49.206-1 Submission of settlement proposals
Source: FAR 49.206-1 on acquisition.gov
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.
(a) Subject to the provisions of the termination clause, the contractor should promptly submit to the TCO a settlement proposal for the amount claimed because of the termination. The final settlement proposal must be submitted within oneyear from the effective date of the termination, unless the period is extended by the TCO. Termination charges under a single prime contract involving two or more divisions or units of the prime contractor may be consolidated and included in a single settlement proposal.
(b) The settlement proposal must cover all cost elements including settlements with subcontractors and any proposed profit. With the consent of the TCO, proposals may be filed in successive steps covering separate portions of the contractor’s costs. Such interim proposals shall include all costs of a particular type, except as the TCO may authorize otherwise.
(c) Settlement proposals must be on the forms prescribed in 49.602 unless the forms are inadequate for a particular contract. Settlement proposals must be in reasonable detail supported by adequate accounting data. Actual, standard (appropriately adjusted), or average costs may be used in preparing settlement proposals if they are determined under generally recognized accounting principles consistently followed by the contractor. When actual, standard, or average costs are not reasonably available, estimated costs may be used if the method of arriving at the estimates is approved by the TCO. Contractors shall not be required to maintain unduly elaborate cost accounting systems merely because their contracts may subsequently be terminated.
(d) The contractor may use the Settlement Proposal (Short Form), https://www.gsa.gov/forms-library/settlement-proposal-short-form" target="_blank">SF 1438 (see 49.602-1(d) and 53.249), when the total proposal is less than $10,000, unless otherwise instructed by the TCO. Settlement proposals that would normally be included in a single settlement proposal; e.g., those based on a series of separate orders for the same item under one contract, should be consolidated whenever possible and not divided to bring them below $10,000.
(e) The Schedule of Accounting Information, https://www.gsa.gov/forms-library/schedule-accounting-information" target="_blank">SF 1439, must be submitted for each termination under a contract for which a settlement proposal is submitted, except when the https://www.gsa.gov/forms-library/settlement-proposal-short-form" target="_blank">Standard Form 1438 is used. Although several interim proposals may be submitted, https://www.gsa.gov/forms-library/schedule-accounting-information" target="_blank">SF 1439 need be submitted only once unless, subsequent to filing the original form, major changes occur in the information submitted.