The Defense Department said it is moving to impose tighter controls on its use of undefinitized...

The Defense Department said it is moving to impose tighter controls on its use of undefinitized contract actions, such as letter contracts and modifications.

The Government Accountability Office found DOD is not adequately tracking the use of such contracts, which are intended to be used

The GAO report says DOD keeps track only of letter contracts, not modifications or task and delivery orders. "DOD faces a potentially large gap in its data and thus does not know the extent to which it is using UCAs," the auditors said.

According to regulations, after a UCA is issued a definitive contract must be signed before half the money is spent or 40% of the work is completed, or within 180 days, whichever comes first. The auditors found DOD installations routinely missed the 180-day deadline. When that happens, they said, "the government risks paying unnecessary costs."

Most often, the report said, the contractor did not submit a proposal in time to meet the deadline. Auditors said contractors have little incentive to submit timely proposals because they are almost always reimbursed for costs incurred before a definitive contract is signed.

DOD said it agreed with GAO's recommendations for improved oversight and control.