Cost-reimbursement contracts-complete termination, with settlement limited to fee
FAR 49.603-4 ensures that, when a cost-reimbursement contract is fully terminated and settlement is limited to the fee, all parties use a standardized agreement that documents payment and preserves essential rights and liabilities.
Overview
FAR 49.603-4 provides the required language and structure for settlement agreements when a cost-reimbursement contract is completely terminated and the settlement is limited to the contractor's fee. This section specifies the content to be inserted in Block 14 of Standard Form 30 (SF 30) to ensure all parties agree on the final fee payment, address allowable costs, and reserve certain rights and liabilities. The agreement documents the fee already paid, the additional fee due, and clarifies that this payment constitutes full settlement of the contractor's fee. It also outlines which rights and liabilities are reserved, such as those related to patents, government property, warranties, and statutory clauses, ensuring that both parties retain necessary protections after contract termination.
Key Rules
- Settlement Limited to Fee
- The agreement only settles the contractor's fee, not allowable costs, which are handled separately.
- Required Agreement Content
- Specifies amounts already paid and the net fee due, with payment contingent on proper invoicing.
- Reservation of Rights and Liabilities
- Lists specific rights and liabilities that remain in effect after settlement, including those related to patents, property, warranties, and statutory requirements.
Responsibilities
- Contracting Officers: Must use the prescribed language in SF 30, ensure all relevant rights and liabilities are reserved, and verify proper settlement of the fee.
- Contractors: Must submit proper invoices or vouchers for the fee and comply with ongoing obligations for reserved rights and liabilities.
- Agencies: Oversee compliance with FAR Parts 31 and 49 and ensure settlements are properly documented.
Practical Implications
- This section ensures clarity and finality in fee settlements for terminated cost-reimbursement contracts, while protecting both parties' ongoing rights and obligations. Failure to use the correct format or reserve necessary rights can lead to disputes or loss of legal protections.