Overview
This section outlines the four authorized procedures for settling cost-reimbursement and fixed-price contracts terminated for the government's convenience. It emphasizes the preference for reaching a mutual agreement over unilateral administrative actions.
Key Rules
- Authorized Methods: Settlements may be reached via negotiated agreement, a formal determination by the Termination Contracting Officer (TCO), costing-out via vouchers (SF 1034) for cost-reimbursement contracts, or a combination of these.
- Negotiation Priority: The TCO is primary tasked with pursuing a fair and prompt negotiated settlement with the contractor whenever possible.
- Unilateral Determination: The TCO may only issue a settlement by determination as a last resort when a mutual agreement cannot be reached.
Practical Implications
- Contractors should prioritize negotiation to maintain more control over the settlement outcome, as a TCO determination is a unilateral decision that may lead to less favorable terms or necessitate a formal dispute.
- For cost-reimbursement contracts, the "costing-out" method provides a streamlined administrative path to recover costs through standard public vouchers rather than a single lump-sum settlement.