General
Contract losses alone do not justify extraordinary relief; requests must demonstrate that action will facilitate national defense and are subject to case-by-case judgment.
Overview
FAR 50.103-1 clarifies that simply incurring losses under a government contract does not automatically justify the use of extraordinary contractual relief under Public Law 85-804. The decision to grant such relief is based on whether the action will facilitate the national defense, requiring a comprehensive assessment of all facts and circumstances in each case. While examples of appropriate cases are provided in FAR 50.103-2, these are illustrative and not exhaustive. Even if a contractor's situation matches an example, relief may still be denied if other considerations outweigh the justification. The regulation emphasizes the discretionary nature of contract adjustments and the need for careful, case-by-case evaluation by the approving authority.
Key Rules
- Losses Alone Are Insufficient
- Experiencing losses under a contract does not, by itself, justify extraordinary relief.
- National Defense Facilitation
- Relief is only considered if it will facilitate the national defense, based on all facts of the case.
- Case-by-Case Judgment
- Each request is evaluated individually, and the presence of example factors does not guarantee approval.
- Examples Are Not Limiting
- The examples in 50.103-2 are illustrative; other cases may also qualify if circumstances warrant.
Responsibilities
- Contracting Officers: Must evaluate requests for contract adjustment based on national defense needs and all relevant facts, not just financial losses.
- Contractors: Should provide comprehensive justification for relief requests, demonstrating how action would facilitate national defense.
- Agencies: Exercise discretion and ensure decisions are well-documented and based on a full assessment of circumstances.
Practical Implications
- This section prevents automatic relief for contract losses, ensuring only cases that truly support national defense are considered.
- Contractors must prepare strong, fact-based cases for relief requests.
- Approving authorities retain broad discretion, so outcomes are not guaranteed even when examples are met.