Overview
This section outlines the procedure for a contractor to request an equitable adjustment to the price of the remaining (continued) portion of a fixed-price contract following a partial termination. It establishes the administrative workflow between the Termination Contracting Officer (TCO) and the Contracting Officer while preventing the duplication of costs.
Key Rules
- Contractor Right: After a partial termination, the contractor is entitled to submit a proposal for an equitable adjustment to the prices of the non-terminated portion of the contract.
- Submission Format: The proposal must be submitted in the specific format required by FAR 15.408, Table 15-2.
- Administrative Routing: The TCO must forward the proposal to the Contracting Officer unless the TCO has been specifically delegated negotiation authority.
- Prohibition of "Double-Counting":
- The Contracting Officer must ensure that price increases for the continued work are not included in the termination settlement.
- The TCO must ensure that costs accounted for in the equitable adjustment are excluded from the termination settlement.
Practical Implications
- Recovery of Increased Unit Costs: Partial terminations often eliminate economies of scale; this section allows contractors to recover the resulting higher per-unit costs for the remaining work.
- Strict Cost Segregation: Contractors must maintain rigorous accounting to ensure that costs associated with the "continued portion" are clearly distinguished from "termination costs" to avoid audit issues regarding duplicate recovery.