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FAR and DFARS › DFARS Part 217: Special Contracting Methods › Subpart 217.74

DFARS 217.7404-4 Limitations on obligations.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This DFARS section limits how much the Government can obligate on an undefinitized contract action before the contract is definitized. Generally, no more than 50 percent of the not-to-exceed price may be obligated, but that limit can rise to 75 percent if the contractor submits a qualifying proposal early. It matters because it affects how much funding a contractor can expect before the contract terms are finalized.

Applies to: Government contracting officers obligating funds on undefinitized contract actions

Key terms: not-to-exceed price · definitization · qualifying proposal · undefinitized period · obligate

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) The Government shall not obligate more than 50 percent of the not-to-exceed price before definitization. However, if a contractor submits a qualifying proposal before 50 percent of the not-to-exceed price has been obligated by the Government, then the limitation on obligations before definitization may be increased to no more than 75 percent (see 232.102-70 for coverage on provisional delivery payments).

(b) In determining the appropriate amount to obligate, the contracting officer shall assess the contractor's proposal for the undefinitized period and shall obligate funds only in an amount consistent with the contractor's requirements for the undefinitized period.

Sections it refers to

Sections that refer to it

← 217.7404-3 Definitization schedule. · 217.7404-5 Exceptions. →

Rule changes for DFARS Part 217

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

DFARS 217.7404-4 Limitations on obligations · SpendQuery