–591, §101(c) [title X, §908(d)(1)(A)], Oct. 30, 1986, 100 Stat. 3341–82, 3341–140; Pub. L. 99–661, div. A, title IX, formerly title IV, §908(d)(1)(A), Nov. 14, 1986, 100 Stat. 3920, renumbered title IX, Pub. L. 100–26, §3(5), Apr. 21, 1987, 101 Stat. 273; amended Pub. L. 101–189, div. A, title XVI, §1622(c)(6), Nov. 29, 1989, 103 Stat. 1604; Pub. L. 102–25, title VII, §701(d)(5), Apr. 6, 1991, 105 Stat. 114; Pub. L. 103–355, title I, §1505, Oct. 13, 1994, 108 Stat. 3298; Pub. L. 105–85, div. A, title VIII, §803(a), Nov. 18, 1997, 111 Stat. 1831; Pub. L. 114–328, div. A, title VIII, §811, Dec. 23, 2016, 130 Stat. 2268; Pub. L. 115–91, div. A, title VIII, §815(a), (b), Dec. 12, 2017, 131 Stat. 1462.)

Pub. L. 99–591 is a corrected version of Pub. L. 99–500.

Pub. L. 99–500, Pub. L. 99–591, and Pub. L. 99–661 added identical sections.

A prior section 2326 was renumbered section 2346 of this title.

2017—Subsec. (b)(3). Pub. L. 115–91, §815(b), substituted "subsection (h)" for "subsection (g)".

Subsecs. (c) to (j). Pub. L. 115–91, §815(a), added subsec. (c) and redesignated former subsecs. (c) to (i) as (d) to (j), respectively.

2016—Subsec. (e). Pub. L. 114–328, §811(1), designated existing provisions as par. (1), redesignated former pars. (1) and (2) as subpars. (A) and (B), respectively, of par. (1), and added par. (2).

Subsecs. (f) to (i). Pub. L. 114–328, §811(2), (3), added subsecs. (f) and (g) and redesignated former subsecs. (f) and (g) as (h) and (i), respectively.

Subsec. (i)(1). Pub. L. 114–328, §811(4)(A), redesignated subpars. (B) to (D) as (A) to (C), respectively, and struck out former subpar. (A) which read as follows: "Foreign military sales."

Subsec. (i)(2). Pub. L. 114–328, §811(4)(B), substituted "a meaningful audit of the information contained in the proposal." for "complete and meaningful audits of the information contained in the proposal and of any other information that the Department is entitled to review in connection with the contract, as determined by the contracting officer."

1997—Subsec. (b)(4). Pub. L. 105–85 amended par. (4) generally. Prior to amendment, par. (4) read as follows: "The head of an agency may waive the provisions of this subsection with respect to a contract of that agency if such head of an agency determines that the waiver is necessary in order to support a contingency operation."

1994—Subsec. (b). Pub. L. 103–355, §1505(a)(1), struck out "and expenditure" after "obligation" in heading.

Subsec. (b)(1)(B). Pub. L. 103–355, §1505(a)(2), struck out "or expended" after "obligated".

Subsec. (b)(2). Pub. L. 103–355, §1505(a)(3), substituted "obligate" for "expend".

Subsec. (b)(3). Pub. L. 103–355, §1505(a)(4), substituted "obligated" for "expended" and "obligate" for "expend".

Subsec. (b)(4), (5). Pub. L. 103–355, §1505(b), added par. (4) and redesignated former par. (4) as (5).

Subsec. (g)(1)(B). Pub. L. 103–355, §1505(c), substituted "simplified acquisition threshold" for "small purchase threshold".

1991—Subsec. (g)(1)(B). Pub. L. 102–25 substituted "in an amount not in excess of the amount of the small purchase threshold" for "of less than $25,000".

1989—Subsec. (g)(1)(D). Pub. L. 101–189 substituted "Congressionally mandated" for "Congressionally-mandated".

For effective date and applicability of amendment by Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set out as a note under section 2302 of this title.

Pub. L. 99–500, §101(c) [title X, §908(d)(2)], Oct. 18, 1986, 100 Stat. 1783–82, 1783–142, Pub. L. 99–591, §101(c) [title X, §908(d)(2)], Oct. 30, 1986, 100 Stat. 3341–82, 3341–142, and Pub. L. 99–661, div. A, title IX, formerly title IV, §908(d)(2), Nov. 14, 1986, 100 Stat. 3921, renumbered title IX, Pub. L. 100–26, §3(5), Apr. 21, 1987, 101 Stat. 273, provided that: "Section 2326 of title 10, United States Code (as added by subsection (d)(1)), applies to undefinitized contractual actions that are entered into after the end of the 180-day period beginning on the date of the enactment of this Act [Oct. 18, 1986]."

Pub. L. 115–91, div. A, title VIII, §815(c), Dec. 12, 2017, 131 Stat. 1462, provided that: "Not later than 120 days after the date of the enactment of this Act [Dec. 12, 2017], the Secretary of Defense shall revise the Department of Defense Supplement to the Federal Acquisition Regulation to implement section 2326 of title 10, United States Code, as amended by this section."

For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6.

Pub. L. 111–84, div. A, title VIII, §812, Oct. 28, 2009, 123 Stat. 2406, provided that:

"(a) Revision Required.—Not later than 180 days after the date of the enactment of this Act [Oct. 28, 2009], the Secretary of Defense shall revise the Defense Supplement to the Federal Acquisition Regulation to ensure that any limitations described in subsection (b) are applicable to all categories of undefinitized contractual actions (including undefinitized task orders and delivery orders).

"(b) Limitations.—The limitations referred to in subsection (a) are any limitations on the reimbursement of costs and the payment of profits or fees with respect to costs incurred before the definitization of an undefinitized contractual action of the Department of Defense, including—

Pub. L. 110–181, div. A, title VIII, §809, Jan. 28, 2008, 122 Stat. 216, provided that:

"(a) Guidance and Instructions.—Not later than 180 days after the date of the enactment of this Act [Jan. 28, 2008], the Secretary of Defense shall issue guidance, with detailed implementation instructions, for the Department of Defense to ensure the implementation and enforcement of requirements applicable to undefinitized contractual actions.

"(b) Elements.—The guidance and instructions issued pursuant to subsection (a) shall address, at a minimum—

"(c) Reports.—

Pub. L. 99–500, §101(c) [title X, §908(a)–(c), (e)], Oct. 18, 1986, 100 Stat. 1783–82, 1783–139, 1783–140, 1783–142, Pub. L. 99–591, §101(c) [title X, §908(a)–(c), (e)], Oct. 18, 1986, 100 Stat. 3341–82, 3341–139, 3341–140, 3341–142, and Pub. L. 99–661, div. A, title IX, formerly title IV, §908(a)–(c), (e), Nov. 14, 1986, 100 Stat. 3918, 3919, 3921, renumbered title IX and amended by Pub. L. 100–26, §§3(5), 5(2), Apr. 21, 1987, 101 Stat. 273, 274; Pub. L. 104–106, div. D, title XLIII, §4322(b)(2), Feb. 10, 1996, 110 Stat. 677, provided that:

"(a) Limitation on Use of Funds for Undefinitized Contractual Actions.—(1) On the last day of each six-month period described in paragraph (4), the Secretary of Defense (with respect to the Defense Logistics Agency) and the Secretary of each military department shall determine—

"(2) On the last day of each six-month period described in paragraph (4), the amount of funds obligated for undefinitized contractual actions entered into by the Secretary of Defense (with respect to the Defense Logistics Agency) or the Secretary of a military department during the six-month period that are not definitized on or before such day may not exceed 10 percent of the amount of funds obligated for all contractual actions entered into by the Secretary during the six-month period.

"(3) If on the last day of a six-month period described in paragraph (4) the total amount of funds obligated for undefinitized contractual actions under the jurisdiction of a Secretary that were entered into during the six-month period exceeds the limit established in paragraph (2), the Secretary—

"(4) This subsection applies to the following six-month periods:

"(b) Oversight by Inspector General.—The Inspector General of the Department of Defense shall—

"(c) Waiver Authority.—The Secretary of Defense may waive the application of subsections (a) and (b) for urgent and compelling considerations relating to national security or public safety if the Secretary notifies the Committees on Armed Services of the Senate and House of Representatives of such waiver before the end of the 30-day period beginning on the date that the waiver is made.

"(e) Definition.—For purposes of this section, the term 'undefinitized contractual action' has the meaning given such term in section 2326(g) [now 2326(j)] of title 10, United States Code (as added by subsection (d)(1))."