Submission of settlement proposals
Contractors must submit a detailed, timely, and properly documented settlement proposal after contract termination, using prescribed forms and including all relevant costs and supporting data.
Overview
FAR 49.206-1 outlines the requirements for contractors to submit settlement proposals following the termination of a government contract. Contractors must promptly submit a settlement proposal to the Termination Contracting Officer (TCO), with a final proposal due within one year of the termination date unless an extension is granted. The proposal must include all cost elements, settlements with subcontractors, and any proposed profit. Proposals can be submitted in stages with TCO approval, and must be detailed and supported by adequate accounting data. Standard forms (SF 1436, SF 1437, SF 1438, SF 1439) are prescribed for submission, with the short form (SF 1438) allowed for proposals under $10,000. The Schedule of Accounting Information (SF 1439) is required for each termination unless the short form is used. Consolidation of proposals is encouraged to avoid artificially lowering the claim below $10,000. Estimated costs may be used if actual data is unavailable and the method is approved by the TCO. Contractors are not required to maintain elaborate accounting systems solely due to contract termination.