FAR 16.603-1—Description.
Plain-English Summary
FAR 16.603-1 defines what a letter contract is and sets the basic concept for this special type of procurement instrument. The section covers the instrument’s form as a written preliminary contractual instrument, its immediate effect of authorizing the contractor to start manufacturing supplies or performing services, and its role as an interim arrangement before a definitive contract is executed. In practice, this means the Government can begin urgent work without waiting for all final contract terms to be fully negotiated, but only through a written instrument that clearly permits performance to start. The section is important because it distinguishes a letter contract from a fully executed contract and signals that the arrangement is temporary, limited, and intended to bridge the gap until final terms are completed. For contractors, it means work may begin before the final contract is signed, but they should understand that the authorization is preliminary and may later be replaced by a more complete contract document. For contracting officers, it provides a mechanism to avoid delay when immediate performance is needed, while still preserving the need to finalize the contractual details.
Key Rules
Written preliminary instrument
A letter contract must be in writing. It is not an informal promise or oral direction; it is a formal preliminary contractual instrument used to start performance before the final contract is completed.
Immediate performance authorization
The core function of a letter contract is to authorize the contractor to begin immediately manufacturing supplies or performing services. The instrument must clearly allow work to start right away.
Temporary, not final, arrangement
A letter contract is only a preliminary instrument, meaning it is used before the definitive contract is finalized. It is intended to bridge the gap between urgent need and completion of full contract terms.
Applies to supplies and services
The section expressly covers both manufacturing supplies and performing services. It is not limited to one type of procurement effort.
Responsibilities
Contracting Officer
Issue the letter contract in writing when immediate start of work is needed, and ensure the instrument clearly authorizes the contractor to begin performance before the final contract is completed.
Contractor
Treat the letter contract as the written authority to begin the specified work, while recognizing that it is preliminary and that final contract terms will still need to be completed.
Agency
Use letter contracts only when immediate performance is necessary and support the contracting officer in moving quickly from the preliminary instrument to the definitive contract.
Practical Implications
This section is often used when the Government cannot wait for full contract negotiation but needs work to start immediately.
Contractors should not assume a letter contract is the final agreement; key terms may still change when the definitive contract is executed.
Because the instrument is preliminary, unclear wording can create disputes about what work is authorized and when performance may begin.
Contracting officers should make sure the written instrument is explicit about the start of work to avoid unauthorized performance or scope confusion.
Both sides should track the transition from the letter contract to the final contract so the temporary arrangement does not linger longer than necessary.
Official Regulatory Text
A letter contract is a written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services.