49.105 Duties of termination contracting

officer after issuance of notice of

termination.

(a) Consistent with the termination clause and the notice of termination, the TCO shall-

(1) Direct the action required of the prime contractor;

(2) Examine the settlement proposal of the prime contractor and, when appropriate, the settlement

proposals of sub-contractors;

(3) Promptly negotiate settlement with the contractor and enter into a settlement agreement; and

(4) Promptly settle the contractor’s settlement proposal by determination for the elements that

cannot be agreed on, if unable to negotiate a complete settlement.

(b) To expedite settlement, the TCO may request specially qualified personnel to-

(1) Assist in dealings with the contractor;

(2) Advise on legal and contractual matters;

(3) Conduct accounting reviews and advise and assist on accounting matters; and

(4) Perform the following functions regarding termination inventory (see subpart 45.6):

(i) Verify its existence.

(ii) Determine qualitative and quantitative allocability.

(iii) Make recommendations concerning serviceability.

(iv) Undertake necessary screening and redistribution.

(v) Assist the contractor in accomplishing other disposition.

(c) The TCO should promptly hold a conference with the contractor to develop a definite program for

effecting the settlement. When appropriate in the judgment of the TCO, after consulting with the

contractor, principal subcontractors should be requested to attend. Topics that should be discussed

at the conference and documented include-

(1) General principles relating to the settlement of any settlement proposal, including obligations of

the contractor under the termination clause of the contract;

(2) Extent of the termination, point at which work is stopped, and status of any plans, drawings, and

information that would have been delivered had the contract been completed;

(3) Status of any continuing work;

(4) Obligation of the contractor to terminate subcontracts and general principles to be followed in
settling subcontractor settlement proposals;

(5) Names of subcontractors involved and the dates termination notices were issued to them;

(6) Contractor personnel handling review and settlement of subcontractor settlement proposals and

the methods being used;

(7) Arrangements for transfer of title and delivery to the Government of any material required by the

Government;

(8) General principles and procedures to be followed in the protection, preservation, and disposition

of the contractor’s and subcontractors’ termination inventories, including the preparation of

termination inventory schedules;

(9) Contractor accounting practices and preparation of SF 1439 (Schedule of Accounting

Information (49.602-3));

(10) Form in which to submit settlement proposals;

(11) Accounting review of settlement proposals;

(12) Any requirement for interim financing in the nature of partial payments;

(13) Tentative time schedule for negotiation of the settlement, including submission by the

contractor and subcontractors of settlement proposals, termination inventory schedules, and

accounting information schedules (see 49.206-3 and 49.303-2);

(14) Actions taken by the contractor to minimize impact upon employees affected adversely by the

termination (see paragraph (g) of the letter notice in 49.601-2); and

(15) Obligation of the contractor to furnish accurate, complete, and current cost or pricing data, and

to certify to that effect in accordance with 15.403-4(a)(1) when the amount of a termination

settlement agreement, or a partial termination settlement agreement plus the estimate to complete

the continued portion of the contract exceeds the threshold in 15.403-4.

49.105-1 Termination status reports.

49.105-2 Release of excess funds.

49.105-3 Termination case file.

49.105-4 Cleanup of construction site.

Parent topic: Subpart 49.1 - General Principles