[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 936]

 

            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

 

49.203  Adjustment for loss.



    (a) In the negotiation or determination of any settlement, the TCO 

shall not allow profit if it appears that the contractor would have 

incurred a loss had the entire contract been completed. The TCO shall 

negotiate or determine the amount of loss and make an adjustment in the 

amount of settlement as specified in paragraph (b) or (c) below. In 

estimating the cost to complete, the TCO shall consider expected 

production efficiencies and other factors affecting the cost to 

complete.

    (b) If the settlement is on an inventory basis (see 49.206-2(a)), 

the contractor shall not be paid more than the total of the amounts in 

subparagraphs (1), (2), and (3) below, less all disposal credits and all 

unliquidated advance and progress payments previously made under the 

contract:

    (1) The amount negotiated or determined for settlement expenses.

    (2) The contract price, as adjusted, for acceptable completed end 

items (see 49.205).

    (3) The remainder of the settlement amount otherwise agreed upon or 

determined (including the allocable portion of initial costs (see 

31.205-42(c)), reduced by multiplying the remainder by the ratio of (i) 

the total contract price to (ii) the total cost incurred before 

termination plus the estimated cost to complete the entire contract.

    (c) If the settlement is on a total cost basis (see 49.206-2(b)), 

the contractor shall not be paid more than the total of the amounts in 

subparagraphs (1) and (2) below, less all disposal and other credits, 

all advance and progress payments, and all other amounts previously paid 

under the contract:

    (1) The amount negotiated or determined for settlement expenses.

    (2) The remainder of the total settlement amount otherwise agreed 

upon or determined (lines 7 and 14 of SF 1436, Settlement Proposal 

(Total Cost Basis)) reduced by multiplying the remainder by the ratio of 

(i) the total contract price to (ii) the remainder plus the estimated 

cost to complete the entire contract.