EXTRAORDINARY CONTRACTUAL ADJUSTMENT PROCEDURES

17.103-2 Amendments Without Consideration.

(a) Where an actual or threatened loss under a Government contract, however caused, will impair the productive ability of a contractor 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 Government 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 capacity as the other contracting party, the contract may be adjusted if fairness so requires; thus, where such Government action, although not creating any liability on the part of the Government, increases the cost of performance, considerations of fairness may make some adjustment in the contract appropriate.

17.103-3 Mistakes. A contract may be amended or modified to correct or mitigate the effect of a mistake. Examples of cases where such action may be appropriate include the following:

(i) 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;

(ii) 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

(iii) 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.

17.103-4 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 official of NASA and relying in good faith upon the apparent authority of the official to issue such instructions, has arranged to furnish or has furnished property or services to NASA or to a Government 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.

17.104 Limitations Upon Deciding Cases.

(a) The Act is not authority for:

(i) the use of the cost-plus-a-percentage-of-cost system of contracting; (ii) the execution of any contract in violation of existing law relating to limitation of profit or fees;

(iii) the negotiation of purchases of or contracts for property or services required by law to be procured by formal advertising and competitive bidding;

(iv) the waiver of any bid, payment, performance, or other bond required by law;

(v) the amendment of a contract 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; or

17.103-2

CFR TITLE 41 CHAPTER 18

STANDARDS AND PROCEDURES

(vi) the formalization of an informal commitment, unless it is found that at the time the commitment was made it was impracticable to use normal procurement procedures.

(b) No contract, amendment, or modification shall be entered into under the authority of the Act:

(i) unless a finding is made that the action will facilitate the national defense;

(ii) unless other legal authority in the Administration is deemed to be lacking or inadequate;

(iii) unless the request therefor has been filed before all obligations have been discharged and final payment made; and

(iv) except within the limits of the amounts appropriated and the statutory contract authorization.

17.105 Procedures for Filing Requests.

17.105-1 Filing Requests. Any person or company seeking an adjustment under the standards set forth in 17.103 (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 Board or the Administrator for forwarding to the cognizant contracting officer.

17.105-2 Form of Requests. The contractor's request shall normally consist of a statement, dated and signed by the contractor, containing as a minimum the following information:

(i) a chronological narrative of the essential facts, showing in detail the chain of events leading up to the request;

(ii) the contractor's conclusions based on such facts, showing in terms of the standards set forth in 17.103 and the limitations set forth in 17.104 why the contractor considers himself entitled to the adjustment requested;

(iii) the precise adjustment requested, showing how it was formulated or computed and the consequences of granting or denying the request, including whether any proceeds from the request, if granted, will be subject to any assignment or other transfer, and to whom;

(iv) if a written contract is involved, a statement of the contractor's understanding of why the subject matter of the request cannot now and could not at the time it arose be disposed of under the terms of the contract itself;

(v) if a written contract is involved, a complete copy of or a brief description of the contract, indicating the dates of execution and amendments thereto, the items being procured, the price or prices, the delivery schedule or revisions thereof, and such other special contractual provisions as may be relevant to the request;

(vi) if a written contract is involved, whether all obligations, including final payment under the contract have been discharged; and

(vii) whether the contractor has sought the same, or a similar or related, adjustment from the General Accounting Office or any other agency of the Government, or anticipates doing so.

17.105-3 Additional Facts and Evidence.

(a) General. The cognizant contracting officer, or the Contract Adjustment Board, may, where considered pertinent, request the contractor to furnish additional facts and evidence in support of his request, of the na

NASA PROCUREMENT REGULATION

17.105-3

EXTRAORDINARY CONTRACTUAL ADJUSTMENT PROCEDURES

ture set forth below. In complying with such requests, the contractor may also submit other statements and evidence which he may consider helpful to his case:

(i) the best evidence available to the contractor in support of any facts alleged by the contractor, including contemporaneous memoranda, correspondence, affidavits, and any other material tending to establish matters of fact;

(ii) a history of performance indicating when work under the contracts or commitments was begun, the progress made to the present, an exact statement of the contractor's remaining obligations, and the contractor's expectations regarding completion thereof;

(iii) a statement of payments received, payments due, and payments yet to be received or to become due, including advance and progress payments and amounts withheld by the Government, and information as to other obligations of the Government, if any, which are yet to be performed under the contract;

(iv) a statement giving a detailed analysis of the monetary elements of the request, including precisely how the actual or estimated dollar amount of the request was arrived at, the effect of approval or denial on the contractor's profits before Federal income taxes, and whether the costs for which reimbursement is requested have been included as a part of his gross costs in statutory renegotiation proceedings, together with the contractor's renegotiation status for the relevant years;

(v) relevant financial statements, cost analyses, or other such data, preferably certified by a certified public accountant, including such additional financial data as is necessary to explain fully and to support the monetary elements of the request for adjustment;

(vi) a list of persons (in the employ of the Government, in the employ of the contractor, or otherwise connected with the contract) who have some factual knowledge of the subject matter, including, where possible, the name, office or title, address, and telephone number of each such per

son;

(vii) a statement and evidence of steps taken to mitigate loss and reduce claims to a minimum; and

(viii) such other statements or evidence as may be requested.

(b) Amendments Without Consideration Under 17.103-2(a). In addition to the facts and evidence enumerated in paragraph (a) above, where a request involves possible amendment without consideration, and "essentiality" is a factor, the contractor may be asked to furnish:

(i) a statement and evidence of the contractor's original breakdown of estimated costs, including contingency allowances and profit;

(ii) a statement and evidence of the contractor's present estimate of total costs under the contracts involved if enabled to complete, broken down between costs accrued to date of request and run-out costs, and between costs for which the contractor has made payment and those for which he is indebted at the time of the request;

(iii) a statement and evidence of the contractor's estimate of the final price of the contracts involved, giving effect to all escalation, changes, extras, and the like, known or contemplated by the contractor;

(iv) a statement of any claims known or contemplated by the contractor against the Government involving the contracts in question, other than those stated in response to (iii) above;

17.105-3

CFR TITLE 41 CHAPTER 18

STANDARDS AND PROCEDURES

(v) an estimate of the contractor's total profit or loss under the contracts involved if enabled to complete at the final contract price (see (iii) above) broken down between profit or loss to date and run-out profit or loss;

(vi) an estimate of the total profits from other Government business and all other sources during the period from the date of the first contract involved to the estimated date of completion of all the contracts involved; (vii) a statement of the amount of any tax refunds and an estimate of those anticipated during or for the period from the date of the first contract involved through the estimated completion date of all the contracts involved;

(viii) a statement in detail as to efforts the contractor has made to obtain funds from commercial sources to enable him to complete performance of the contracts involved;

(ix) a statement of the minimum amount necessary as an amendment without consideration to enable the contractor to complete performanc of the contracts involved, and the detailed basis for that amount;

(x) an estimate of the time required to complete each contract if the request is granted;

(xi) a statement of the factors which have caused the loss under the contracts involved;

(xii) a statement as to the course of events anticipated if the request is denied;

(xiii) balance sheets, preferably certified by a certified public accountant, as of the end of the contractor's fiscal year first preceding the date of the first contract, as of the end of each subsequent fiscal year, as of the date of the request, and projected as of the date of completion of all the contracts involved, assuming the contractor is enabled to complete the contracts at the final prices estimated pursuant to (iii) above, together with income statements for annual periods subsequent to the date of the first balance sheet. Balance sheets and income statements should be both consolidated, and by affiliates, and should show all transactions between the contractor and his affiliates, stockholders, and partners including loans to the contractor guaranteed by any stockholder or partner; and

(xiv) a list of all salaries, bonuses, and all other forms of compensation of the principal officers or partners and of all dividends and other withdrawals, and all payments to stockholders in any form since the date of the first contract involved.

(c) Amendments Without Consideration Under 17.103-2(b). In addition to the facts and evidence enumerated in paragraph (a) above, where a request involves possible amendment without consideration because of Government action, and "essentiality" is not a factor, the contractor may be asked to furnish:

(i) a detailed statement of the precise Government action which the contractor considers caused a loss under the contract, with evidence to support each essential fact;

(ii) a statement and evidence of the contractor's original breakdown of estimated costs, including contingency allowances and profit;

(iii) the estimated total loss suffered under the contract, with detailed supporting analysis; and

(iv) the estimated loss resulting from the Government action, with detailed supporting analysis.

NASA PROCUREMENT REGULATION

17.105-3

EXTRAORDINARY CONTRACTUAL ADJUSTMENT PROCEDURES

(d) Correction of Mistakes Under 17.103-3. In addition to the facts and evidence enumerated in paragraph (a) above, where a request involves possible correction of a mistake, the contractor may be asked to furnish:

(i) a statement and evidence of the precise mistake or error that was made, the ambiguity that exists, or the misunderstanding that arose, showing of what it consisted and how it occurred, and the intention of the parties;

(ii) a statement explaining when the mistake was discovered, when notice of mistake was given to the contracting officer, and whether given before completion of work under, or the effective date of termination of, the contract;

(iii) an estimate of loss or profit under the contract with detailed supporting analysis; and

(iv) an estimate of the increase in cost to the Government resulting from the adjustment requested, with detailed supporting analysis.

(e) Formalization of Informal Commitments Under 17.103-4. In addition to the facts and evidence enumerated in paragraph (a) above, where a request involves possible formalization of an informal commitment, the contractor may be asked to furnish:

(i) copies of any written instructions or assurances, or a statement under oath of any oral instructions or assurances made to the contractor, with identification of the Government officer or official making such statement;

(ii) a statement as to when the property or services were furnished or arranged to be furnished, and to whom;

(iii) evidence that the contractor relied upon the instructions or assurances, with a full description of the circumstances which led him so to rely, and that the contractor intended, at the time of performing the work, to be compensated directly for it by the Government and did not anticipate recovery of the costs in some other way;

(iv) a cost breakdown supporting the amount claimed as a fair compensation for the work performed; and

(v) a statement and evidence of why it was impracticable to provide for the work performed in an appropriate contractual instrument.

17.106 Processing Contractor Requests.

17.106-1 Investigation. Upon receipt of a contractor's request for an extraordinary contractual adjustment, the cognizant contracting officer shall be responsible for making a thorough investigation of all facts and issues relevant to the request. Facts and evidence shall be obtained from contractor and Government personnel, including signed statements of material facts within the knowledge of individuals where documentary evidence is lacking, and audits where considered necessary to establish financial or cost facts. The investigation shall establish the facts essential to meeting the standards required for a decision on the request.

17.106-2 Submission of Request to the Contract Adjustment Board. (a) Statements and Information to Board.

(1) After completing the investigation of the facts and issues relevant to the contractor's request, the cognizant contracting officer shall forward the request to the Chairman, Contract Adjustment Board, NASA Headquarters, and shall state the following in his forwarding letter:

(i) the nature of the case; and

17.106

CFR TITLE 41 CHAPTER 18