Overview
This section prescribes a standardized memorandum format for recommending the release of funds that are no longer required following the complete or partial termination of a contract. It ensures that excess government obligations are identified and deobligated efficiently during the settlement process.
Key Rules
- Mandatory Format: The specific template provided in this section must be used when recommending the release of excess funds.
- Applicability Exception: This format is not required if the original contracting office retains responsibility for the termination settlement.
- Basis of Estimate: Fund release recommendations must be based on the "best information available" regarding the estimated gross settlement costs.
- Accounting for Prior Payments: Any payments already made to the contractor for terminated items must be factored into the calculation of the amount available for release.
- Appropriation Specificity: The recommendation must explicitly identify the related appropriations and the specific amounts to be released from each.
- Revision Procedures: The regulation provides a specific alternative paragraph for cases where previous estimates must be revised based on new evidence.
Practical Implications
- Financial Efficiency: By formalizing the release of excess funds, the FAR enables the government to "recoup" and potentially reallocate unneeded capital to other requirements before the funds expire or are lost to the Treasury.
- Administrative Coordination: The format serves as a vital communication link between the Termination Contracting Officer (TCO), the original Contracting Office, and the Finance/Paying Office to ensure financial records match the status of the termination.