Overview
This section outlines the standards and procedures for "extraordinary contractual relief" under Public Law 85-804, allowing the government to adjust contracts when such actions facilitate national defense, even if no legal obligation for adjustment exists. It provides a mechanism for the government to protect essential supply sources, correct mistakes, and formalize informal commitments that fall outside standard contract law.
Key Rules
- National Defense Standard: The primary justification for any adjustment is not the contractor's loss, but whether the action will "facilitate the national defense."
- Types of Adjustments:
- Amendments Without Consideration: Used to prevent impairment of a contractor's productive ability if they are an essential source, or to address "fairness" when government action caused a loss (even if the government is not legally liable).
- Correcting Mistakes: Used to mitigate mutual mistakes, ambiguities, or obvious contractor errors that were or should have been apparent to the Contracting Officer.
- Formalizing Informal Commitments: Allows payment to parties who provided supplies or services based on the "apparent authority" of an official without a formal contract.
- Certification Requirements: Any request exceeding the Simplified Acquisition Threshold (SAT) must be certified by the contractor regarding good faith and data accuracy.
- Documentation: Approving authorities must sign a "Memorandum of Decision" that explicitly states the action will facilitate national defense and includes a rationale for the dollar amount awarded.
- Non-waivable Clauses: Even when using this extraordinary authority, certain clauses (e.g., Audit and Records, Equal Opportunity, and Assignment of Claims) cannot be omitted from the contract.
Practical Implications
- Remedy of Last Resort: This authority is rarely used and is intended for situations where standard FAR remedies (like the Changes clause or Claims process) are unavailable or legally insufficient to protect a critical defense interest.
- High Burden of Proof: Contractors must provide exhaustive financial data—including balance sheets, compensation schedules, and efforts to obtain commercial financing—to prove that they are "essential" to the national defense or that an adjustment is truly necessary.
- Expedited Correction: For mistakes, this process is intended to bypass lengthy litigation to ensure the contracting program continues without delay, maintaining the contractor's willingness to participate in defense work.