49.603-3
Cost reimbursement contracts-complete termination, if settlement includes cost
When settling a completely terminated cost-reimbursement contract, contractors must certify inventory disposition, ensure subcontractor compliance, and follow strict payment and documentation procedures to finalize the agreement.
Overview
This subsection provides the required language and certifications for use in Block 14 of SF 30 when settling cost-reimbursement contracts that are completely terminated and the settlement includes costs. It outlines the specific representations, certifications, and obligations that contractors must make regarding termination inventory, subcontractor settlements, payment procedures, and the transfer of rights to the government. It also details the calculation and payment of the final settlement amount and enumerates rights and liabilities that are reserved or excepted from the settlement, ensuring both parties retain certain legal protections and obligations after contract termination.
Key Rules
- Inventory Certification and Disposition
- Contractors must certify proper accounting and disposition of all termination inventory, including items held by subcontractors.
- Subcontractor Settlement Certification
- Contractors must obtain and retain certifications from immediate subcontractors regarding their own termination inventory and settlements.
- Settlement Payment Calculation
- The agreement specifies how the final settlement amount is calculated, including deductions for prior payments and property credits.
- Payment to Subcontractors
- Contractors must pay immediate subcontractors their entitled amounts within 10 days of receiving settlement payment.
- Transfer of Rights
- Contractors must transfer any rights to termination inventory not otherwise accounted for to the government.
- Reservation of Rights and Liabilities
- Certain rights and liabilities are explicitly reserved, such as those related to patents, warranties, government property, and unresolved claims.
Responsibilities
- Contracting Officers: Ensure the correct language is inserted in SF 30, verify contractor certifications, and review reserved rights and liabilities.
- Contractors: Certify inventory disposition, obtain subcontractor certifications, calculate and pay subcontractors, and transfer rights to the government as required.
- Agencies: Oversee compliance, review settlement documentation, and enforce reserved rights and liabilities.
Practical Implications
- This regulation ensures transparency and accountability in the settlement of terminated cost-reimbursement contracts.
- It protects the government’s interests in inventory and unresolved claims while ensuring contractors and subcontractors are properly compensated.
- Common pitfalls include incomplete certifications, failure to pay subcontractors promptly, and inadequate documentation of inventory disposition.