The Air Force netcentric and C4ISR acquisition agency hasn't consistently followed the rules around letter contracts, which allow contractors to start work even without a finalization of contract terms.

Letter contracts--or "undefinitized contractual actions"--are generally reserved for urgent needs when there's no time to finalize a contract for a requirement. Acquisition regulations require that letter contracts be converted into a definitized contract within 180 days. However, a review by the Defense Department inspector general of 41 letter contracts let by the Air Force Electronic Systems Center between fiscal 2004 through August 14, 2009, found that didn't always happen.

Of the 41 contracts reviewed in the inspector general report, which is dated August 18, nearly a third--12 in total--remained undefinitized after the 180 day period expired.

The chief reason--present in seven of the 12 undefinitized contracts--was that the government changed its requirements during the undefinitized period of performance.

In one case, a contract for the Joint Range Extension Transparent Multi-Platform Gateway Equipment Package (JTEP), which allows Air National Guard F-16s to send and receive radar data, was about to be definitized in 2006 when program officer personnel added additional requirements. Engineers also determined that some JTEP hardware was obsolete and needed replacement; as a result, the contract wasn't definitized until 286 days after the letter contract was let.

In all, definitization due to changing Air Force requirements took an average 474 days to complete from the day the initial letter contract was let, according to the audit. Inadequate contractor proposals accounted for three of the 12 delays--resulting in an average definitization wait of 465 days--and re-assignment of the contracting officer accounted for the remaining two, resulting in an average definitization duration of 198 days.

For more:
- download the DoD inspector general report, D-2010-080 (.pdf)

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