Overview
This section prescribes the specific Standard Forms (SF) that contractors must use when submitting settlement proposals, inventory schedules, and partial payment applications following the termination of a government contract. It ensures a standardized process for documenting costs and executing final settlement agreements for both prime contracts and, in certain cases, subcontracts.
Key Rules
- Fixed-Price Settlement Proposals: Contractors must choose the correct form based on the proposal method:
- SF 1435 (Inventory Basis): For proposals based on inventory levels.
- SF 1436 (Total Cost Basis): For proposals computed on a total cost approach.
- SF 1438 (Short Form): Permitted for fixed-price proposals totaling less than $10,000.
- Cost-Reimbursement Settlements: SF 1437 is the mandatory form for all cost-reimbursement type contract settlement proposals.
- Supporting Documentation:
- SF 1428 & 1429 (Inventory Disposal): Used to support proposals submitted on SF 1436 and SF 1438.
- SF 1439 (Accounting Information): Must be filed with all proposals except when the Short Form (SF 1438) is used.
- Partial Payments: Contractors seeking interim funding before final settlement must apply using SF 1440.
- Final Execution: All termination settlement agreements are officially executed using SF 30 (Amendment of Solicitation/Modification of Contract).
Practical Implications
- Standardization: The use of these forms facilitates a uniform audit trail, allowing Termination Contracting Officers (TCOs) to efficiently review and compare termination costs against FAR cost principles.
- Administrative Relief: The "Short Form" (SF 1438) provides a simplified pathway for small claims (under $10,000) by reducing the burden of filing a separate Schedule of Accounting Information.
- Subcontractor Flow-down: While these forms are designed for prime contracts, the regulation explicitly allows SF 1435 and SF 1436 to be used for subcontract settlements, promoting consistency throughout the supply chain.