49.301
General
When a cost-reimbursement contract is terminated for convenience, only costs and fees deemed allowable by the contract's cost clauses may be settled and reimbursed.
Overview
FAR 49.301 addresses the general principles for settling cost-reimbursement contracts that are terminated for convenience. It clarifies that termination clauses in these contracts (referencing FAR 49.503(a)) establish the process for settling both allowable costs and any applicable fees. The determination of which costs are allowable is governed by the specific contract clauses related to costs, ensuring that only those costs deemed permissible under the contract and applicable regulations are included in the settlement. This section serves as a foundational guideline for handling the financial aspects of contract termination in cost-reimbursement scenarios.
Key Rules
- Settlement of Costs and Fees
- Termination clauses in cost-reimbursement contracts dictate how costs and fees are settled upon termination for convenience.
- Allowable Costs
- Only costs deemed allowable under the contract's cost principles and clauses may be included in the settlement.
Responsibilities
- Contracting Officers: Must ensure settlements only include allowable costs and fees as defined by the contract and applicable regulations.
- Contractors: Must submit claims for costs and fees that are allowable under the contract's cost principles.
- Agencies: Oversee and review settlements to ensure compliance with cost allowability requirements.
Practical Implications
- This section ensures clarity and fairness in settling terminated cost-reimbursement contracts, preventing disputes over unallowable costs.
- Contractors must be diligent in documenting and justifying all claimed costs as allowable.
- Common pitfalls include attempting to claim costs that are not explicitly allowable under the contract, leading to disallowed claims and potential delays in settlement.