U.S. flag
          An official website of the United States Government  Main navigation
  

        

              Data Initiatives
                              Regulations
                                                                        Row 1
                                              FAR FAR
                              Smart Matrix Smart Matrix
                              Chapter 99 (CAS) Chapter 99 (CAS)
                              Row 2
                                              DFARS DFARS
                              DFARSPGI DFARSPGI
                              AFARS AFARS
                              DAFFARS DAFFARS
                              DAFFARS MP DAFFARS MP
                              DARS DARS
                              DLAD DLAD
                              NMCARS NMCARS
                              Row 3
                                              SOFARS SOFARS
                              TRANSFARS TRANSFARS
                              AGAR AGAR
                              AIDAR AIDAR
                              CAR CAR
                              DEAR DEAR
                              DIAR DIAR
                              DOLAR DOLAR
                              Row 4
                                              DOSAR DOSAR
                              DTAR DTAR
                              EDAR EDAR
                              EPAAR EPAAR
                              FEHBAR FEHBAR
                              GSAM/R GSAM/R
                              HHSAR HHSAR
                              HSAR HSAR
                              Row 5
                                              HUDAR HUDAR
                              IAAR IAAR
                              JAR JAR
                              LIFAR LIFAR
                              NFS NFS
                              NRCAR NRCAR
                              TAR TAR
                              VAAR VAAR
                              Tools
                                                                        Archives
                              Smart Matrix
                              Regulations Search
                              Acquisition Regulation Comparator (ARC)
                              Policy Network
                                                                        CAOC
                              CAAC
                              FAR Council
                              ISDC
 Breadcrumb
        Home
                            Regulations
                            FAR
                            Subpart 49.3 - Additional Principles for Cost-Reimbursement Contracts Terminated for Convenience
        
                  FAR
FAR
FAC Number: 2024-03 Effective Date: 02/23/2024
PartPart 1Part 2Part 3Part 4Part 5Part 6Part 7Part 8Part 9Part 10Part 11Part 12Part 13Part 14Part 15Part 16Part 17Part 18Part 19Part 20Part 21Part 22Part 23Part 24Part 25Part 26Part 27Part 28Part 29Part 30Part 31Part 32Part 33Part 34Part 35Part 36Part 37Part 38Part 39Part 40Part 41Part 42Part 43Part 44Part 45Part 46Part 47Part 48Part 49Part 50Part 51Part 52Part 53
Subpart49.049.149.249.349.449.549.6
Section49.30149.30249.30349.30449.305
Leave this field blank
        
                  

                                
                  
        « PreviousNext »
Subpart 49.3 - Additional Principles for Cost-Reimbursement Contracts Terminated for ConvenienceSubpart 49.3 - Additional Principles for Cost-Reimbursement Contracts Terminated for Convenience    **Parent topic:**  Part 49 - Termination of Contracts49.301 General.       Termination clauses for cost-reimbursement contracts (see  49.503(a)) provide for the settlement of costs and fee, if any. The contract clauses governing costs shall determine what costs are allowable.49.302 Discontinuance of vouchers.       (a) 						            When the contract has been completely terminated, the contractor shall not use   Standard Form 1034 (Public Voucher for Purchases and Services Other than Personal) after the last day of the sixth month following the month in which the termination is effective. The contractor may elect to stop using vouchers at any time during the 6-month period. When the contractor has vouchered out all costs within the 6-month period, a proposal for fee, if any, may be submitted on   SF 1437 (see  49.602-1) or by letter appropriately certified. The contractor must submit a substantiated proposal for fee to the TCO within 1 year from the effective date of termination, unless the period is extended by the TCO. When the use of vouchers is discontinued, the contractor shall submit all unvouchered costs and the proposed fee, if any, as specified in  49.303.                                          (b) 						            When the contract is partially terminated,  49.304 shall apply.49.303 Procedure after discontinuing vouchers.    49.303-1 Submission of settlement proposal.       The contractor shall submit a final settlement proposal covering unvouchered costs and any proposed fee to within 1 year from the effective date of termination, unless the period is extended by the TCO. The contractor shall use the form prescribed in  49.602-1, unless the TCO authorizes otherwise. The proposal shall not include costs that have been-                                       (a) 						            Finally disallowed by the contracting officer; or                                          (b) 						            Previously vouchered and formally questioned by the Government but not yet decided as to allowability.49.303-2 Submission of inventory disposal schedules.       Subject to the terms of the termination clause, and whenever termination inventory is involved, the contractor shall submit complete inventory disposal schedules to the TCO reflecting inventory that is allocable to the terminated portion of the contract. The inventory disposal schedules shall be submitted within 120 days from the effective date of termination unless otherwise extended by the TCO based on a written justification to support the extension. The inventory disposal schedules shall be prepared on   Standard Form 1428 Inventory Disposal Schedule.49.303-3 Audit of settlement proposal.       The TCO shall submit the settlement proposal to the appropriate audit agency for review (see  49.107). However, if the settlement proposal is limited to an adjustment of fee, no referral to the audit agency is required.49.303-4 Adjustment of indirect costs.       (a) 						            If the contract contains the clause at  52.216-7, Allowable Cost and Payment, and it appears that adjustment of indirect costs will unduly delay final settlement, the TCO, after obtaining information from the appropriate audit agency, may agree with the contractor to-                                                         (1) 								                Negotiate the amount of indirect costs for the contract period for which final indirect cost rates have not been negotiated, or to use billing rates as final rates for this period if the billing rates appear reasonable; or                                                            (2) 								                Reserve any indirect cost adjustment in the final settlement agreement, pending establishment of negotiated rates under  subpart  42.7.                                                                             (b) 						            When an amount of indirect cost is negotiated under paragraph (a)(1) of this section, the contractor shall eliminate the indirect cost and the related direct costs on which it was based from the total pool and base used to compute indirect costs for other contracts performed during the applicable accounting period.49.303-5 Final settlement.       (a) 						            The TCO shall proceed with the settlement and execution of a settlement agreement upon receipt of the audit report, if applicable, and the contract audit closing statement covering vouchered costs.                                          (b) 						            The TCO shall adjust the fee as provided in  49.305.                                          (c) 						            The final settlement agreement may include all demands of the Government and proposals of the contractor under the terminated contract. However, no amount shall be allowed for any item of cost disallowed by the Government, nor for any other item of cost of the same nature.                                          (d) 						            If an overall settlement of costs is agreed upon, agreement on each element of cost is not necessary. If appropriate, differences may be compromised and doubtful questions settled by agreement. An overall settlement shall not include costs that are clearly not allowable under the terms of the contract.49.304 Procedure for partial termination.    49.304-1 General.       (a) 						            In a partial termination, the TCO shall limit the settlement to an adjustment of the fee, if any, and with the concurrence of the contracting office to a reduction in the estimated cost. The TCO shall adjust the fee as provided in  49.304-2 and  49.305, unless-                                                         (1) 								                The terminated portion is clearly severable from the balance of the contract; or                                                            (2) 								                Performance of the contract is virtually complete, or performance of any continued portion is only on subsidiary items or spare parts, or is otherwise not substantial.                                                                             (b) 						            In the case of the exceptions in paragraph (a), the procedures in  49.302 and  49.303 apply.49.304-2 Submission of settlement proposal (fee only).       The contractor shall limit the settlement proposal to a proposed reduction in the amount of fee. The final settlement proposal shall be submitted to the TCO within oneyear from the effective date of termination, unless the period is extended by the TCO. The proposal may be submitted in the form prescribed in  49.602-1 or by letter appropriately certified. The contractor shall substantiate the amount of fee claimed (see  49.305).49.304-3 Submission of vouchers.       When a partial termination settlement is limited to adjustment of fee, the contractor shall continue to submit the   SF 1034, Public Voucher for Purchases and Services Other than Personal, for costs reimbursable under the contract. The contractor shall not be reimbursed for costs of settlements with subcontractors unless required approvals or ratifications have been obtained (see  49.108).49.305 Adjustment of fee.    49.305-1 General.       (a) 						            The TCO shall determine the adjusted fee to be paid, if any, in the manner provided by the contract. The determination is generally based on a percentage of completion of the contract or of the terminated portion. When this basis is used, factors such as the extent and difficulty of the work performed by the contractor (*e.g.,* planning, scheduling, technical study, engineering work, production and supervision, placing and supervising subcontracts, and work performed by the contractor in (1) stopping performance, (2) settling terminated subcontracts, and (3) disposing of termination inventory) shall be compared with the total work required by the contract or by the terminated portion. The contractor’s adjusted fee shall not include an allowance for fee for subcontract effort included in subcontractors’ settlement proposals.                                          (b) 						            The ratio of costs incurred to the total estimated cost of performing the contract or the terminated portion is only one factor in computing the percentage of completion. This percentage may be either greater or less than that indicated by the ratio of costs incurred, depending upon the evaluation by the TCO of other pertinent factors.49.305-2 Construction contracts.       (a) 						            The percentage of completion basis refers to the contractor’s total effort and not solely to the actual construction work. Generally, the effort of a contractor under a cost-reimbursement construction or professional services contract can be segregated into factors such as-                                                         (1) 								                Mobilization including organization,                                                            (2) 								                Use of finances,                                                            (3) 								                Contracting for and receipt of materials,                                                            (4) 								                Placement of subcontracts,                                                            (5) 								                Preparation of shop drawings,                                                            (6) 								                Work in place performed by own forces,                                                            (7) 								                Supervision of subcontractors’ work,                                                            (8) 								                Job administration, and                                                            (9) 								                Demobilization.                                                                             (b) 						            Each of the applicable factors in paragraph (a) of this section shall be assigned a weighted value depending on its importance and difficulty. The total weight value of all factors should be easily divisible (*e.g.,* by 100) to determine percentages. The percentage of completion of each factor must be established based upon the specific facts of each contract. When totaled, the percentage of completion of each factor applied to the weighted value of each factor results in the overall percentage of contract completion. The percentage of completion is then applied to the total contract fee or to the fee applicable to the terminated portion of the contract to arrive at an equitable adjustment.
« PreviousNext »
FavoriteX

      Far Parts
            Regulations FAR Menu
  

        
      Index
                              List of Sections Affected
                              DOD Deviations
                              CAAC Deviations
                              1
                              2
                              3
                              4
                              5
                              6
                              7
                              8
                              9
                              10
                              11
                              12
                              13
                              14
                              15
                              16
                              17
                              18
                              19
                              20
                              21
                              22
                              23
                              24
                              25
                              26
                              27
                              28
                              29
                              30
                              31
                              32
                              33
                              34
                              35
                              36
                              37
                              38
                              39
                              40
                              41
                              42
                              43
                              44
                              45
                              46
                              47
                              48
                              49
                              50
                              51
                              52
                              53
                              Chapter 99 (CAS)Definitions
    Toggle
FAC Changes
    Toggle
Style Formatter
    Toggle

      ×
        Data Initiatives
                                                              Regulations
                                                              Tools
                                              Archives
                                                              Smart Matrix
                                                              Regulations Search
                                                              Acquisition Regulation Comparator (ARC)
                                                              Policy Network
                                              CAO.gov
                                                        CAO Home
                                                              Council Member
                                                                    Large Agencies
                                                              Small Agencies
                                                              Council Defining Documents
                                                                    CAOC History
                                                              CAOC Charter
                                                              Civilian Agency Acquisition Council (CAAC)
                                                              Federal Acquisition Regulatory Council
                                                              Interagency Suspension and Debarment Committee (ISDC)
                                                              Search
 ˄ Top Sign up for FAR News

                            Share the FAR
                        Upper Footer Menu
  

        
      Useful Links
                              FAR Resources
                              Training
                              Acquisition Systems
            
                            **Contact Us/FAQs**
                        **Privacy and Security Notice**
                        **Accessibility Aids**
                        **Last Updated 03/29/2024**
 ACQUISITION.GOV
                An official website of the General Services Administration About GSA
                Accessibility support
                FOIA requests
                No FEAR Act data
                Office of the Inspector General
                Performance reports
                Privacy policy Looking for U.S. government information and services?
            Visit USA.gov
 «
    
    Tt