§ 1431. Authorization; official approval; Congressional action: notification of committees of certain proposed obligations, resolution of disapproval, continuity of session, computation of period

§ 1431. Authorization; official approval; Congressional action: notification of committees of certain proposed obligations, resolution of disapproval, continuity of session, computation of period

(a) The President may authorize any department or agency of the Government which exercises functions in connection with the national defense, acting in accordance with regulations prescribed by the President for the protection of the Government, to enter into contracts or into amendments or modifications of contracts heretofore or hereafter made and to make advance payments thereon, 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. The authority conferred by this section shall not be utilized to obligate the United States in an amount in excess of $500,000 without approval by an official at or above the level of an Assistant Secretary or his Deputy, or an assistant head or his deputy, of such department or agency, or by a Contract Adjustment Board established therein. The authority conferred by this section may not be utilized to obligate the United States in an amount in excess of $150,000,000 unless the Committees on Armed Services of the Senate and the House of Representatives and in addition, the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate with respect to contracts, or modifications or amendments to contracts, or advance payments proposed to be made under this section by the Secretary of the Department in which the Coast Guard is operating with respect to the acquisition of Coast Guard cutters or aircraft, have been notified in writing of such proposed obligation and 60 days of continuous session of Congress have expired following the date on which such notice was transmitted to such Committees. For purposes of this section, the continuity of a session of Congress is broken only by an adjournment of the Congress sine die at the end of a Congress, and the days on which either House is not in session because of an adjournment of more than 3 days to a day certain, or because of an adjournment sine die other than at the end of a Congress, are excluded in the computation of such 60-day period.

(b) Temporary Authority to Modify Certain Contracts and Options Based on the Impacts of Inflation.— Only amounts specifically provided by an appropriations Act for the purposes detailed in subsections (c) and (d) of this section may be used by the Secretary of Defense to carry out such subsections. If any such amounts are so specifically provided, the Secretary may use them for such purposes.

(c)

(1) The Secretary of Defense, acting pursuant to a Presidential authorization under subsection (a) and in accordance with subsection (b)—

(A) may, notwithstanding subsection (e) of section 1432 of this title, make an amendment or modification to an eligible contract when, due solely to economic inflation, the cost to a prime contractor of performing such eligible contract is greater than the price of such eligible contract; and

(B) may not request consideration from such prime contractor for such amendment or modification.

(2) A prime contractor may submit to the Secretary of Defense a request for an amendment or modification to an eligible contract pursuant to subsection (a) when, due solely to economic inflation, the cost to a covered subcontractor of performing an eligible subcontract is greater than the price of such eligible subcontract. Such request shall include a certification that the prime contractor—

(A) will remit to such covered subcontractor the difference, if any, between the original price of such eligible contract and the price of such eligible contract if the Secretary of Defense makes an amendment or modification pursuant to subsection (a); and

(B) will not require such covered subcontractor to pay additional consideration or fees related to such amendment or modification.

(3) If a prime contractor does not make the request described in paragraph (2), a covered subcontractor may submit to a contracting officer of the Department of Defense a request for an amendment or modification to an eligible subcontract when, due solely to economic inflation, the cost to such covered subcontractor of performing such eligible subcontract is greater than the price of such eligible subcontract.

(d) Any adjustment or modification made pursuant to subsection (c) to an eligible contract or an eligible subcontract shall—

(1) be contingent upon the continued performance, as applicable, of such eligible contract or such eligible subcontract; and

(2) account only for the actual cost of performing such eligible contract or such eligible subcontract, but may account for indirect costs of performance, as the Secretary of Defense determines appropriate.

(e) The authority under subsections (c) and (d) shall be effective during the period beginning on December 23, 2022, and ending on December 31, 2024.

(f) In this section:

(1) The term “covered subcontractor” means a subcontractor who has entered into an eligible subcontract with a prime contractor.

(2) The term “eligible contract” means a contract awarded to a prime contractor by the Secretary of Defense pursuant to subsection (a).

(3) The term “eligible subcontract” means a subcontract made under an eligible contract to a covered subcontractor.

(Pub. L. 85–804, § 1, Aug. 28, 1958, 72 Stat. 972; Pub. L. 93–155, title VIII, § 807(a), Nov. 16, 1973, 87 Stat. 615; Pub. L. 101–510, div. A, title XIII, § 1313, Nov. 5, 1990, 104 Stat. 1670; Pub. L. 102–25, title VII, § 705(f), Apr. 6, 1991, 105 Stat. 120; Pub. L. 116–92, div. C, title XXXV, § 3507(c), Dec. 20, 2019, 133 Stat. 1976; Pub. L. 117–263, div. A, title VIII, § 822(a), Dec. 23, 2022, 136 Stat. 2709; Pub. L. 118–31, div. A, title VIII, § 824, Dec. 22, 2023, 137 Stat. 332.)

Editorial Notes

Amendments

2023—Subsec. (b). Pub. L. 118–31, § 824(1), inserted at end “If any such amounts are so specifically provided, the Secretary may use them for such purposes.”

Subsec. (e). Pub. L. 118–31, § 824(2), substituted “December 31, 2024” for “December 31, 2023”.

2022—Pub. L. 117–263, § 822(a)(1), (4), inserted section 1 designation in original Act, designated existing provisions as subsec. (a), and added subsecs. (b) to (f).

Subsec. (a). Pub. L. 117–263, § 822(a)(2), (3), substituted “an amount in excess of $500,000” for “an amount in excess of $50,000” and “an amount in excess of $150,000,000” for “any amount in excess of $25,000,000”.

2019—Pub. L. 116–92, in third sentence, inserted “and in addition, the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate with respect to contracts, or modifications or amendments to contracts, or advance payments proposed to be made under this section by the Secretary of the Department in which the Coast Guard is operating with respect to the acquisition of Coast Guard cutters or aircraft,” after “House of Representatives”.

1991—Pub. L. 102–25, § 705(f)(1), inserted before period at end of third sentence “and 60 days of continuous session of Congress have expired following the date on which such notice was transmitted to such Committees”.

Pub. L. 102–25, § 705(f)(2), in fourth sentence, inserted “at the end of a Congress” after “sine die” and “, or because of an adjournment sine die other than at the end of a Congress,” after “to a day certain”.

1990—Pub. L. 101–510 struck out before period at end of third sentence “and 60 days of continuous session of Congress have expired following the date on which such notice was transmitted to such Committees and neither House of Congress has adopted, within such 60-day period, a resolution disapproving such obligation”.

1973—Pub. L. 93–155 provided for notification of Congressional Committees with respect to certain proposed obligations, Congressional resolution of disapproval, continuity of Congressional session, and computation of period.

Statutory Notes and Related Subsidiaries

Effective Date of 1991 Amendment

Pub. L. 102–25, title VII, § 705(f)(1), Apr. 6, 1991, 105 Stat. 120, provided that the amendment made by that section is effective as of Nov. 6, 1990.

Nonapplicability of National Emergencies Act

The provisions of the National Emergencies Act [see Short Title note set out under section 1601 of this title] shall not apply to the powers and authorities conferred by this section and actions taken hereunder, see section 1651(a)(4) of this title.

Guidance

Pub. L. 117–263, div. A, title VIII, § 822(b), Dec. 23, 2022, 136 Stat. 2711, provided that: “Not later than 90 days after the date of the enactment of an Act providing appropriations to carry out section 1 of Public Law 85–804 (50 U.S.C. 1431) (as added by subsection (a)), the Under Secretary of Defense for Acquisition and Sustainment shall issue guidance implementing the authority under subsections (b) through (d) of section 1 of Public Law 85–804 (50 U.S.C. 1431) (as added by subsection (a)).”

Obligations Entered Into Before November 16, 1973

Pub. L. 93–155, title VIII, § 807(e), Nov. 16, 1973, 87 Stat. 616, provided that: “The amendments made by this section [amending this section, sections 3816 and 4532 of this title, and section 2307 of Title 10, Armed Forces] shall not affect the carrying out of any contract, loan, guarantee, commitment, or other obligation entered into prior to the date of enactment of this section [Nov. 16, 1973].”

Executive Documents

Ex. Ord. No. 10789. Contracting Authority of Government Agencies in Connection With National Defense Functions

Ex. Ord. No. 10789, Nov. 14, 1958, 23 F.R. 8897, as amended by Ex. Ord. No. 11051, Sept. 27, 1962, 27 F.R. 9683; Ex. Ord. No. 11382, Nov. 28, 1967, 32 F.R. 16247; Ex. Ord. No. 11610, July 22, 1971, 36 F.R. 13755; Ex. Ord. No. 12148, July 20, 1979, 44 F.R. 43239; Ex. Ord. No. 12919, § 904(b), June 3, 1994, 59 F.R. 29534; Ex. Ord. No. 13232, Oct. 20, 2001, 66 F.R. 53941; Ex. Ord. No. 13286, § 73, Feb. 28, 2003, 68 F.R. 10630, provided:

By virtue of the authority vested in me by the act of August 28, 1958, 72 Stat. 972, hereinafter called the act [this chapter], and as President of the United States, and deeming that such action will facilitate the national defense, it is hereby ordered as follows:

Part I—Department of Defense

Under such regulations, which shall be uniform to the extent practicable, as may be prescribed or approved by the Secretary of Defense:

1A. (a) The limitation in paragraph 1 to amounts appropriated and the contract authorization provided therefor shall not apply to contractual provisions which provide that the United States will hold harmless and indemnify the contractor against any of the claims or losses set forth in subparagraph (b), whether resulting from the negligence or wrongful act or omission of the contractor or otherwise (except as provided in subparagraph (b)(2)). This exception from the limitations of paragraph 1 shall apply only to claims or losses arising out of or resulting from risks that the contract defines as unusually hazardous or nuclear in nature. Such a contractual provision shall be approved in advance by an official at a level not below that of the Secretary of a military department and may require each contractor so indemnified to provide and maintain financial protection of such type and in such amounts as is determined by the approving official to be appropriate under the circumstances. In deciding whether to approve the use of an indemnification provision and in determining the amount of financial protection to be provided and maintained by the indemnified contractor, the appropriate official shall take into account such factors as the availability, cost and terms of private insurance, self-insurance, other proof of financial responsibility and workmen’s compensation insurance. Such approval and determination, as required by the preceding two sentences, shall be final.

(b)(1) Subparagraph (a) shall apply to claims (including reasonable expenses of litigation and settlement) or losses, not compensated by insurance or otherwise, of the following types:

(A) Claims by third persons, including employees of the contractor, for death, personal injury, or loss of, damage to, or loss of use of property;

(B) Loss of, damage to, or loss of use of property of the contractor;

(C) Loss of, damage to, or loss of use of property of the Government;

(D) Claims arising (i) from indemnification agreements between the contractor and a subcontractor or subcontractors, or (ii) from such arrangements and further indemnification arrangements between subcontractors at any tier; provided that all such arrangements were entered into pursuant to regulations prescribed or approved by the Secretaries of Defense, the Army, the Navy, or the Air Force.

(2) Indemnification and hold harmless agreements entered into pursuant to this subsection, whether between the United States and a contractor, or between a contractor and a subcontractor, or between two subcontractors, shall not cover claims or losses caused by the willful misconduct or lack of good faith on the part of any of the contractor’s or subcontractor’s directors or officers or principal officials which are (i) claims by the United States (other than those arising through subrogation) against the contractor or subcontractor, or (ii) losses affecting the property of such contractor or subcontractor. Regulations to be prescribed or approved by the Secretaries of Defense, the Army, the Navy or the Air Force shall define the scope of the term principal officials.

(3) The United States may discharge its obligation under a provision authorized by subparagraph (a) by making payments directly to subcontractors or to third persons to whom a contractor or subcontractor may be liable.

(c) A contractual provision made under subparagraph (a) that provides for indemnification must also provide for—

(1) notice to the United States of any claim or action against, or of any loss by, the contractor or subcontractor which is covered by such contractual provision; and

(2) control or assistance by the United States, at its election, in the settlement or defense of any such claim or action.