49.305
Adjustment of fee
FAR 49.305 ensures that contractor fees are fairly adjusted when cost-reimbursement contracts are terminated for convenience, reflecting only the work performed.
Overview
FAR 49.305 addresses the adjustment of fees in cost-reimbursement contracts that are terminated for the convenience of the government. This section outlines how the contractor's fee should be adjusted when a contract is partially or completely terminated, ensuring that the fee reflects the reduced scope of work and the contractor's performance up to the point of termination. It also distinguishes between general contracts and construction contracts, each with specific considerations for fee adjustment. The regulation aims to ensure fair compensation for work performed while preventing overpayment for uncompleted work.
Key Rules
- Fee Adjustment Upon Termination
- When a cost-reimbursement contract is terminated for convenience, the contractor's fee must be equitably adjusted to reflect the reduced work and actual performance.
- Special Provisions for Construction Contracts
- Construction contracts may have unique fee adjustment methods, recognizing the nature of construction work and progress payments.
Responsibilities
- Contracting Officers: Must determine and negotiate a fair fee adjustment based on the extent of contract completion and applicable regulations.
- Contractors: Must provide accurate documentation of work performed and costs incurred up to termination.
- Agencies: Oversee the process to ensure compliance and prevent improper payments.
Practical Implications
- This section ensures contractors are fairly compensated for work performed but not for uncompleted portions after termination.
- Impacts contract closeout, settlement negotiations, and final payment calculations.
- Common issues include disputes over the amount of fee due and adequate documentation of performance.