Incorporated in the NFS

NASA logo


Procurement Information Circular

(July 5, 1995)


PURPOSE: To provide a model letter for use when precontract costs are authorized.

BACKGROUND: The longstanding precontract cost authorization letter used by one center, called an advance agreement, could be construed as an implied-in-fact contract. Such construction may require the Government to pay incurred costs even if a contract is not subsequently awarded. In order to avoid potential liability and litigation, a standard model letter for the authorization of precontract costs has been developed. The letter makes it clear that the Government is under no obligation to reimburse the contractor for precontract costs if no award is made to the contractor. The letter also standardizes the elements which should be contained in each authorization of precontract costs.

GUIDANCE: When precontract costs are authorized in accordance with NASA FAR Supplement 1831.205-32, the enclosed letter is to be used.

EFFECTIVE DATE: This PIC is effective as dated, and shall remain in effect until canceled or superseded.

HEADQUARTERS CONTACT: Joe Le Cren, Code HC, (202) 358-0444.

Carol A. Saric

Deputy Director, Acquisition
Liaison Division


Mr,/Ms. XYZ
ABC Company
Street Address
City, State Zip Code

Dear XYZ:

1. It is anticipated that a contract will be awarded to Company Name in Estimated Month and Year for Description of Work.

2. Company Name is authorized to incur costs for the anticipated contract subject to the following Conditions:

(a) The costs must be incurred during the period from _________ to the effective date of the contract.

(b) The costs shall not exceed in the aggregate $___________ unless such amount is increased in writing by the Contracting Officer.

(c) The costs are allowable to the extent they would have been allowable if incurred after the date of the contract.

(d) The Government shall be under no obligation to reimburse the contractor for any costs incurred if the Government is unable to award the proposed contract or the parties are unable to reach agreement on the award of the proposed contract,

3. Your written concurrence or non-concurrence with this understanding shall be provided to this office within seven (7) days after receipt hereof, Keep a copy of this document for your records.

If there are any questions, please contact the undersigned at ___________.

Mr,/Ms, XXX
Contracting Officer