[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 919-920]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 49_TERMINATION OF CONTRACTS--Table of Contents
 
Subpart 49.2_Additional Principles for Fixed-Price Contracts Terminated 
                             for Convenience
 
Sec.  49.201  General.


    (a) A settlement should compensate the contractor fairly for the 
work done

[[Page 920]]

and the preparations made for the terminated portions of the contract, 
including a reasonable allowance for profit. Fair compensation is a 
matter of judgment and cannot be measured exactly. In a given case, 
various methods may be equally appropriate for arriving at fair 
compensation. The use of business judgment, as distinguished from strict 
accounting principles, is the heart of a settlement.
    (b) The primary objective is to negotiate a settlement by agreement. 
The parties may agree upon a total amount to be paid the contractor 
without agreeing on or segregating the particular elements of costs or 
profit comprising this amount.
    (c) Cost and accounting data may provide guides, but are not rigid 
measures, for ascertaining fair compensation. In appropriate cases, 
costs may be estimated, differences compromised, and doubtful questions 
settled by agreement. Other types of data, criteria, or standards may 
furnish equally reliable guides to fair compensation. The amount of 
recordkeeping, reporting, and accounting related to the settlement of 
terminated contracts should be kept to a minimum compatible with the 
reasonable protection of the public interest.