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National Aeronautics and 

Space Administration

Mary W. Jackson NASA Headquarters

Washington, DC 20546-0001

September 23, 2022 

MEMORANDUM FOR NASA ACQUISITION WORKFORCE 

SUBJECT: Managing the Effects of Inflation with Existing Contracts 

As the NASA Headquarters Office of Procurement (HQ OP) continues to evaluate inflation 

and its effects on the Aerospace Industry and contractors’ ability to perform under existing

firm-fixed price contracts, this memorandum provides additional guidance to Contracting 

Officers (COs) when considering the evaluation of inflation in extraordinary

circumstances. 

On July 15, 2022, HQ OP released a memorandum entitled “NASA Guidance on Current 

Inflation and Economic Price Adjustments” which emphasized existing Federal

Acquisition Regulation (FAR) and NASA FAR Supplement (NFS) guidance that may be 

considered to recognize cost increases due to inflation. The guidance is largely dependent 

on contract type. FAR 16.203-1, for example, provides guidance on the use of a fixedprice contract with economic price adjustment, shifting the price upward or downward 

depending on the certain circumstances. However, in addition to the situations discussed

in the previous memorandum, there may be extraordinary circumstances where an 

accommodation can be reached by mutual agreement of the contracting parties, perhaps to 

address acute impacts on small business and other suppliers.

For extraordinary circumstances that will facilitate national defense, where contractors 

have sought or may seek an upward adjustment to the price of an existing firm-fixed- price 

contract to account for current economic conditions, COs may have authority under Public 

Law 85-804, and as implemented by FAR Part 50 and the NFS 1850.103, to afford 

Extraordinary Contractual Relief. While the law and regulation have established stringent 

criteria, NASA may consider contractor requests to employ this authority, subject, of 

course, to available funding. Note per FAR Part 50.103-1: The fact that losses occur under

a contract is not sufficient basis for exercising the authority conferred by Pub. L. 85-804.... 

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.

Best Practice Guidance for COs: As stated in FAR 50.102-3(b), Limitations on exercise of 

authority, no contract, amendment, or modification shall be made under Pub. L. 85-804’s 

authority (1) Unless the approving authority finds that the action will facilitate the national 

defense, (2) Unless other legal authority within the agency concerned is deemed to be 

lacking or inadequate, (3) Except within the limits of the amounts appropriated and the 

statutory contract authorization, and (4) That will obligate the Government for any 

amount over $35 million unless the Senate and House Committees on Armed Services are 

notified in writing of the proposed obligation and 60 days of continuous session of 

Congress have passed since the transmittal of such notification. 
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COs shall take the following steps as needed:

1) Ensure that the contractor’s request include the required information in accordance 

with FAR 50.103-3(a) and that all facts surrounding the case are examined in 

accordance with FAR 50.103-4.

2) Request specific guidance from the NASA HQ OP, Procurement Management and 

Policy Division when evaluating cases of inflation in extraordinary circumstances. 

This office will consult the Enterprise Pricing Office as to the validity of the case 

presented. 

3) After investigating the facts and issues relevant to the contractor's request, forward the 

request to the Associate General Counsel for Contracts and Procurement Law in 

accordance with, NFS 1850.103-570 Submission of Request to the Contract 

Adjustment Board.

I appreciate your cooperation and continued commitment to supporting NASA’s mission. If 

you have any questions, please contact Edgar Lee, Senior Procurement Analyst, 

Procurement Management and Policy Division at edgar.e.lee@nasa.gov.

Karla Smith Jackson

Assistant Administrator for Procurement 

cc: 

Procurement Officers

Deputy Procurement Officers

Office of the General Counsel

M. Horne

J. Wise 

A. Sheppard

G. Sage

R. Overstreet