FAR 50.103-1—General.
Plain-English Summary
FAR 50.103-1 explains the threshold principle for using the extraordinary authority in Public Law 85-804: a contractor’s loss alone does not justify relief. This section covers the core standard for deciding whether action is appropriate, the requirement to evaluate all facts of the case, the relationship between this general standard and the illustrative examples in FAR 50.103-2, and the fact that the examples are not exhaustive. In practice, this means the approving authority must make a discretionary, case-by-case judgment about whether granting contract adjustment or other relief would facilitate the national defense. The section also warns that even when a case appears to fit an example, relief can still be denied if other considerations weigh against it. For contractors, this provision is important because it makes clear that requests for extraordinary relief must be supported by more than proof of financial harm; they must show why the requested action serves the national defense and why the overall circumstances justify relief.
Key Rules
Loss alone is not enough
A contractor’s losses under a contract do not, by themselves, justify action under Public Law 85-804. The request must meet the higher standard for extraordinary relief, not just show that the contractor suffered financial harm.
National defense is the test
The deciding question is whether the proposed action will facilitate the national defense. This is a judgment call based on the full record, not a mechanical checklist or automatic entitlement.
All facts must be considered
The approving authority must evaluate the entire situation, including the contract circumstances, the cause and extent of the loss, and any other relevant considerations. No single fact controls the outcome.
Examples are illustrative only
The examples in FAR 50.103-2 are guidance, not an exclusive list of qualifying situations. A case may qualify even if it does not match an example, and a case may still be denied even if it does.
Other considerations can defeat relief
Even when a case fits an example, the approving authority may deny the request if other factors make relief inappropriate. The presence of qualifying facts does not create a right to adjustment.
Responsibilities
Approving Authority
Make the final discretionary judgment on whether the requested action will facilitate the national defense, considering all facts and any countervailing factors. Determine whether relief is appropriate even when a case appears to fit an illustrative example.
Contractor
Show more than mere loss or hardship. Present facts and arguments demonstrating why the requested contract adjustment or other action is warranted and how it would support the national defense.
Contracting Officer / Agency Officials
Evaluate requests in light of the full circumstances and the governing standard, not just the existence of a loss. Use the examples in FAR 50.103-2 as guidance, while recognizing they do not control the outcome.
Practical Implications
Contractors should not treat financial loss as a standalone basis for relief; they need a strong national-defense justification and a persuasive factual record.
Decision-makers must avoid a box-checking approach. The analysis is discretionary and fact-specific, so documentation of the full circumstances matters.
A case that looks similar to an example in FAR 50.103-2 can still be denied, so parties should address adverse facts and policy concerns up front.
Because the examples are not exhaustive, unusual situations may still qualify if the approving authority concludes relief is warranted.
The section sets a high bar for extraordinary relief, so requests should be carefully prepared, narrowly tailored, and supported by evidence showing why action is in the government’s interest.
Official Regulatory Text
The fact that losses occur under a contract is not sufficient basis for exercising the authority conferred by Pub. L. 85-804. Whether appropriate action will facilitate the national defense is a judgment to be made on the basis of all of the facts of the case. Although it is impossible to predict or enumerate all the types of cases in which action may be appropriate, examples are included in 50.103-2 . Even if all of the factors in any of the examples are present, other considerations may warrant denying a contractor's request for contract adjustment. The examples are not intended to exclude other cases in which the approving authority determines that the circumstances warrant action.