In a big change for defense contractors, Congress has amended 10 U.S.C. § 3372 to make clear that a Department of Defense (DoD) contracting officer’s unilateral definitization of an undefinitized contract action is directly appealable to the Armed Services Board of Contract Appeals (ASBCA) or the Court of Federal Claims. Congress’s change (made under Section 803 of the Servicemember Quality of Life Improvement and National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2025) (we report on the FY 2025 NDAA here) is contrary to recent ASBCA and Federal Circuit decisions.

Contractors often are in the position of negotiating undefinitized contract actions (at times for years) only to have contracting officers unilaterally definitize at a low price.  Under prior board and court decisions, a contractor seeking to challenge a unilateral definitization first had to submit a separate claim to the contracting officer, disputing the reasonableness of the government’s action.  That process imposed further delay and burden on the contractor.

Now, under the amended statute, dispute resolution is more efficient and balanced.  A contracting officer’s unilateral definitization is a directly appealable government claim, enabling contractors to challenge the contracting officer’s action without going through additional procedural hurdles (only to have the same contracting officer reaffirm the prior decision).

Additionally, because a contracting officer’s unilateral definitization is a government claim, the government will arguably carry the initial burden of supporting the reasonableness of its unilateral price.  In the end though, both the government and contractors will likely be required to proffer evidence to support the reasonableness of their respective prices.

Congress’s change to the definitization process will benefit contractors by creating a more efficient review process and requiring contracting officers to justify unilateral definizations.