FAR 50.103-6—Disposition.
Plain-English Summary
FAR 50.103-6 explains how a contractor’s request under FAR 50.103-3(a) must be documented when it is approved or denied. It requires the approving authority to prepare, sign, and date a Memorandum of Decision that captures the contractor’s identity, the contract number, the nature of the request, a concise description of the supplies or services involved, the decision itself, and the actual or estimated potential cost impact. The memorandum must also state the circumstances that justify the decision and identify any information that is classified Confidential or higher, with classified material allowed to be placed in a separate referenced document. If the request is approved in whole or in part, the memorandum must include the national defense finding language and the supporting case file must show how the dollar amount was derived and why it is reasonable. When the approved amount exceeds what audit or other independent review supports, the approving authority must further explain why it departed from that recommendation. In practice, this section is about creating a defensible administrative record for extraordinary contract adjustments so the government can show both the basis for the decision and the rationale for the amount approved.
Key Rules
Signed decision memorandum
The approving authority must sign and date a Memorandum of Decision whenever acting on a contractor request under 50.103-3(a). This is the formal record of the approval or denial decision.
Required memorandum contents
The memorandum must include the contractor’s name and address, contract identification, the nature of the request, a concise description of the supplies or services, the decision reached, and the actual or estimated potential cost involved, if any.
State the justification
The memorandum must include a statement of the circumstances that justify the decision. This ensures the record explains why the action was taken, not just what was decided.
Handle classified information separately
Any information classified Confidential or higher must be identified. Instead of placing it in the memorandum, the information may be put in a separate classified document that is referenced in the memorandum.
Include national defense finding
If some adjustment is approved, the memorandum must include a statement substantially in the prescribed form that the authorized action will facilitate the national defense.
Document the dollar basis
The supporting case file must show how the approved dollar amount was derived and the rationale for that amount. This is especially important where the adjustment involves a monetary award or settlement.
Explain deviations from audit support
If the approved dollar amount exceeds the amount supported by audit or other independent review, the approving authority must document why it is departing from that recommendation.
Responsibilities
Approving Authority
Must decide whether to approve or deny the contractor’s request, sign and date the Memorandum of Decision, include all required content, make the national defense finding when an adjustment is approved, and document any departure from audit or independent review recommendations.
Contracting/Program File Owner
Must maintain the case file supporting the decision, including the derivation and rationale for the dollar amount and any separate classified reference documents.
Auditors or Independent Reviewers
Provide audit findings or other independent review recommendations that may support the approved amount; their work becomes part of the record when the approving authority considers the requested adjustment.
Contractor
Submits the request under FAR 50.103-3(a) and should provide sufficient facts, cost information, and supporting documentation to allow the government to make and document a decision.
Practical Implications
This section is a documentation control rule: if the memorandum is incomplete, the decision can be vulnerable to challenge because the record will not show the required basis for action.
The dollar amount must be supportable, not just acceptable to the decision-maker; the file should clearly tie the approved amount to facts, analysis, and any audit input.
Classified information must be handled carefully. Do not place Confidential-or-higher material directly into an unclassified memorandum if it can be segregated into a referenced classified attachment.
When approving more than audit or independent review supports, the approving authority should expect heightened scrutiny and should write a clear, specific explanation for the variance.
Contractors should anticipate that requests under this part will be judged on both substance and record quality, so incomplete cost data or weak justification can delay or reduce the approved adjustment.
Official Regulatory Text
When approving or denying a contractor’s request made in accordance with 50.103-3 (a), the approving authority shall sign and date a Memorandum of Decision containing- (a) The contractor’s name and address, the contract identification, and the nature of the request; (b) A concise description of the supplies or services involved; (c) The decision reached and the actual cost or estimated potential cost involved, if any; (d) A statement of the circumstances justifying the decision; (e) Identification of any of the foregoing information classified "Confidential" or higher (instead of being included in the memorandum, such information may be set forth in a separate classified document referenced in the memorandum); and (f) If some adjustment is approved, a statement in substantially the following form: "I find that the action authorized herein will facilitate the national defense." The case files supporting this statement will show the derivation and rationale for the dollar amount of the award. When the dollar amount exceeds the amounts supported by audit or other independent reviews, the approving authority will further document the rationale for deviating from the recommendation.