Overview
This section identifies letter contracts as a specialized procurement tool authorized for use when the government requires contract performance to commence immediately.
Key Rules
- Immediate Performance: These instruments are specifically reserved for situations where the urgency of the requirement precludes the delay incident to negotiating a definitive contract.
- Cross-Reference: The application and administration of these contracts are governed by the detailed requirements found in FAR 16.603, which includes rules on definitization schedules and liability limits.
- Preliminary Nature: A letter contract serves as a written preliminary contractual instrument that authorizes the contractor to begin work and incur costs right away.
Practical Implications
- This provision is frequently invoked during emergency acquisitions or disaster relief efforts where the need for speed outweighs the ability to finalize all terms and conditions upfront.
- While they allow for rapid response, they increase risk for the government, requiring strict adherence to definitization timelines to finalize pricing and terms post-award.