Subpart 49.3
Additional Principles for Cost-Reimbursement Contracts Terminated for Convenience
FAR Subpart 49.3 provides essential procedures for handling cost-reimbursement contracts terminated for convenience, ensuring proper payment discontinuance, documentation, and fair fee adjustments.
Overview
FAR Subpart 49.3 outlines additional principles and procedures specifically for cost-reimbursement contracts that are terminated for the convenience of the government. This subpart supplements the general termination procedures by addressing unique aspects of cost-reimbursement contracts, such as the handling of vouchers, steps to take after discontinuing voucher payments, procedures for partial terminations, and the adjustment of contractor fees. The subpart ensures that both contracting officers and contractors understand their responsibilities and the processes to follow when such contracts are terminated, minimizing disputes and ensuring fair compensation for work performed up to the point of termination.
Key Rules
- General Principles (49.301)
- Establishes the foundational rules for handling cost-reimbursement contract terminations for convenience.
- Discontinuance of Vouchers (49.302)
- Details when and how voucher payments to contractors should be stopped after termination.
- Procedure After Discontinuing Vouchers (49.303)
- Outlines the steps contracting officers and contractors must take once voucher payments have ceased.
- Procedure for Partial Termination (49.304)
- Provides guidance on managing contracts that are only partially terminated, including continued performance on the remaining portion.
- Adjustment of Fee (49.305)
- Explains how contractor fees should be adjusted in light of the termination, ensuring fair compensation for work performed.
Responsibilities
- Contracting Officers: Must follow specific procedures for discontinuing vouchers, managing partial terminations, and adjusting fees.
- Contractors: Required to comply with voucher discontinuance, submit necessary documentation, and cooperate in fee adjustments.
- Agencies: Oversee the termination process to ensure compliance and proper settlement.
Practical Implications
- This subpart exists to address the complexities of terminating cost-reimbursement contracts, which differ from fixed-price contracts.
- It impacts daily contracting by providing clear steps for handling payments, documentation, and fee adjustments after termination.
- Common pitfalls include failing to properly discontinue vouchers, mishandling partial terminations, or incorrectly adjusting fees, which can lead to disputes or audit findings.