I can tell you what's 'supposed' to happen but the rule has been subverted so often that it hasn't got any teeth left in it.
We had problems with LOTS of failures to fire and subsequent requests for alibis. (This pertains, naturally, to centerfire. When talking rimfire, any round that is struck and fails to fire is IMO an alibi.)
The rule was intended to eliminate the clowns who showed up -- often -- at matches with unsafe and improperly loaded ammo. Therefore:
IF the primer is struck normally and the round fails to fire and
IF there is no evidence that the reloader failed to add powder (always a good choice) and
IF the primer is not in backwards and
IF it's the proper ammo for that rifle and
IF it still fails,
THEN: It's an alibi.
If the loader screwed up -- thereby at least inconveniencing all the people on the line smart enough to be able to load ammo that works and maybe endangering them with actually dangerous loads -- then he/she is expected to stand up like a responsible human with a measurable IQ and accept a lost animal.
Since I wrote it, I'm pretty certain that that was the original intent.
Since then, I've heard whiners coming up and crying:
"But I load with a Dillon and I don't have the time to check my ammo. If it's no good (or overcharged or undercharged or the primer's reversed or it's otherwise just lousy ammo) then it must be the machine's fault. 'I' certainly shouldn't have to accept responsibility for my screw-ups. (Mr. Klinton told me that!) Besides, 'I' don't have time to actually make sure that it works right -- 'I'm' too busy! So! If 'I' load s****y ammo that doesn't go off or that ties up my rifle, then everyone ELSE will just have to waste time standing around while 'I' get to shoot again!"
As for factory loaded failures:
1. WHO do you know who shoots factory centerfire in silhouette?
2. HOW often have you seen them have a failure?
As I said, the intent was to make people aware that they were expected to show up with safe ammo that worked and that they wouldn't get alibis for being incompetent reloaders. However, the whiners have prevailed and as it stands now, almost anything that doesn't go BOOM! -- no matter how stupid the reason for the failure -- is given an alibi.