FAR 16.603-3
Limitations.
A letter contract may be used only after the head of the contracting activity or a designee determines in writing that no other contract is suitable. Letter contracts shall not- (a) Commit the Government to a definitive contract in excess of the funds available at the time the letter contract is executed; (b) Be entered into without competition when competition is required by part 6 ; or (c) Be amended to satisfy a new requirement unless that requirement is inseparable from the existing letter contract. Any such amendment is subject to the same requirements and limitations as a new letter contract.
Source: acquisition.gov — FAR
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