49.603-5
Cost-reimbursement contracts-partial termination
FAR 49.603-5 mandates a standardized format and detailed documentation for settling partial terminations of cost-reimbursement contracts, ensuring clarity and proper financial adjustments.
Overview
FAR 49.603-5 provides the required format and content for settlement agreements related to partial terminations of cost-reimbursement contracts. It specifies the language to be inserted in Block 14 of SF 30 (Amendment of Solicitation/Modification of Contract) when documenting the settlement of a termination proposal. The regulation ensures that all relevant details about the terminated portion—such as line items, quantities, and pricing—are clearly stated to avoid ambiguity. It also addresses the adjustment of contract fee and estimated cost, and outlines the continued reimbursement process for allowable costs and earned fees related to the terminated portion, referencing SF 1034 and FAR Part 31 for cost principles.
Key Rules
- Settlement Agreement Format
- Use the prescribed language in SF 30 for partial terminations of cost-reimbursement contracts.
- Clear Identification of Terminated Portion
- Specify the terminated portion by line item, description, quantity, price, and any necessary explanations.
- Adjustment of Fee and Estimated Cost
- Decrease the contract fee and, if appropriate, the estimated cost to reflect the termination.
- Continued Reimbursement
- Allowable costs and earned fees for the terminated portion are reimbursed per contract terms and FAR Part 31, using SF 1034.
Responsibilities
- Contracting Officers: Ensure the settlement agreement is properly documented in SF 30, with all required details and adjustments.
- Contractors: Provide accurate information on terminated portions and submit claims for allowable costs and fees as specified.
- Agencies: Oversee compliance with the prescribed format and ensure settlements are processed according to FAR requirements.
Practical Implications
- This section standardizes the process for documenting partial terminations in cost-reimbursement contracts, reducing disputes and confusion.
- Accurate completion of SF 30 and clear identification of terminated work are critical to avoid misunderstandings and ensure proper financial adjustments.
- Failure to follow the format or provide sufficient detail can delay settlement and reimbursement.