03-09

Procurement Information Circular


April 3, 2003

CATEGORIZING AND REPORTING CHANGES AS UNDEFINITIZED CONTRACT ACTIONS (UCAs)

 

PURPOSE:  To provide guidance and establish guidelines for determining when a change should be processed as a UCA under contracts that include a “swing clause”.

 

BACKGROUND:  NASA FAR Supplement (NFS) section 1843.7001 defines an undefinitized contract action as a “unilateral or bilateral contract modification or delivery/task order in which the final price or estimated cost and fee have not been negotiated and mutually agreed to by NASA and the contractor.”  In 2000, the General Accounting Office (GAO) reported concerns about NASA’s use of such actions, since this practice could result in contract cost overruns and cost growth in various programs.  As a result of the concerns, the Office of Procurement implemented numerous controls aimed at decreasing the use of UCAs.  One of the controls is the requirement for Center Director approval for the issuance of a UCA with a Government estimated cost or price over $100,000.  This requirement is now reflected in the NFS 1843.7003, Procedures.

 

In exceptional circumstances, some contracts include a clause that recognizes the potential for future changes and establishes a negotiated threshold.  Changes below this threshold are implemented at no change in the total cost or price of the contract.  These clauses are often referred to as “swing clauses”.   

 

A recently completed OIG review noted NASA’s significant reduction in the use of UCAs.  The only recommendation resulting from this review was that the Assistant Administrator for Procurement establish guidelines for consistent treatment of undefinitized contract changes issued under contracts with “swing clauses”.   

 

GUIDANCE:

   (1) The Head of the Contracting Activity should approve the use of all “swing clauses”..

   (2) For required changes that must be issued prior to negotiation under contracts that include a “swing clause”—

         (a) If the cost estimate for a required change is unknown or in excess of the “swing clause” threshold, the change shall be considered a UCA and processed in accordance with NFS 1843.70; and

         (b) If the cost estimate for the change is within the “swing clause” threshold, the change is not processed as a UCA.

 

EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until canceled or superseded.

 

HEADQUARTERS CONTACT:  Lou Becker, Code HK, (202) 358-4593, e-mail: louis.g.becker@nasa.gov.

 

 

 

R. Scott Thompson

Director, Contract Management Division