
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 10USC2326]

 
                         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--
        (A) the end of the 180-day period beginning on the date on which 
    the contractor submits a qualifying proposal to definitize the 
    contractual terms, specifications, and price; or
        (B) the date on which the amount of funds obligated under the 
    contractual action is equal to more than 50 percent of the 
    negotiated overall ceiling price for the contractual action.

    (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 (g)) 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:
        (A) A contingency operation.
        (B) A humanitarian or peacekeeping operation.

    (5) This subsection does not apply to an undefinitized contractual 
action for the purchase of initial spares.
    (c) 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--
        (1) good business practice; and
        (2) in the best interests of the United States.

    (d) 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--
        (1) good business practice; and
        (2) in the best interests of the United States.

    (e) Allowable Profit.--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--
        (1) the possible reduced cost risk of the contractor with 
    respect to costs incurred during performance of the contract before 
    the final price is negotiated; and
        (2) the reduced cost risk of the contractor with respect to 
    costs incurred during performance of the remaining portion of the 
    contract.

    (f) Applicability.--This section does not apply to the Coast Guard 
or the National Aeronautics and Space Administration.
    (g) Definitions.--In this section:
        (1) The term ``undefinitized contractual action'' means a new 
    procurement action entered into by the head of an agency for which 
    the contractual terms, specifications, or price are not agreed upon 
    before performance is begun under the action. Such term does not 
    include contractual actions with respect to the following:
            (A) Foreign military sales.
            (B) Purchases in an amount not in excess of the amount of 
        the simplified acquisition threshold.
            (C) Special access programs.
            (D) Congressionally mandated long-lead procurement 
        contracts.

        (2) The term ``qualifying proposal'' means a proposal that 
    contains sufficient information to enable the Department of Defense 
    to conduct 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.

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

                          Codification

    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.


                            Prior Provisions

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


                               Amendments

    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, Sec. 1505(a)(1), struck out 
``and expenditure'' after ``obligation'' in heading.
    Subsec. (b)(1)(B). Pub. L. 103-355, Sec. 1505(a)(2), struck out ``or 
expended'' after ``obligated''.
    Subsec. (b)(2). Pub. L. 103-355, Sec. 1505(a)(3), substituted 
``obligate'' for ``expend''.
    Subsec. (b)(3). Pub. L. 103-355, Sec. 1505(a)(4), substituted 
``obligated'' for ``expended'' and ``obligate'' for ``expend''.
    Subsec. (b)(4), (5). Pub. L. 103-355, Sec. 1505(b), added par. (4) 
and redesignated former par. (4) as (5).
    Subsec. (g)(1)(B). Pub. L. 103-355, Sec. 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''.


                    Effective Date of 1994 Amendment

    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 251 of Title 41, Public Contracts.


                             Effective Date

    Section 101(c) [title X, Sec. 908(d)(2)] of Pub. L. 99-500 and Pub. 
L. 99-591, and section 908(d)(2) of title IX, formerly title IV, of Pub. 
L. 99-661, renumbered title IX, Pub. L. 100-26, Sec. 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].''


   Limitation on Use of Funds for Undefinitized Contractual Actions; 
            Oversight by Inspector General; Waiver Authority

    Section 101(c) [title X, Sec. 908(a)-(c), (e)] of Pub. L. 99-500 and 
Pub. L. 99-591, and section 908(a)-(c), (e) of title IX, formerly title 
IV, of Pub. L. 99-661; renumbered title IX and amended by Pub. L. 100-
26, Secs. 3(5), 5(2), Apr. 21, 1987, 101 Stat. 273, 274; Pub. L. 104-
106, div. D, title XLIII, Sec. 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--
        ``(A) the total amount of funds obligated for contractual 
    actions during the six-month period;
        ``(B) the total amount of funds obligated during the six-month 
    period for undefinitized contractual actions; and
        ``(C) the total amount of funds obligated during the six-month 
    period for undefinitized contractual actions that are not 
    definitized on or before the last day of such period.
    ``(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--
        ``(A) shall, not later than the end of the 45-day period 
    beginning on the first day following the six-month period, submit to 
    the defense committees an unclassified report concerning--
            ``(i) the amount of funds obligated for contractual actions 
        under the jurisdiction of the Secretary that were entered into 
        during the six-month period with respect to which the report is 
        submitted; and
            ``(ii) the amount of such funds obligated for undefinitized 
        contractual actions; and
        ``(B) except with respect to the six-month period described in 
    paragraph (4)(A), may not enter into any additional undefinitized 
    contractual actions until the date on which the Secretary certifies 
    to Congress that such limit is not exceeded by the cumulative amount 
    of funds obligated for undefinitized contractual actions under the 
    jurisdiction of the Secretary that are not definitized on or before 
    such date and were entered into--
            ``(i) during the six-month period for which such limit was 
        exceeded; or
            ``(ii) after the end of such six-month period.
    ``(4) This subsection applies to the following six-month periods:
        ``(A) The period beginning on October 1, 1986, and ending on 
    March 31, 1987.
        ``(B) The period beginning on April 1, 1987, and ending on 
    September 30, 1987.
        ``(C) The period beginning on October 1, 1987, and ending on 
    March 31, 1988.
        ``(D) The period beginning on April 1, 1988, and ending on 
    September 30, 1988.
        ``(E) The period beginning on October 1, 1988, and ending on 
    March 31, 1989.
    ``(b) Oversight by Inspector General.--The Inspector General of the 
Department of Defense shall--
        ``(1) periodically conduct an audit of contractual actions under 
    the jurisdiction of the Secretary of Defense (with respect to the 
    Defense Logistics Agency) and the Secretaries of the military 
    departments; and
        ``(2) after each audit, submit to Congress a report on the 
    management of undefinitized contractual actions by each Secretary, 
    including the amount of contractual actions under the jurisdiction 
    of each Secretary that is represented by undefinitized contractual 
    actions.
    ``(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) of title 10, United States Code (as added by subsection 
(d)(1)).''
