52.249-6 Termination (Cost-Reimbursement).

As prescribed in 49.503(a)(1), insert the following clause:

Termination (Cost-Reimbursement) (May 2004)

(a) The Government may terminate performance of work under this contract in whole or, from time

to time, in part, if-

(1) The Contracting Officer determines that a termination is in the Government’s interest; or

(2) The Contractor defaults in performing this contract and fails to cure the default within 10 days

(unless extended by the Contracting Officer) after receiving a notice specifying the default. "Default"

includes failure to make progress in the work so as to endanger performance.

(b) The Contracting Officer shall terminate by delivering to the Contractor a Notice of Termination

specifying whether termination is for default of the Contractor or for convenience of the

Government, the extent of termination, and the effective date. If, after termination for default, it is

determined that the Contractor was not in default or that the Contractor’s failure to perform or to

make progress in performance is due to causes beyond the control and without the fault or

negligence of the Contractor as set forth in the Excusable Delays clause, the rights and obligations

of the parties will be the same as if the termination was for the convenience of the Government.

(c) After receipt of a Notice of Termination, and except as directed by the Contracting Officer, the

Contractor shall immediately proceed with the following obligations, regardless of any delay in

determining or adjusting any amounts due under this clause:

(1) Stop work as specified in the notice.

(2) Place no further subcontracts or orders (referred to as subcontracts in this clause), except as

necessary to complete the continued portion of the contract.

(3) Terminate all subcontracts to the extent they relate to the work terminated.

(4) Assign to the Government, as directed by the Contracting Officer, all right, title, and interest of

the Contractor under the subcontracts terminated, in which case the Government shall have the

right to settle or to pay any termination settlement proposal arising out of those terminations.

(5) With approval or ratification to the extent required by the Contracting Officer, settle all

outstanding liabilities and termination settlement proposals arising from the termination of

subcontracts, the cost of which would be reimbursable in whole or in part, under this contract;

approval or ratification will be final for purposes of this clause.

(6) Transfer title (if not already transferred) and, as directed by the Contracting Officer, deliver to

the Government-

(i) The fabricated or unfabricated parts, work in process, completed work, supplies, and other

material produced or acquired for the work terminated;

(ii) The completed or partially completed plans, drawings, information, and other property that, if

the contract had been completed, would be required to be furnished to the Government; and
(iii) The jigs, dies, fixtures, and other special tools and tooling acquired or manufactured for this

contract, the cost of which the Contractor has been or will be reimbursed under this contract.

(7) Complete performance of the work not terminated.

(8) Take any action that may be necessary, or that the Contracting Officer may direct, for the

protection and preservation of the property related to this contract that is in the possession of the

Contractor and in which the Government has or may acquire an interest.

(9) Use its best efforts to sell, as directed or authorized by the Contracting Officer, any property of

the types referred to in paragraph (c)(6) of this clause; provided, however, that the Contractor (i)is

not required to extend credit to any purchaser and (ii) may acquire the property under the

conditions prescribed by, and at prices approved by, the Contracting Officer. The proceeds of any

transfer or disposition will be applied to reduce any payments to be made by the Government under

this contract, credited to the price or cost of the work, or paid in any other manner directed by the

Contracting Officer.

(d) The Contractor shall submit complete termination inventory schedules no later than 120 days

from the effective date of termination, unless extended in writing by the Contracting Officer upon

written request of the Contractor within this 120-day period.

(e) After expiration of the plant clearance period as defined in Subpart 49.001 of the Federal

Acquisition Regulation, the Contractor may submit to the Contracting Officer a list, certified as to

quantity and quality, of termination inventory not previously disposed of, excluding items authorized

for disposition by the Contracting Officer. The Contractor may request the Government to remove

those items or enter into an agreement for their storage. Within 15 days, the Government will accept

the items and remove them or enter into a storage agreement. The Contracting Officer may verify

the list upon removal of the items, or if stored, within 45 days from submission of the list, and shall

correct the list, as necessary, before final settlement.

(f) After termination, the Contractor shall submit a final termination settlement proposal to the

Contracting Officer in the form and with the certification prescribed by the Contracting Officer. The

Contractor shall submit the proposal promptly, but no later than 1 year from the effective date of

termination, unless extended in writing by the Contracting Officer upon written request of the

Contractor within this 1-year period. However, if the Contracting Officer determines that the facts

justify it, a termination settlement proposal may be received and acted on after 1 year or any

extension. If the Contractor fails to submit the proposal within the time allowed, the Contracting

Officer may determine, on the basis of information available, the amount, if any, due the Contractor

because of the termination and shall pay the amount determined.

(g) Subject to paragraph (f) of this clause, the Contractor and the Contracting Officer may agree on

the whole or any part of the amount to be paid (including an allowance for fee) because of the

termination. The contract shall be amended, and the Contractor paid the agreed amount.

(h) If the Contractor and the Contracting Officer fail to agree in whole or in part on the amount of

costs and/or fee to be paid because of the termination of work, the Contracting Officer shall

determine, on the basis of information available, the amount, if any, due the Contractor, and shall

pay that amount, which shall include the following:

(1) All costs reimbursable under this contract, not previously paid, for the performance of this

contract before the effective date of the termination, and those costs that may continue for a

reasonable time with the approval of or as directed by the Contracting Officer; however, the
Contractor shall discontinue those costs as rapidly as practicable.

(2) The cost of settling and paying termination settlement proposals under terminated subcontracts

that are properly chargeable to the terminated portion of the contract if not included in paragraph

(h)(1) of this clause.

(3) The reasonable costs of settlement of the work terminated, including-

(i) Accounting, legal, clerical, and other expenses reasonably necessary for the preparation of

termination settlement proposals and supporting data;

(ii) The termination and settlement of subcontracts (excluding the amounts of such settlements); and

(iii) Storage, transportation, and other costs incurred, reasonably necessary for the preservation,

protection, or disposition of the termination inventory. If the termination is for default, no amounts

for the preparation of the Contractor’s termination settlement proposal may be included.

(4) A portion of the fee payable under the contract, determined as follows:

(i) If the contract is terminated for the convenience of the Government, the settlement shall include

a percentage of the fee equal to the percentage of completion of work contemplated under the

contract, but excluding subcontract effort included in subcontractors’ termination proposals, less

previous payments for fee.

(ii) If the contract is terminated for default, the total fee payable shall be such proportionate part of

the fee as the total number of articles (or amount of services) delivered to and accepted by the

Government is to the total number of articles (or amount of services) of a like kind required by the

contract.

(5) If the settlement includes only fee, it will be determined under paragraph (h)(4) of this clause.

(i) The cost principles and procedures in part 31 of the Federal Acquisition Regulation, in effect on

the date of this contract, shall govern all costs claimed, agreed to, or determined under this clause.

(j) The Contractor shall have the right of appeal, under the Disputes clause, from any determination

made by the Contracting Officer under paragraph (f), (h), or (l) of this clause, except that if the

Contractor failed to submit the termination settlement proposal within the time provided in

paragraph (f) and failed to request a time extension, there is no right of appeal. If the Contracting

Officer has made a determination of the amount due under paragraph (f), (h) or (l) of this clause, the

Government shall pay the Contractor-

(1) The amount determined by the Contracting Officer if there is no right of appeal or if no timely

appeal has been taken; or

(2) The amount finally determined on an appeal.

(k) In arriving at the amount due the Contractor under this clause, there shall be deducted-

(1) All unliquidated advance or other payments to the Contractor, under the terminated portion of

this contract;

(2) Any claim which the Government has against the Contractor under this contract; and

(3) The agreed price for, or the proceeds of sale of materials, supplies, or other things acquired by
the Contractor or sold under this clause and not recovered by or credited to the Government.

(l) The Contractor and Contracting Officer must agree to any equitable adjustment in fee for the

continued portion of the contract when there is a partial termination. The Contracting Officer shall

amend the contract to reflect the agreement.

(m)

(1) The Government may, under the terms and conditions it prescribes, make partial payments and

payments against costs incurred by the Contractor for the terminated portion of the contract, if the

Contracting Officer believes the total of these payments will not exceed the amount to which the

Contractor will be entitled.

(2) If the total payments exceed the amount finally determined to be due, the Contractor shall repay

the excess to the Government upon demand, together with interest computed at the rate established

by the Secretary of the Treasury under 50 U.S.C. App.1215(b)(2). Interest shall be computed for the

period from the date the excess payment is received by the Contractor to the date the excess is

repaid. Interest shall not be charged on any excess payment due to a reduction in the Contractor’s

termination settlement proposal because of retention or other disposition of termination inventory

until 10 days after the date of the retention or disposition, or a later date determined by the

Contracting Officer because of the circumstances.

(n) The provisions of this clause relating to fee are inapplicable if this contract does not include a

fee.

(End of clause)

Alternate I (Sept1996). If the contract is for construction, substitute the following paragraph (h)(4)

for paragraph (h)(4) of the basic clause:

(4) A portion of the fee payable under the contract determined as follows:

(i) If the contract is terminated for the convenience of the Government, the settlement shall include

a percentage of the fee equal to the percentage of completion of work contemplated under the

contract, but excluding subcontract effort included in subcontractors’ termination settlement

proposals, less previous payments for fee.

(ii) If the contract is terminated for default, the total fee payable shall be such proportionate part of

the fee as the actual work in place is to the total work in place required by the contract.

Alternate II (Sept1996). If the contract is with an agency of the U.S. Government or with State, local,

or foreign governments or their agencies, and if the contracting officer determines that the

requirement to pay interest on excess partial payments is inappropriate, delete paragraph (m)(2)

from the basic clause.

Alternate III (Sept1996). If the contract is for construction with an agency of the U.S. Government or

with State, local, or foreign governments or their agencies, the following paragraph (h)(4) shall be

substituted for paragraph (h)(4) of the basic clause. Paragraph (m)(2) may be deleted from the basic

clause if the contracting officer determines that the requirement to pay interest on excess partial

payments is inappropriate.
(4) A portion of the fee payable under the contract determined as follows:

(i) If the contract is terminated for the convenience of the Government, the settlement shall include

a percentage of the fee equal to the percentage of completion of work contemplated under the

contract, but excluding subcontract effort included in subcontractors’ termination settlement

proposals, less previous payments for fee.

(ii) If the contract is terminated for default, the total fee payable shall be such proportionate part of

the fee as the actual work in place is to the total work in place required by the contract.

Alternate IV (Sept1996). If the contract is a time-and-material or labor-hour contract, substitute the

following paragraphs (h) and (l) for paragraphs (h) and (l) of the basic clause:

(h) If the Contractor and the Contracting Officer fail to agree in whole or in part on the amount to be

paid because of the termination of work, the Contracting Officer shall determine, on the basis of

information available, the amount, if any, due the Contractor and shall pay the amount determined

as follows:

(1) If the termination is for the convenience of the Government, include-

(i) An amount for direct labor hours (as defined in the Schedule of the contract) determined by

multiplying the number of direct labor hours expended before the effective date of termination by

the hourly rate(s) in the Schedule, less any hourly rate payments already made to the Contractor;

(ii) An amount (computed under the provisions for payment of materials) for material expenses

incurred before the effective date of termination, not previously paid to the Contractor;

(iii) An amount for labor and material expenses computed as if the expenses were incurred before

the effective date of termination, if they are reasonably incurred after the effective date, with the

approval of or as directed by the Contracting Officer; however, the Contractor shall discontinue

these expenses as rapidly as practicable;

(iv) If not included in subdivision (h)(1)(i), (ii), or (iii) of this clause, the cost of settling and paying

termination settlement proposals under terminated subcontracts that are properly chargeable to the

terminated portion of the contract; and

(v) The reasonable costs of settlement of the work terminated, including-

(A) Accounting, legal, clerical, and other expenses reasonably necessary for the preparation of

termination settlement proposals and supporting data;

(B) The termination and settlement of subcontracts (excluding the amounts of such settlements); and

(C) Storage, transportation, and other costs incurred, reasonably necessary for the protection or

disposition of the termination inventory.

(2) If the termination is for default of the Contractor, include the amounts computed under

paragraph (h)(1) of this clause but omit-

(i) Any amount for preparation of the Contractor’s termination settlement proposal; and

(ii) The portion of the hourly rate allocable to profit for any direct labor hours expended in

furnishing materials and services not delivered to and accepted by the Government.
(l) If the termination is partial, the Contractor may file with the Contracting Officer a proposal for an

equitable adjustment of price(s) for the continued portion of the contract. The Contracting Officer

shall make any equitable adjustment agreed upon. Any proposal by the Contractor for an equitable

adjustment under this clause shall be requested within 90 days from the effective date of

termination, unless extended in writing by the Contracting Officer.

Alternate V (Sept1996). If the contract is a time-and-material or labor-hour contract with an agency

of the U.S. Government or with State, local or foreign governments or their agencies, substitute the

following paragraphs (h) and (l) for paragraphs (h) and (l) of the basic clause. Paragraph (m)(2) may

be deleted from the basic clause if the contracting officer determines that the requirement to pay

interest on excess partial payments is inappropriate.

(h) If the Contractor and the Contracting Officer fail to agree in whole or in part on the amount to be

paid because of the termination of work, the Contracting Officer shall determine, on the basis of

information available, the amount, if any, due the Contractor and shall pay the amount determined

as follows:

(1) If the termination is for the convenience of the Government, include-

(i) An amount for direct labor hours (as defined in the Schedule of the contract) determined by

multiplying the number of direct labor hours expended before the effective date of termination by

the hourly rate(s) in the Schedule, less any hourly rate payments already made to the contractor;

(ii) An amount (computed under the provisions for payment of materials) for material expenses

incurred before the effective date of termination, not previously paid to the Contractor;

(iii) An amount for labor and material expenses computed as if the expenses were incurred before

the effective date of termination if they are reasonably incurred after the effective date, with the

approval of or as directed by the Contracting Officer; however, the Contractor shall discontinue

these expenses as rapidly as practicable;

(iv) If not included in subdivision (h)(1)(i), (ii), or (iii) of this clause, the cost of settling and paying

termination settlement proposals under terminated subcontracts that are properly chargeable to the

terminated portion of the contract; and

(v) The reasonable costs of settlement of the work terminated, including-

(A) Accounting, legal, clerical, and other expenses reasonably necessary for the preparation of

termination settlement proposals and supporting data;

(B) The termination and settlement of subcontracts (excluding the amounts of such settlements); and

(C) Storage, transportation, and other costs incurred, reasonably necessary for the protection or

disposition of the termination inventory.

(2) If the termination is for default of the Contractor, include the amounts computed under

paragraph (h)(1) of this clause but omit-

(i) Any amount for preparation of the Contractor’s termination settlement proposal; and

(ii) The portion of the hourly rate allocable to profit for any direct labor hours expended in

furnishing materials and services not delivered to and accepted by the Government.
(l) If the termination is partial, the Contractor may file with the Contracting Officer a proposal for an

equitable adjustment of the price(s) for the continued portion of the contract. The Contracting

Officer shall make any equitable adjustment agreed upon. Any proposal by the Contractor for an

equitable adjustment under this clause shall be requested within 90 days from the effective date of

termination, unless extended in writing by the Contracting Officer.

Parent topic: 52.249 [Reserved]