49.603-6
No-cost settlement agreement-complete termination
FAR 49.603-6 ensures that a no-cost settlement for a completely terminated contract is properly documented, with both parties waiving further claims except for any specifically reserved rights.
Overview
FAR 49.603-6 provides the required language and structure for executing a no-cost settlement agreement in the event of a complete contract termination. This template is used when both the government and contractor agree that no further payments, claims, or obligations remain, except for any specifically reserved rights or liabilities. The agreement is formalized using Standard Form 30 (SF 30), with the prescribed language inserted in Block 14. This ensures both parties clearly waive any further claims and release each other from future obligations, except as explicitly stated.
Key Rules
- Use of SF 30 for No-Cost Settlement
- The agreement must be documented using SF 30, with the specified language inserted in Block 14.
- Unconditional Waiver and Release
- The contractor must unconditionally waive any charges against the government due to the termination and release the government from all contract obligations, except as listed.
- Reservation of Rights
- Any rights or liabilities that are not waived must be explicitly listed in the agreement, referencing FAR 49.109-2 and 49.603-1(b)(7).
Responsibilities
- Contracting Officers: Must ensure the correct language is used in SF 30 and that all reserved rights are clearly listed.
- Contractors: Must agree to the unconditional waiver and release, and review any reserved rights or liabilities.
- Agencies: Must oversee proper documentation and compliance with FAR requirements for terminations.
Practical Implications
- This provision streamlines the closeout of terminated contracts where no further settlement is needed, reducing administrative burden.
- Ensures both parties are protected from future claims, except for any specifically reserved rights.
- Common pitfalls include failing to list all reserved rights or using incorrect language in the agreement.