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the Navy, and the Air Force in accordance with §§ 1.101 and 1.105 of this chapter and has been approved by the Secretary of Defense. Notwithstanding § 1.105 of this chapter, any amendments to this part developed in accordance with the procedure specified in § 1.105 of this chapter and any deviations proposed to be made under the procedure specified in § 1.109 of this chapter shall be concurred in by the Secretaries of the Army, the Navy, and the Air Force, and approved by the Secretary of Defense.

[25 F.R. 14322, Dec. 31, 1960]

Subpart A-General

SOURCE: The provisions of this Subpart A appear at 25 F.R. 14322, Dec. 31, 1960. § 17.101 Previous authority.

Title II of the First War Powers Act, as amended and extended, expired June 30, 1958. Executive Order No. 10210, dated February 2, 1951; and the following joint regulations are thus no longer applicable:

(a) "Regulations Governing the Exercise of Certain Authority Granted by Title II of the First War Powers Act, as Amended, and Executive Order No. 10210, Issued Thereunder", dated February 21, 1951; and the amendment thereto dated January 12, 1954;

(b) "Coordinated Procedures to be Applied by the Army, Navy and Air Force for the Disposition of Requests by Contractors under Title II of the First War Powers Act, as Amended by Public Law 921, 81st Congress", dated June 23, 1951; and

(c) "Regulations Governing the Authority To Contract Under Title II of the First War Powers Act, as Amended, and Executive Order No. 10210, Issued Thereunder", dated July 17, 1951.

§ 17.102 General policy.

(a) The authority conferred by the Act shall be delegated by the Secretaries of the Military Departments in a manner which will best serve the logistic functions of the Departments and, at the same time, retain control over the exercise of the authority at a level high enough to insure uniformity of action.

(b) The authority conferred by the Act shall not be utilized so as to encourage carelessness and laxity on the part of persons engaged in the defense effort nor be relied upon by a Military Department where other adequate legal authority exists in the Department.

(c) The actions authorized under the Act shall be processed as expeditiously as practicable consistent with the care, restraint, and exercise of sound judgment, appropriate to such extraordinary authority. The interests of other departments and agencies of the Government shall be considered.

§ 17.103 Types of actions.

Three types of actions may be taken by or pursuant to the direction of an approving authority under the Act These are—(a) contractual adjustments such as amendments without consideration, correction of mistakes, and formalization of informal commitments (see Subpart B of this part); (b) making advance payments (not covered by this part); and (c) exercise of "residual powers," which refers to all other authority, under the Act (see Subpart C of this part).

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(a) The term "approving authority" as used in this part means a Contract Adjustment Board, or an officer or official having authority to approve actions under the Act. This authority is distinguished from authority to take appropriate contractual action pursuant to such approval.

(b) The term "Secretarial level" as used in this part means an official at or above the level of an Assistant Secretary or his Deputy, and a Contract Adjustment Board established by the Secretary concerned.

Subpart B-Requests for Contractual Adjustment

§ 17.200 Scope.

This subpart provides for the establishment of a Contract Adjustment Board within each Military Department and describes certain delegations of authority. It also sets forth standards and the procedures for disposition of requests for contractual adjustment under the Act.

[25 F.R. 14323, Dec. 31, 1960] § 17.201

Authority of the Secretaries! and the Director, DSA.

(a) The Secretary of each Department may delegate in writing his authority under the Act and the Executive Order, subject to the following limitations:

(1) Authority to approve actions under the Act obligating the United States in

an amount in excess of $50,000 shall not be delegated below the Secretarial level; and

(2) Authority to approve any amendment without consideration which increases the stated contract price or unit price may not be delegated below the Secretarial level except in extraordinary cases or classes of cases as to which the Secretary involved finds that there are special circumstances clearly justifying delegation to a lower level.

(b) The Director of the Defense Supply Agency may exercise authority under the Act and the Executive Order in all cases obligating the United States in the amount of $50,000 or less, and in disapproving proposed action in any amount. This authority may be redelegated, consistent with the provisions of this Section. Recommendations for payments in excess of $50,000 will be submitted by the Director to the Assistant Secretary of Defense for Installations and Logistics for approval.

(c) The delegations described in §§ 17.202 and 17.203 shall not be construed as limiting the authority of the Secretaries or the Director to modify or make other delegations. Copies of all delegations and successive redelegations shall be transmitted to the Assistant Secretary of Defense for Installations and Logistics at the time of issuance. [27 F.R. 6139, June 29, 1962]

§ 17.202 Contract Adjustment Boards. [25 F.R. 14323, Dec. 31, 1960] § 17.202-1 Organization.

A Contract Adjustment Board has been established within each Military Department by the Secretary thereof. Such Boards consist of a Chairman and not less than two or more than six other members, one of whom may be designated the Vice-Chairman. A majority constitutes a quorum for any purpose and the concurring vote of a majority of the total Board membership constitutes an action of the Board. Alternates may be appointed to act in the absence of members.

[25 F.R. 14323, Dec. 31, 1960]

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in § 17.203 or otherwise designated by the Secretary concerned, and to make all determinations and findings which are necessary or appropriate. Where deemed necessary to the exercise of the foregoing authority, such Boards may authorize any appropriate action not precluded by § 17.205, including the modification or release of any obligations. The decisions of such Boards shall be final, but each Board may reconsider and modify, correct, or reverse any of its previous decisions. Such Boards shall determine and adopt their own procedures and have authority to do all acts and things necessary or appropriate for the conduct of their functions.

[25 F.R. 14323, Dec. 31, 1960]

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(a) The following authority has been delegated to the officers and officials listed in paragraph (b) of this section:

(1) Authority to deny any request for contractual adjustment under this subpart;

(2) Subject to the limitations set forth in § 17.205, authority to approve, authorize, and direct an appropriate action, and to make all determinations and findings which are necessary or appropriate, in the examples of mistake and informal commitment described in §§ 17.204-3 and 17.204-4, including, where necessary thereto, authority to modify, release, rescind, or cancel obligations of any sort and to extend delivery and performance dates; and

(3) Authority to submit to the cognizant Contract Adjustment Board for its determination, together with his recommendation

(i) Any case where the officer or official recommends a specific adjustment which he does not have authority to approve under subparagraph (2) of this paragraph; and

(ii) Any doubtful or unusual case. The foregoing authority may be redelegated only with the written approval of the Secretary concerned or the Director.

(b) The delegations of authority which have been made are as follows: (1) The Army:

Heads of procuring activities (see § 1.201-14 of this chapter);

(2) The Navy:

Chief of each Bureau; Chief of Naval Research;

Aviation Supply Officer, Philadelphia; Commander, Military Sea Transportation Service; and

Commandant of the United States Marine Corps;

(3) The Air Force:

Deputy Chief of Staff, Systems and Logistics; Commander, Air Force Logistics Command; and

Commander, Air Force Systems Command. [28 FR. 4893, May 16, 1963]

§ 17.204 Standards for deciding cases. [25 F.R. 14323, Dec. 31, 1960]

§ 17.204-1 General.

The mere fact that losses occur under a Government contract is not, by itself, a sufficient basis for the exercise of the authority conferred by the Act. Whether, in a particular case, appropriate action such as amendment without consideration, correction of a mistake or ambiguity in a contract, or formalization of an informal commitment, will facilitate the national defense is a matter of sound judgment to be made on the basis of all of the facts of such case. Although it is obviously impossible to predict or enumerate all the types of cases with respect to which action may be appropriate, examples of certain cases or types of cases where action may be proper are set forth in §§ 17.204-2 to 17.204-4. Even if all of the factors contained in any of the examples are present, other factors or considerations in a particular case may result in a denial of the request. These examples are not intended to exclude other cases where a Contract Adjustment Board determines that the circumstances warrant action. [25 F.R. 14323, Dec. 31, 1960]

§ 17.204-2 Amendments without consideration.

(a) Where an actual or threatened loss under a defense contract, however caused, will impair the productive ability of a contractor whose continued performance on any defense contracts or whose continued operation as a source of supply is found to be essential to the national defense, the contract may be adjusted but only to the extent necessary to avoid such impairment to the contractor's productive ability.

(b) Where a contractor suffers a loss (not merely a diminution of anticipated profits) on a defense contract as a result of Government action, the character of the Government action will generally

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A contract may be amended or modified to correct or mitigate the effect of a mistake, including the following examples:

(a) A mistake or ambiguity which consists of the failure to express or to express clearly in a written contract the agreement as both parties understood it;

(b) A mistake on the part of the contractor which is so obvious that it was or should have been apparent to the contracting officer; and

(c) A mutual mistake as to a material fact.

Amending contracts to correct mistakes with the least possible delay normally will facilitate the national defense by expediting the procurement program and by giving contractors proper assurance that such mistakes will be corrected expeditiously and fairly.

[25 F.R. 14323, Dec. 31, 1960, as amended at 28 F.R. 4893, May 16, 1963]

§ 17.204 4 Informal commitments.

Informal commitments may be formalized under certain circumstances to permit payment to persons who have taken action without a formal contract; for example, where any person, pursuant to written or oral instructions from an officer or official of a Military Department and relying in good faith upon the apparent authority of the officer or offcial to issue such instructions, has arranged to furnish or has furnished property or services to a Military Department or to a defense contractor or subcontractor without formal contractual coverage for such property or services. Formalization of commitments under such circumstances normally will facilitate the national defense by assuring such persons that they will be treated fairly and paid expeditiously.

[25 F.R. 14323, Dec. 31, 1960]

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[25 F.R. 14323, Dec. 31, 1960]

§ 17.205-1 General limitations.

(a) The Act is not authority for: (1) The use of the cost-plus-a-percentage-of-cost system of contracting; (2) The making of any contract in I violation of existing law relating to limitation of profit or fees;

(3) The negotiation or purchases of or contracts for property or services required by law to be procured by formal advertising and competitive bidding; or (4) The waiver of any bid, payment, : performance or other bond required by law.

(b) No contracts, amendments, or modifications shall be entered into under the authority of the Act:

(1) Unless a finding is made that = the action will facilitate the national defense;

(2) Unless other legal authority in the Department concerned is deemed to be lacking or inadequate; and

(3) Except within the limits of the amounts appropriated and the statutory contract authorization.

(c) No contract shall be amended or modified:

(1) Unless the request therefor has been filed before all obligations (including final payment) under the contract have been discharged; and

(2) If the contract was negotiated under 10 U.S.C. 2304(a) (15), to increase the contract price to an amount higher than the lowest rejected bid of any responsible bidder.

(d) No informal commitment shall be formalized (1) unless a request for payment has been filed within six months after arranging to furnish or furnishing property or services in reliance upon the commitment and (2) unless it is found that at the time the commitment was made it was impracticable to use normal procurement procedures.

[25 F.R. 14324, Dec. 31, 1960, as amended at 28 F.R. 4893, May 16, 1963]

§ 17.205-2 Additional limitations upon authority below Secretarial level. The exercise of authority by officers and officials below the Secretarial level pursuant to § 17.203 (a) (2) shall be subject to the following additional limitations:

(a) The action shall not deal with or directly affect any matter which has been

submitted to the General Accounting Office;

(b) The action shall not obligate the Government in an amount in excess of $50,000;

(c) The action shall not release a contractor from performance of an obligation

(1) Priced in excess of $50,000; or

(2) Where reprocurement is contemplated, unless the approving authority finds that the estimated actual or potential increase in cost to the Government will not exceed $50,000;

(d) The action shall not involve the disposal of Government surplus property;

(e) Mistakes shall not be corrected by action obligating the Government in an amount in excess of $500 unless notice of the mistake was given to the contracting officer before completion of the contractor's work or the effective date of contract termination; and

(f) The correction of a contract because of a mistake in its making shall not result in increasing the original contract price above the next lowest responsive bid of a responsibile bidder in the case of a formally advertised procurement, or the amount of the next lowest responsive proposal of a responsible offeror considered in the case of a negotiated procurement.

[25 F.R. 14324, Dec. 31, 1960, as amended at 28 F.R. 4893, May 16, 1963]

§ 17.206 Contractual requirements.

Every contract entered into or amended or modified pursuant to this part shall contain:

(a) A citation of the Act and Executive Order;

(b) A brief statement of the circumstances justifying the action;

(c) A recital of the finding that the action will facilitate the national defense;

(d) The contract clause, entitled "Covenant Against Contingent Fees," as set forth in § 7.103-20 of this chapter;

(e) The contract clause entitled "Examination of Records" as set forth in § 7.104-15 of this chapter for fixed price type contracts or the clause entitled "Examination of Records" as set forth in § 7.203-7 of this chapter for cost-reimbursement type contracts, but see § 6.704-1(b) of this chapter for Foreign Assistance Act purchases:

(f) The contract clause entitled "Equal Opportunity" as set forth in

§ 12.802 of this chapter, wherever required under Subpart H, Part 12 of this chapter;

(g) The contract clause, entitled "Assignment of Claims" as set forth in § 7.103-8 of this chapter;

(h) If otherwise applicable, the contract clause entitled "Walsh-Healey Public Contracts Act," "Davis-Bacon Act," "Copeland ('Anti-Kickback') ActNonrebate of Wages," and "Contract Work Hours Standards Act-Overtime Compensation," as set forth respectively in §§ 12.605 and 12.403 of this chapter.

(1) Where an indemnification agreement is authorized under the Act, a contract clause providing that the Government's obligation under the agreement is expressly conditioned upon and subject to the availability of appropriated funds from which payment can be made; and (j) Any other clauses set forth in this subchapter which are appropriate to the particular procurement.

[25 F.R. 14324, Dec. 31, 1960, as amended at 28 F.R. 4893, May 16, 1963; 30 F.R. 6019, Apr. 29, 1965]

§ 17.207 Submission of requests by con

tractors.

[25 F.R. 14324, Dec. 31, 1960]

§ 17.207-1 Filing requests.

Any person seeking an adjustment under the standards set forth in § 17.204 (hereinafter called the "contractor") may file a request in duplicate with the cognizant contracting officer or his duly authorized representative. If such filing is impracticable, requests will be deemed to be properly filed if filed with the following addresses for forwarding to the cognizant contracting officer:

(a) In the Army, the Head of Procuring Activity listed in § 1.201-14 of this chapter appearing to be cognizant of the contract or commitment involved;

(b) In the Navy:

The Navy officer or official listed in § 17.203 (b) (2) appearing to be cognizant of the contract or commitment involved;

(c) In the Air Force:

Commander Air Force Logistics Command
Attn: MCPKA

Wright-Patterson Air Force Base, Ohio; and

(d) In the Defense Supply Agency, Commanders of the Defense Supply Centers concerned.

[28 F.R. 4893, May 16, 1963, as amended at 30 F.R. 14094, Nov. 9, 1965]

§ 17.207-2 Form of requests by con

tractors.

The contractor's request shall normally consist of a letter to the contracting officer stating:

(a) The precise adjustment requested; (b) The essential facts summarized in chronological narrative form;

(c) The contractor's conclusions based on such facts and showing, in terms of the standards set forth in § 17.204, why the contractor considers itself entitled to the adjustment requested;

(d) Whether all obligations have been discharged under the contracts involved: (e) Whether final payment has been made under the contracts involved; (f) Whether any proceeds from the request will be subject to any assignment or other transfer, and to whom; and

(g) Whether the contractor has sought the same, or a similar or related, adjustment from the General Accounting Office or any other part of the Government, or anticipates doing so. [25 F.R. 14324, Dec. 31, 1960]

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At the time the request is filed, a preliminary record as described in this subpart shall be prepared by the activity responsible for the case under § 17.203. A copy of each such record prepared during each month shall be forwarded within 30 days after the close of the month as follows:

(a) Army activities, to the Army Contract Adjustment Board, Office of the Assistant Secretary of the Army (Instaliations and Logistics);

(b) Navy activities, to the Office of Naval Material. (Navy Contract Adjustment Board); and

(c) Air Force activities, to the Air Force Contract Adjustment Board, Office of the Assistant Secretary of the Air Force (Materiel).

(d) Defense Supply Agency activities, to Headquarters, DSA.

[25 F.R. 14324, Dec. 31, 1960, as amended at 27 F.R. 6139, June 29, 1962; 30 F.R. 14094, Nov. 2, 1965]

§ 17.207-4 Facts and evidence.

(a) General. The contracting officer. or any officer, official, or Contract Adjustment Board, having authority to act upon the contractor's request, shall, where considered appropriate, request the contractor to furnish additional facts, and evidence as described in this

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