As distinguished from the normal principles and procedures set forth in the other parts of this subchapter, this part establishes uniform regulations for entering into and amending or modifying contracts to facilitate the national defense under the extraordinary emergency authority granted by the Act of August 28, 1958 (Public Law 85-804); 72 Stat. 972; 50 U.S.C. 1431-1435, set forth in § 17.501, referred to in this part as "the Act," and Executive Order No. 10789, dated November 14, 1958 (23 F.R. 8897), set forth in § 17.502, referred to in this part as "the Executive Order." The Act empowers the President to authorize departments and agencies exercising functions in connection with the national defense, to enter into contracts or into amendments or modifications of contracts and to make advance payments, without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, whenever he deems that such action would facilitate the national defense. This extraordinary authority may be exercised only in the unusual circumstances described in this part. This part does not cover advance payments (see Defense Contract Financing Regulations, AR 715-6; NAVEXOS P-1006; AFR 173-133, Part 163, Subchapter E, of this title). [25 F.R. 14322, Dec. 31, 1960] § 17.001 Approval of regulations and deviations. The Executive Order authorizes the Secretaries of Defense, the Army, the Navy and the Air Force, respectively, under regulations prescribed or approved by the Secretary of Defense, to exercise this authority. This part has been concurred in by the Secretaries of the Army, 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 Act of August 28, 1958 (Public Law 85-804, 50 U.S.C. 1481-1435). Executive Order No. 10789 of November 14, 1958, as amended by Executive Order 11051, of Sept. 27, 1962. 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 Executive Order No. 10210, dated February 2, 1951; and the following joint regulations are thus no longer applicable: (a) "Regulations Governing the Exercise of Certain Authority Granted by Title II of the First War Powers Act, as Amended, and Executive Order No. 10210,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 take by or pursuant to the direction of a approving authority under the Ad These are (a) contractual adjustment such as amendments without considera tion, correction of mistakes, and formal ization of informal commitments (se Subpart B of this part); (b) making ad vance payments (not covered by thi part); and (c) exercise of "residus powers," which refers to all other author ity, under the Act (see Subpart C of thi part). (a) The term "approving authority as used in this part means a Contract Adjustment Board, or an officer or officia having authority to approve action under the Act. This authority is dis tinguished from authority to take ap propriate contractual action pursuant to such approval. (b) The term "Secretarial level" a used in this part means an official at o above the level of an Assistant Secretar or his Deputy, and a Contract Adjust ment Board established by the Secre tary concerned. Subpart B-Requests for Contractua Adjustment 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. described in (c) The delegations §§ 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] § 17.202-2 Authority. The Contract Adjustment Board in each Department has been given authority to approve, authorize and direct appropriate action under the standards set forth in § 17.204 in any case submitted to it by an officer or official listed 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 843 (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; Aviation Supply Officer, Philadelphia; 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 F.R. 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 determine whether any adjustment in the contract will be made and its extent. Where the Government action is directed primarily at the contractor and is taken by the Government in its capac 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] § 17.205 Limitations upon exercise of authority. [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 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 re |