§ 3374. Undefinitized contractual actions: allowable profit

706 words·~3 min read·/usc/title-10/section-3374

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(a)Allowed Profit to Reflect Cost Risks of Contractor.— 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;

(2)the reduced cost risk of the contractor with respect to costs incurred during performance of the remaining portion of the contract;

(3)the increased cost risk of the contractor with respect to any costs incurred prior to the award of the undefinitized contractual action when such costs—

(A)would have been directly chargeable to the contract if incurred after the award of the contract; and

(B)were incurred to meet an anticipated contract delivery schedule or anticipated contract price targets of the Government under an acquisition strategy required under section 4211 of this title; and

(4)the increased cost risk of the contractor with respect to negotiations continuing for more than 180 days beginning on the date on which the contractor submitted the qualifying proposal to definitize such undefinitized contractual action.

(b)Date as of Which Contractor Cost Risk to Be Determined.— If a contractor submits a qualifying proposal to definitize an undefinitized contractual action and the contracting officer for such action definitizes the contract after the end of the 180-day period beginning on the date on which the contractor submitted the qualifying proposal, the head of the agency concerned shall ensure that the profit allowed on the contract accurately reflects the cost risk of the contractor as such risk existed on the date the contractor submitted the qualifying proposal.

(Added and amended Pub. L. 116–283, div. A, title XVIII, § 1819(a), (e), Jan. 1, 2021, 134 Stat. 4189, 4190; Pub. L. 119–60, div. A, title VIII, § 814(a), Dec. 18, 2025, 139 Stat. 953.)

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public-private-law