Although DFAR limits obligation of funds to 50% of established NTE before definitization, is the USG able to issue a UCA with a NTE of $900M even though it only has $200M? Is the USG required to have all funding up to the NTE amount of $900M prior to issuing a UCA?
It depends specifically on what the Government requirement is for. FAR 32.703-2 covers contracts conditioned upon availability of funds. It states:
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The contracting officer may initiate a contract action properly chargeable to funds of the new fiscal year before these funds are available, provided that the contract includes the clause at 52.232-18, Availability of Funds (see 32.706-1(a)). This authority may be used only for operation and maintenance and continuing services (e.g., rentals, utilities, and supply items not financed by stock funds) --
(1) necessary for normal operations and
(2) For which Congress previously had consistently appropriated funds, unless specific statutory authority exists permitting applicability to other requirements.
If the requirement meets either (1) or (2) above, then you could include FAR 52.232-18 in the UCA.
You did not indicate the contract type or nature of the requirement (supplies vs. service, severable or non-severable) but see also DFARS 232.703-1 regarding incremental funding. If this is an Army requirement, you should also check the corresponding AFARS coverage.