49.603-8
Fixed-price contracts-settlements with subcontractors only
FAR 49.603-8 mandates specific certifications, inventory accountability, and prompt payment procedures for fixed-price contract settlements involving only subcontractors, ensuring transparency and compliance in the termination process.
Overview
FAR 49.603-8 provides the required language and procedures for settling fixed-price contract terminations that involve only settlements with subcontractors. This section specifies the format and certifications to be included in Block 14 of SF 30 when the settlement proposal covers only terminated subcontracts. It ensures that all subcontractor settlements are properly documented, inventory is accounted for, and payment obligations are clearly defined.
Key Rules
- Certification of Subcontractor Settlements
- Contractors must certify that each immediate subcontractor has provided a certificate confirming proper inventory disposition and that similar certifications have been obtained from lower-tier subcontractors.
- Inventory Certification
- Contractors must certify that all termination inventory is properly allocable, does not exceed reasonable requirements, and is not usable on other work without loss.
- Transfer of Inventory Rights
- Any rights to subcontract termination inventory not otherwise accounted for must be transferred to the Government.
- Timely Payment to Subcontractors
- Contractors must pay immediate subcontractors within 10 days of receiving settlement payment, after deducting prior payments and any amounts owed by the subcontractor.
- Government Payment and Settlement Finality
- The Government will pay the contractor the agreed settlement amount, which constitutes full settlement except for specifically reserved rights and liabilities.
- Reservation of Rights
- Certain rights and liabilities may be reserved as specified in the agreement.
Responsibilities
- Contracting Officers: Ensure the correct format and certifications are included in SF 30 and verify compliance with inventory and payment requirements.
- Contractors: Obtain and provide required certifications, account for inventory, transfer rights as needed, and pay subcontractors promptly.
- Agencies: Oversee the settlement process and ensure all regulatory requirements are met.
Practical Implications
- This section ensures transparency and accountability in subcontractor settlements during contract termination.
- It helps prevent disputes over inventory and payment, and protects the Government’s interests in termination inventory.
- Common pitfalls include incomplete certifications, delayed payments to subcontractors, and failure to properly account for inventory.