My answer to In what cases can a contract be agreed to with a customer without having a clearly defined scope of wo…
Answer by Ken Larson:
When both parties agree that the work or the procurement of the item must proceed and an interim contract is let with a dollar ceiling to allow going forward.
The terms of the inerim contract specify a due date for full definitization of the final contract; at which time the actual costs incurred are added to an estimate to complete the job under a completed SOW or BOQ.
In U.S. government contracting the interim contract is often referred to as a “Letter Contract”.