49.604
Release of excess funds under terminated contracts
FAR 49.604 mandates a standardized process and format for recommending the release of excess funds after contract termination, ensuring proper financial management and documentation.
Overview
FAR 49.604 provides the required format and process for recommending the release of excess funds under contracts that have been terminated, unless the contracting office is handling the settlement directly. This section ensures that any funds not needed for settlement of the terminated contract are identified and released for other uses, preventing unnecessary encumbrance of government funds. The format includes details such as the contract number, contractor name, termination notice, estimated settlement costs, and the amount of excess funds available for release. It also requires documentation of related appropriations and distribution of copies to relevant offices.
Key Rules
- Standard Format Requirement
- A specific format must be used to recommend the release of excess funds under terminated contracts, unless the contracting office retains settlement responsibility.
- Inclusion of Key Financial Data
- The recommendation must include estimated gross settlement costs, the amount of excess funds, and appropriations involved.
- Documentation and Distribution
- The recommendation must reference prior communications, if any, and copies must be sent to the paying office, accounting and finance office, and other relevant parties.
Responsibilities
- Contracting Officers: Must use the prescribed format to recommend release of excess funds and ensure all required information is included and distributed appropriately.
- Contractors: No direct compliance obligations, but may be affected by the release of funds related to their terminated contracts.
- Agencies: Must ensure proper oversight and documentation of fund releases and maintain accurate financial records.
Practical Implications
- This section exists to ensure prompt and accurate release of government funds no longer needed after contract termination, supporting fiscal responsibility.
- It impacts daily contracting by providing a clear process for financial closeout of terminated contracts.
- Common pitfalls include incomplete documentation, failure to update estimates, or not distributing copies to all required offices.