49.602-1
Termination settlement proposal forms
Contractors must use the correct standard form for termination settlement proposals based on contract type, settlement basis, and proposal amount to ensure compliance and timely processing.
Overview
FAR 49.602-1 prescribes the specific standard forms that contractors must use when submitting settlement proposals following the termination of government contracts. The section distinguishes between different contract types (fixed-price and cost-reimbursement) and the basis for the settlement (inventory, total cost, or short form), as well as the dollar threshold for short form submissions. Using the correct form is essential for compliance and ensures that the termination settlement process is handled efficiently and in accordance with federal requirements.
Key Rules
- Inventory Basis (SF 1435)
- Use Standard Form 1435 for fixed-price contract terminations when the settlement is computed on an inventory basis.
- Total Cost Basis (SF 1436)
- Use Standard Form 1436 for fixed-price contract terminations when the settlement is computed on a total cost basis.
- Cost-Reimbursement Contracts (SF 1437)
- Use Standard Form 1437 for settlement proposals resulting from the termination of cost-reimbursement contracts.
- Short Form (SF 1438)
- Use Standard Form 1438 for fixed-price contract terminations when the total settlement proposal is less than $10,000.
Responsibilities
- Contracting Officers: Must ensure contractors use the correct standard form based on contract type and settlement basis.
- Contractors: Must select and submit the appropriate standard form for their termination settlement proposal.
- Agencies: Oversee compliance with form requirements and review submitted proposals for accuracy and completeness.
Practical Implications
- This section ensures uniformity and clarity in the submission of termination settlement proposals, reducing administrative errors and delays.
- Contractors must be diligent in selecting the correct form to avoid processing issues or rejection of their proposal.
- Common pitfalls include using the wrong form for the contract type or settlement basis, or failing to use the short form for proposals under $10,000.