49.603-7
No-cost settlement agreement-partial termination
FAR 49.603-7 provides the required template and procedures for documenting a no-cost settlement agreement in cases of partial contract termination, ensuring both parties waive further claims for the terminated portion.
Overview
FAR 49.603-7 provides the required language and structure for executing a no-cost settlement agreement in the case of a partial termination of a government contract. This template is inserted into Block 14 of Standard Form 30 (SF 30) when both the government and contractor agree that no further payments or obligations are due for the terminated portion of the contract. The agreement specifies the exact items, quantities, and values affected by the termination and requires the contractor to waive any claims against the government related to the terminated portion. It also allows for the reservation of certain rights and liabilities, as appropriate.
Key Rules
- Use of SF 30 for No-Cost Partial Termination
- The agreement must be documented in Block 14 of SF 30, clearly identifying the terminated portion of the contract.
- Specification of Terminated Items
- The contract modification must detail line items, descriptions, quantities, prices, and any necessary explanations to avoid ambiguity.
- Waiver of Claims
- The contractor must unconditionally waive any charges or claims against the government for the terminated portion.
- Reservation of Rights
- Any rights or liabilities that are not waived must be explicitly listed in the agreement.
Responsibilities
- Contracting Officers: Ensure the agreement is properly documented, all required details are included, and both parties understand the waiver and any reserved rights.
- Contractors: Confirm the accuracy of the terminated items, quantities, and prices, and acknowledge the waiver of claims.
- Agencies: Oversee compliance with FAR requirements and maintain proper documentation for audit purposes.
Practical Implications
- This section streamlines the process for closing out terminated portions of contracts without further financial settlement, reducing administrative burden for both parties. It is critical to ensure all details are accurate and that both parties fully understand the implications of the waiver and any reserved rights to avoid future disputes.