Overview
FAR Part 50 provides agencies with extraordinary authority under Public Law 85-804 to enter into, amend, or modify contracts to facilitate the national defense, often bypassing standard contracting laws. It also implements the SAFETY Act, which provides liability protections and indemnification for providers of qualified anti-terrorism technologies to encourage their development and deployment.
Key Rules
- Authority of Last Resort: Extraordinary authority under Pub. L. 85-804 may only be used when no other adequate legal authority exists within the agency (e.g., it cannot be used if the issue can be resolved via the Contract Disputes Act).
- National Defense Requirement: No action may be taken unless the approving authority specifically finds that the action will "facilitate the national defense."
- Prohibited Actions: This authority cannot be used for cost-plus-a-percentage-of-cost contracting, violating profit/fee limits, waiving mandatory bonds, or avoiding full and open competition.
- Financial Thresholds:
- $90,000: Approvals for obligations exceeding this amount, or any amendment without consideration, generally cannot be delegated below the Secretarial level.
- $150 Million: Obligations exceeding this amount require 60 days of continuous Congressional session notice before the action can be finalized.
- Contractor Requests: Contractors must submit requests for adjustments before all obligations under the contract have been discharged. Requests exceeding the simplified acquisition threshold must be certified for good faith and accuracy.
- Types of Relief:
- Amendments without consideration: Used to protect the productive ability of a contractor essential to national defense or to correct inequities caused by government action.
- Mistake Correction: Amending contracts to fix obvious errors or mutual mistakes.
- Formalizing Informal Commitments: Paying for goods/services provided based on an official's instructions but without a formal contract.
Responsibilities
- Contracting Officers: Responsible for conducting thorough investigations into contractor requests, gathering evidence (audits, affidavits, correspondence), and ensuring that the case file supports the requested relief.
- Approving Authority (Secretarial Level/Contract Adjustment Boards): Responsible for making the final determination, signing the Memorandum of Decision, and certifying that the action facilitates national defense.
- Agency Heads: Responsible for delegating authority in writing and personally approving indemnification for "unusually hazardous or nuclear risks."
- Contractors: Responsible for submitting detailed chronological facts, supporting financial evidence, and certifications when requesting relief.
- Secretary of Homeland Security: Responsible for designating "qualified anti-terrorism technologies" under the SAFETY Act.
Practical Implications
FAR Part 50 acts as the "safety valve" of the federal procurement system. In real-world scenarios, it is most frequently invoked when a critical defense contractor faces bankruptcy due to unforeseen costs and the government cannot afford to lose that source of supply. It is also a vital tool for high-risk industries (such as nuclear energy or counter-terrorism) where the potential for catastrophic liability is so high that private insurance is unavailable; in these cases, the government uses Part 50 to provide indemnification to ensure the work proceeds. However, because of the high level of scrutiny and the "extraordinary" nature of the relief, the documentation burden on both the contractor and the CO is significantly higher than a standard contract modification.