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Report | Jan. 17, 2025

Audit of the Army’s Management of Undefinitized Contract Actions Awarded to Provide Ukraine Assistance (Report No. DODIG-2025-059)

Audit

The objective of this audit was to determine whether Army contracting officials properly managed undefinitized contract actions (UCAs) awarded to assist Ukraine by obligating funds and definitizing actions within the required limits and adjusting profit for costs incurred, or properly waiving the requirements in accordance with Federal and DoD policies. Army contracting personnel did not manage the 18 (75 percent) out of 24 UCAs we reviewed in accordance with Federal and DoD policies. As a result of Army contracting personnel’s noncompliance with Federal and DoD requirements when managing UCAs awarded to assist Ukraine, the DoD took on unnecessary financial risk. During the undefinitized periods, the DoD incurred most of the cost of the contracts and risked paying increased costs. In addition, without adequate procedures to assess incurred costs and adjust profit rates for contract risk to reflect incurred costs during definitization, contractors have little incentive to control costs and provide timely qualifying proposals, creating a potential for wasted taxpayer dollars. Therefore, the DoD needs to ensure it is using UCAs only when necessary, negotiating these UCAs within the required time frames, and adjusting profit rates for contract risk to reflect incurred costs.