Overview
FAR 49.605 outlines the specific information and documentation a prime contractor must submit to a Contracting Officer to obtain formal authorization to settle their own subcontractor termination settlement proposals.
Key Rules
- Organizational Transparency: Contractors must provide a full description of their internal termination department, including the specific officials responsible for processing and settling proposals.
- Experience Documentation: The applicant must demonstrate their experience level in handling termination matters and managing subcontractor claims.
- Workload Disclosure: The request must include the number and estimated dollar value of all uncompleted government contracts and subcontracts, as well as the volume of terminations currently in progress.
- Scope and Limits: The contractor must specify which divisions are seeking authorization and propose a specific dollar "limit of authorization" for the settlements they wish to handle.
- Exclusivity Statement: The contractor must verify whether any other applications for settlement authority have been made for the same divisions.
Practical Implications
- Streamlined Administration: Obtaining this authority allows prime contractors to expedite the closeout process by settling subcontractor claims without seeking individual Government approval for every proposal under the authorized limit.
- Vetting of Internal Controls: The Government uses this information to ensure the contractor has the professional capacity and administrative infrastructure to protect the Government's interests when negotiating settlements.