[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR49]

[Page 907-908]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 49_TERMINATION OF CONTRACTS--Table of Contents
 
                     Subpart 49.1_General Principles
 
Sec.  49.101  Authorities and responsibilities.

    (a) The termination clauses or other contract clauses authorize 
contracting officers to terminate contracts for convenience, or for 
default, and to enter into settlement agreements under this regulation.
    (b) The contracting officer shall terminate contracts, whether for 
default or convenience, only when it is in the Government's interest. 
The contracting officer shall effect a no-cost settlement instead of 
issuing a termination notice when (1) it is known that the contractor 
will accept one, (2) Government property was not furnished, and (3) 
there are no outstanding payments, debts due the Government, or other 
contractor obligations.
    (c) When the price of the undelivered balance of the contract is 
less than $5,000, the contract should not normally be terminated for 
convenience but should be permitted to run to completion.
    (d) After the contracting officer issues a notice of termination, 
the termination contracting officer (TCO) is responsible for negotiating 
any settlement with the contractor, including a no-cost settlement if 
appropriate. Auditors and TCO's shall promptly schedule and complete 
audit reviews

[[Page 908]]

and negotiations, giving particular attention to the need for timely 
action on all settlements involving small business concerns.
    (e) If the same item is under contract with both large and small 
business concerns and it is necessary to terminate for convenience part 
of the units still to be delivered, preference shall be given to the 
continuing performance of small business contracts over large business 
contracts unless the chief of the contracting office determines that 
this is not in the Government's interest.
    (f) The contracting officer is responsible for the release of excess 
funds resulting from the termination unless this responsibility is 
specifically delegated to the TCO.

[48 FR 42447, Sept. 19, 1983, as amended at 55 FR 52797, Dec. 21, 1990; 
56 FR 67134, Dec. 27, 1991]