[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 919]
 
            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.  49.115  Settlement of terminated incentive contracts.

    (a) Fixed-price incentive contracts. The TCO shall settle terminated 
fixed-price incentive (FPI) contracts under the provisions of paragraph 
(j) of the clause at 52.216-16, Incentive Price Revision--Firm Target, 
and 52.249-2, Termination for Convenience of the Government (Fixed-
Price).
    (1) Partial termination. Under a partially terminated contract, the 
TCO shall negotiate a settlement as provided in the termination clause 
of the contract, and paragraph (j) of the clause at 52.216-16, Incentive 
Price Revision--Firm Target, or paragraph (1) of the clause at 52.216-
17, Incentive Price Revision--Successive Targets. The contracting 
officer shall apply the incentive price revision provisions to completed 
items accepted by the Government, including any for which the contractor 
may request reimbursement in the settlement proposal. The TCO shall 
reimburse the contractor at target price for completed articles included 
in the settlement proposal for which a final price has not been 
established. The TCO shall incorporate in the settlement agreement an 
appropriate reservation as to final price for these completed articles.
    (2) Complete termination. If any items were delivered and accepted 
by the Government, the contracting officer shall establish prices under 
the incentive provisions of the contract. On the terminated portion of 
the contract, the provisions of the termination clause (see 52.249-2, 
Termination for Convenience of the Government (Fixed-Price)) shall 
govern and the provisions of the incentive clause shall not apply. The 
TCO responsible for the termination settlement will ensure, on the basis 
of evidence considered proper (including coordination with the 
contracting officer), that no portion of the costs considered in the 
negotiations under the incentive provisions are included in the 
termination settlement.
    (b) Cost-plus-incentive-fee contracts. The TCO shall settle 
terminated cost-plus-incentive-fee contracts under the clause at 52.249-
6, Termination (Cost-Reimbursement).
    (1) Partial termination. Under a partial termination, the TCO shall 
limit the settlement to an adjustment of target fee as provided in 
paragraph (e) of the clause at 52.216-10, Incentive Fee. The settlement 
agreement shall include a reservation regarding any adjustment of target 
cost resulting from the partial termination. The contracting officer 
shall adjust the target cost, if required.
    (2) Complete termination. The parties shall negotiate the settlement 
under the provisions of subpart 49.3 and the clause at 52.249-6, 
Termination (Cost-Reimbursement). The fee shall be adjusted on the basis 
of the target fee, and the incentive provisions shall not be applied or 
considered.