49.108-6
Delay in settling subcontractor settlement proposals
If a subcontractor settlement proposal delays the prime contract settlement, the TCO can settle the prime contract while reserving rights on the unresolved subcontractor issue.
Overview
FAR 49.108-6 addresses situations where a prime contractor's inability to reach a settlement with a subcontractor causes delays in settling the overall prime contract termination. In such cases, the Termination Contracting Officer (TCO) is authorized to proceed with settling the prime contract, while specifically excluding the unresolved subcontractor settlement proposal from the agreement. The TCO must reserve the rights of both the Government and the prime contractor regarding the outstanding subcontractor proposal, allowing for its resolution at a later date without prejudicing either party's interests.
Key Rules
- TCO Authority to Settle Prime Contract
- If a subcontractor settlement proposal is unresolved and causing delay, the TCO may settle the prime contract without including the disputed subcontractor proposal.
- Exclusion and Reservation of Rights
- The TCO must except (exclude) the subcontractor settlement proposal from the prime contract settlement and formally reserve the rights of both the Government and the prime contractor regarding the unresolved proposal.
Responsibilities
- Contracting Officers: Must identify delays caused by unresolved subcontractor proposals and ensure settlements exclude such proposals while reserving all parties' rights.
- Contractors: Should notify the TCO of any delays due to subcontractor settlements and cooperate in reserving rights for future resolution.
- Agencies: Oversee that settlements are not unduly delayed and that rights are properly reserved for unresolved subcontractor proposals.
Practical Implications
- This provision prevents the entire contract settlement process from being stalled by a single unresolved subcontractor issue.
- It ensures that both the Government and the prime contractor retain their rights to address the subcontractor proposal later.
- Common pitfalls include failing to properly reserve rights or inadvertently including unresolved proposals in the settlement, which can lead to disputes or loss of claims.