Limitations on exercise of authority
FAR 50.102-3 strictly limits the use of extraordinary contractual authority, requiring adherence to competition, funding, and approval requirements to protect government interests and ensure legal compliance.
Overview
FAR 50.102-3 outlines strict limitations on the use of extraordinary contractual authority under Public Law 85-804, which allows agencies to enter into, amend, or modify contracts to facilitate national defense. The section prohibits certain contracting practices, sets conditions for approval, and imposes dollar thresholds and procedural safeguards to prevent abuse. It also addresses requirements for formalizing informal commitments, correcting mistakes, and the use of indemnification authority, especially regarding anti-terrorism technologies.
Key Rules
- Prohibited Practices
- The authority cannot be used for cost-plus-a-percentage-of-cost contracts, violating profit/fee limits, bypassing competition, or waiving legally required bonds.
- Approval Conditions
- Actions must facilitate national defense, lack other legal authority, stay within appropriated funds (with some exceptions), and require Congressional notification for obligations over $150 million.
- Contract Amendments/Modifications
- Contractors must request changes before contract obligations are complete, and price increases are limited by prior bids.
- Formalizing Informal Commitments
- Contractors must submit written payment requests within 6 months, and normal procedures must have been impracticable.
- Additional Limitations for Lower-Level Officials
- Restrictions on releasing obligations or increasing costs over $90,000, addressing GAO matters, or disposing of surplus property.
- Mistake Corrections
- Corrections over $1,000 require notice before final payment and cannot exceed the next lowest offer.
- Indemnification Authority
- Special requirements apply for anti-terrorism technologies, including approvals from DHS and OMB or DoD determinations.
Responsibilities
- Contracting Officers: Ensure all actions comply with these limitations, obtain necessary approvals, and document justifications.
- Contractors: Submit timely requests for amendments or payment, especially for informal commitments or mistakes.
- Agencies: Oversee compliance, ensure Congressional notifications, and coordinate with DHS/OMB for indemnification actions.
Practical Implications
This section exists to prevent misuse of extraordinary contracting authority, ensuring transparency, fiscal responsibility, and adherence to competition and legal requirements. Contractors and agencies must be vigilant about procedural steps, documentation, and statutory thresholds to avoid invalid or non-compliant contract actions.