50.102-3
Limitations on exercise of authority
FAR 50.102-3 strictly limits the use of extraordinary contractual authority, requiring adherence to legal, procedural, and monetary restrictions to ensure responsible contracting in support of national defense.
Overview
FAR 50.102-3 outlines strict limitations on the exercise of extraordinary contractual authority under Public Law 85-804, which allows agencies to enter into, amend, or modify contracts to facilitate national defense. This section specifies actions that are not authorized, sets conditions for approval, imposes monetary and procedural thresholds, and details requirements for formalizing informal commitments and correcting mistakes. It also addresses special restrictions for indemnification related to anti-terrorism technologies.
Key Rules
- Prohibited Actions
- Authority under Pub. L. 85-804 cannot be used for cost-plus-a-percentage-of-cost contracts, violating profit/fee limits, bypassing full and open 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 (except certain indemnifications).
- Contract Amendments/Modifications
- Contractors must request amendments before contract obligations are discharged, and price increases are capped by the lowest rejected bid if negotiated under specific circumstances.
- Formalizing Informal Commitments
- Contractors must submit written payment requests within 6 months, and normal procedures must have been impracticable at the time of commitment.
- Additional Limitations for Lower-Level Officials
- Restrictions on releasing contractors or increasing costs over $75,000, addressing GAO matters, or disposing of surplus property; mistake corrections over $1,000 require timely notice.
- Indemnification Restrictions
- Special approvals are required for indemnification involving anti-terrorism technologies, with coordination between DOD, DHS, and OMB as applicable.
Responsibilities
- Contracting Officers: Ensure all actions comply with these limitations, obtain necessary approvals, and document findings.
- Contractors: Submit timely requests for amendments or payments and comply with procedural requirements.
- Agencies: Provide oversight, ensure Congressional notifications, and coordinate with other authorities for indemnification.
Practical Implications
- This section prevents misuse of extraordinary authority and ensures transparency, fiscal responsibility, and legal compliance. Contractors and agencies must be vigilant about procedural steps, thresholds, and documentation to avoid invalid or unenforceable contract actions.