Overview
This section prescribes the policies and constraints for delegating the "extraordinary" contractual authority granted by Public Law 85-804 and Executive Order 10789. It ensures that high-risk or high-value actions—such as indemnification or contract adjustments without consideration—are restricted to senior agency leadership to maintain uniformity and protect the government's interests.
Key Rules
- Delegation Thresholds: Authority to obligate the government for more than $90,000, or to approve amendments without consideration (except in justified special cases), may not be delegated below the Secretarial level.
- Indemnification: Authority to indemnify against unusually hazardous or nuclear risks is strictly reserved for the Agency Secretary, Administrator, or specific heads of the GPO and TVA.
- Prohibited Actions: This authority cannot be used for cost-plus-a-percentage-of-cost contracting, violating fee/profit laws, bypassing full and open competition, or waiving legally required bonds.
- Prerequisites for Use: Actions must facilitate national defense and are only permitted if no other adequate legal authority exists within the agency.
- Congressional Notification: Obligations exceeding $150 million (excluding certain indemnifications) require written notification to the Senate and House Committees on Armed Services and a 60-day waiting period.
- Contract Adjustment Boards: Agency heads may establish boards with final authority to decide on adjustments; these decisions are not subject to appeal but may be reconsidered by the board.
- Informal Commitments: For an informal commitment to be formalized, the contractor must submit a written request within six months of providing services or supplies in reliance on that commitment.
Practical Implications
- Last Resort Relief: This section serves as a "safety valve" for contractors facing unique hardships or risks that cannot be addressed through standard FAR clauses, but the high level of required approval makes it a rare and rigorous process.
- Strict Timelines: Contractors must be vigilant regarding deadlines; failure to request a contract modification before final payment or to formalize an informal commitment within six months generally bars relief under this authority.