50.103-1 General
Source: FAR 50.103-1 on acquisition.gov
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.
The fact that losses occur under a contract is not sufficient basis for exercising the authority conferred by Pub. L. 85-804. Whether appropriate action will facilitate the national defense is a judgment to be made on the basis of all of the facts of the case. Although it is impossible to predict or enumerate all the types of cases in which action may be appropriate, examples are included in 50.103-2. Even if all of the factors in any of the examples are present, other considerations may warrant denying a contractor's request for contract adjustment. The examples are not intended to exclude other cases in which the approving authority determines that the circumstances warrant action.