52.249-6
Termination (Cost-Reimbursement)
FAR 52.249-6 requires contractors to follow strict procedures and deadlines when a cost-reimbursement contract is terminated, ensuring proper settlement and protection of Government interests.
Overview
FAR 52.249-6 outlines the procedures and requirements for terminating cost-reimbursement contracts, either for the Government’s convenience or due to contractor default. It details the steps contractors must take upon receiving a termination notice, including stopping work, settling subcontracts, transferring property, and submitting inventory schedules and settlement proposals. The clause also specifies how costs and fees are determined and paid, the process for resolving disputes, and the handling of partial terminations. Several alternates modify the clause for construction, time-and-material/labor-hour contracts, and contracts with government agencies or foreign entities.
Key Rules
- Termination Types
- The Government may terminate for convenience or default, with specific procedures for each.
- Contractor Obligations Upon Termination
- Contractors must stop work, settle subcontracts, transfer property, and protect Government interests.
- Settlement Proposals and Inventory
- Contractors must submit inventory schedules within 120 days and final settlement proposals within 1 year.
- Cost and Fee Determination
- Payments are based on reimbursable costs, settlement expenses, and a portion of the contract fee, with special rules for construction and T&M contracts.
- Dispute and Appeal Rights
- Contractors may appeal Contracting Officer determinations, except when deadlines are missed without extension requests.
- Partial Terminations and Adjustments
- Equitable adjustments are required for continued work after partial terminations.
Responsibilities
- Contracting Officers: Issue termination notices, approve settlements, determine payments, and ensure compliance with FAR cost principles.
- Contractors: Comply with termination instructions, submit required documentation, settle subcontracts, and protect Government property.
- Agencies: Oversee the termination process, ensure proper settlement, and handle appeals.
Practical Implications
- This clause ensures orderly contract closeout and fair compensation when cost-reimbursement contracts are terminated. Contractors must act quickly to meet deadlines and document costs, while Contracting Officers must follow strict procedures to protect Government interests. Common pitfalls include missing submission deadlines, inadequate documentation, and misunderstanding fee calculations under different termination scenarios.