Here are some examples of situations where Extraordinary Relief has been granted.
- When a loss under a contract impaired the contractor's ability to perform or act as a source of supply under a contract that is essential to the national defense, there may be an amendment without consideration.
- Amendment or modification to correct or mitigate a mistake
- Amendment to formalize informal commitments to a person who took action without a formal contract.
There is an upward limit on recovery - its $25 million unless Congress (the Committees on Armed Services of the Senate and House) have been notified in writing and given 60 days to consider it. Contracting Officers typically have a $50 thousand limit. Anything between that and $25 million must be approved by someone higher than an Assistant Secretary.
A Extraordinary Relief claim is like a financial bailout. A contractor must have exhausted all other avenues for raising working capital. To this end, the Government focuses on aspects of financial capability. For example, in reviewing a contractor's claim for extraordinary relief, the Government will request, review, and consder:
- The contractor's financial position based on the most current information available, and the potential effect on that position if contract performance continued to completion.
- Net working capital changes and changes in financial position since startint the contract.
- A comparative statement of costs experienced under the contract and other similar production.
- The estimated costs to complete the contract.
- The compensation paid to the contractor's key personnel.
- The extent of financial assistance already furnished by the Government.
- Segregation of the profit and loss statement between commercial and Government business.
- Any legal proceedings pending against the contractor.
- Any unusual factors which may impair the contractor's ability (financial or other) to perform the contract.
- Contract inventories and their value in case of default.
If your contract is to cut grass on a military base, you're probably not going to be determined to be essential to the national defense and you're not going to succeed in getting extraordinary relief. If you go bankrupt, the Government will just find another grass-cutter. However, if your contract is to provide housing for military in a war zone, you might have a shot.