A letter contract is a written preliminary contractual instrument that authorizes the supplier to begin work immediately, before a definitive contract is negotiated. Each letter contract must be as complete and definitive as possible under the circumstances. The maximum liability of the Postal Service must be stated (this is the amount estimated to be needed to cover performance before definitization).
A letter contract is used when:
The use of a letter contract must be approved by a portfolio manager.
Each letter contract must contain a negotiated definitization schedule, including a:
The definitization schedule must provide for definitizaing the contract. Because an undefinitized letter contract is, in effect, a cost-reimbursement contract, it is not in the Postal Service’s interest to allow it to continue longer than necessary. Therefore, if after exhausting all reasonable efforts, the CO and the supplier fail to reach an agreement on price or fee, Clause 2-44: Contract Definitization requires the supplier to proceed with the work and provides that the CO may determine a reasonable price or fee, subject to appeal as provided in Clause B-9: Claims and Disputes.
A letter contract must not:
A letter contract must include clauses required for the type of definitive contract contemplated, as well as any additional clauses known to be appropriate. All letter contracts must include the following clauses:
