UCAs are generally considered high risk to the Government because by the time negotiations commence, many of the costs have already been incurred. That makes UCAs very similar ot cost-type contract.
Because of the high risk nature of UCAs, there is a high bar for contracting. The contracting officer must prepare an approval package that includes:
- Documentation for why a UCA is required,
- A detailed explanation for the need to begin performance before definitization,
- Address the adverse impact on agency requirements that would result from delays in beginning performance,
- Identify the risk of using a UCA and the means by which the Government will mitigate such risk,
- Identify and justify the specific contractual instrument to be used
- Establish limitations of the obligation of funds, and
- Provide the definitization schedule of agreed-upon events that support timely definitization.
Sometimes the Government will request the contractor to help prepare the documentation package - especially for establishing price ceilings (need estimates that only a contractor can provide) and definitization milestone schedules (need to make sure that the contractor will /can support the schedule). It wouldn't be prudent for the Government to establish a milestone schedule independent of the contractor.
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