[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR49]



[Page 935]

 

            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

 

49.201  General.





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

work done 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.