49.603-4 Cost-reimbursement contracts-complete termination, with settlement limited to fee
Source: FAR 49.603-4 on acquisition.gov
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.
[Insert the following in Block 14 of https://www.gsa.gov/forms-library/amendment-solicitationmodification-contract" target="_blank">SF 30 for settlement of cost-reimbursement contracts that are completely terminated, if settlement is limited to fee.]
(a) This supplemental agreement settles the amount of fee due under the contract, terminated in its entirety by Notice of Termination dated ______.
(b) The parties agree to the following:
(1) The Contractor has received $______ on account of its fee under the contract before the effective date of termination.
(2) The Government agrees to pay to the Contractor or its assignee, upon presentation of a proper invoice or voucher, $______ [insert net amount to be paid on account of fee]. This sum, with sums previously paid, constitutes payment in full and complete settlement of the amount due the Contractor on account of its fee under the contract.
(3) The Contractor’s allowable costs under the contract will be paid under the terms and conditions of the contract and parts 31 and 49 of the Federal Acquisition Regulation. [Insert paragraph (a)(3) of this subsection only if there are costs to be vouchered out (see 49.302) or if there are costs to be covered later by a separate settlement agreement.]
(4) Regardless of any other provision of this agreement, the following rights and liabilities of the parties under the contract are reserved: [The following list of reserved or excepted rights and liabilities is intended to cover those that should most frequently be reserved and that should be scrutinized at the time a settlement agreement is negotiated (see 49.109-2). The suggested language of the excepted items on the list may be varied at the discretion of the contracting officer. If accuracy or completeness can be achieved by referencing the number of a contract clause or provision covering the matter in question, then follow that method of enumerating reserved rights and liabilities. Omit any of the following that are not applicable and add any additional exceptions or reservations required.]
(i) All rights and liabilities, if any, of the parties, as to matters covered by any renegotiation authority.
(ii) All rights and liabilities, if any, of the parties under those clauses inserted in the contract because of the requirements of Acts of Congress and Executive orders, including, without limitation, any applicable clauses relating to: labor law, contingent fees, domestic articles, and employment of aliens. [If the contract contains clauses of this character inserted for reasons other than requirements of Acts of Congress or Executive orders, the suggested language should be appropriately modified.]
(iii) All rights and liabilities of the parties arising under the contract and relating to reproduction rights, patent infringements, inventions, or applications for patents, including rights to assignments, invention reports, licenses, covenants of indemnity against patent risks, and bonds for patent indemnity obligations, together with all rights and liabilities under the bonds.
(iv) All rights and liabilities of the parties, arising under the contract or otherwise, and concerning defects, guarantees, or warranties relating to any articles or component parts furnished to the Government by the Contractor under the contract or this agreement.
(v) All rights and liabilities of the parties under agreements relating to the future care and disposition by the Contractor of Government-owned property remaining in the Contractor’s custody.
(vi) All rights and liabilities of the parties relating to Government property furnished to, or acquired by, the Contractor for the performance of the contract.
(vii) All rights and liabilities of the parties under the contract relating to options (except options to continue or increase the work under the contract), covenants not to compete, and covenants of indemnity.
(viii) All rights and liabilities, if any, of the parties under those clauses of the contract relating to price reductions for defective certified cost or pricing data.
(End of agreement)