TERMINATION FOR CONVENIENCE SETTLEMENT PROPOSAL

CONTRACTOR'S SETTLEMENT PROPOSAL
Following Termination for Convenience of the Government
Pursuant to FAR Part 49

CONTRACTOR INFORMATION

Contractor Name: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

DUNS/UEI Number: [________________________________]

CAGE Code: [________________________________]

Telephone: [________________________________]

Email: [________________________________]

Point of Contact: [________________________________]

Title: [________________________________]

GOVERNMENT INFORMATION

Termination Contracting Officer (TCO): [________________________________]

Agency: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

Email: [________________________________]

Telephone: [________________________________]

CONTRACT AND TERMINATION INFORMATION

Contract Number: [________________________________]

Task/Delivery Order Number (if applicable): [________________________________]

Contract Type: ☐ Fixed-Price ☐ Cost-Reimbursement ☐ Time and Materials ☐ Other: [________________________________]

Original Contract Award Date: [__/__/____]

Original Contract Value: $[________________________________]

Original Period of Performance: [__/__/____] through [__/__/____]

Termination Information:

Date of Notice of Termination: [__/__/____]

Effective Date of Termination: [__/__/____]

Termination: ☐ Total ☐ Partial

If Partial, Work Terminated: [________________________________]

Percentage of Contract Terminated: [____]%

I. SETTLEMENT PROPOSAL SUMMARY

Date of Settlement Proposal: [__/__/____]

IMPORTANT: This settlement proposal must be submitted within ONE YEAR of the effective date of termination unless extended in writing by the TCO.

Settlement Proposal Type (check one):

☐ Inventory Basis (FAR 49.206-2(a)) - Preferred for fixed-price contracts
☐ Total Cost Basis (FAR 49.206-2(b)) - Used when inventory basis is impractical
☐ Other Basis (as approved by TCO): [________________________________]

II. TOTAL SETTLEMENT AMOUNT REQUESTED

III. DETAILED COST BREAKDOWN

A. Direct Costs

1. Direct Labor

2. Direct Materials (Inventory Basis)

3. Other Direct Costs

B. Indirect Costs

C. Subcontractor Settlement Claims

D. Settlement Expenses

E. Profit Calculation

Profit on Work Performed:

Profit is calculated based on work actually completed and costs incurred, not anticipated profit on the entire terminated portion.

Base Cost for Profit: $[________________________________]

Profit Rate: [____]%

Profit Amount: $[________________________________]

Basis for Profit Rate:
[________________________________]
[________________________________]

IV. INVENTORY SCHEDULE (FORM SF 1428 OR EQUIVALENT)

Schedule A - Metals

Schedule B - Raw Materials (Other)

Schedule C - Purchased Parts

Schedule D - Work in Process

Schedule E - Finished Products

V. CREDITS AND DEDUCTIONS

A. Amounts Previously Paid

B. Disposal Credits

C. Other Deductions

VI. EQUITABLE ADJUSTMENT FOR CONTINUED PORTION (PARTIAL TERMINATION ONLY)

☐ Not Applicable (Total Termination)
☐ Applicable - Equitable Adjustment Requested

If partial termination, the Contractor requests an equitable adjustment to the price of the continued portion:

Original Contract Price (Continued Portion): $[________________________________]

Equitable Adjustment Requested: $[________________________________]

Revised Contract Price (Continued Portion): $[________________________________]

Basis for Equitable Adjustment:
[________________________________]
[________________________________]
[________________________________]

VII. CERTIFICATION

For Settlement Proposals Exceeding $100,000:

I certify that:

1. All the costs included in this settlement proposal are allocable to the contract;

2. This settlement proposal does not include any costs which are expressly unallowable under applicable cost principles in FAR Part 31 or DFARS Part 231;

3. This settlement proposal does not include costs previously reimbursed;

4. The supporting data are accurate, complete, and current to the best of my knowledge and belief as of the date of this certification;

5. This settlement proposal has been prepared in good faith and the claimed amount accurately reflects the compensation to which the Contractor believes itself entitled.

Warning: The making of a false certification may be grounds for prosecution under 18 U.S.C. § 287, False Claims Act, and/or 18 U.S.C. § 1001, Fraud and False Statements.

Signature: [________________________________]

Printed Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

For Settlement Proposals of $100,000 or Less:

I certify that this settlement proposal is submitted in good faith and that the costs claimed are allocable to the terminated portion of the contract.

Signature: [________________________________]

Printed Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

VIII. SUPPORTING DOCUMENTATION

The following documentation is attached:

☐ Tab A: Notice of Termination
☐ Tab B: Contract and All Modifications
☐ Tab C: Inventory Schedules (SF 1428 or equivalent)
☐ Tab D: Labor Distribution Records
☐ Tab E: Material Purchase Orders and Invoices
☐ Tab F: Subcontractor Settlement Proposals and Agreements
☐ Tab G: Overhead and G&A Rate Calculations
☐ Tab H: Settlement Expense Documentation
☐ Tab I: Disposal Documentation
☐ Tab J: Progress Payment Records
☐ Tab K: Accounting System Records
☐ Tab L: [________________________________]

IX. CONTRACTOR'S REQUEST FOR NEGOTIATION

The Contractor requests the opportunity to negotiate this settlement proposal with the Termination Contracting Officer. The Contractor's designated representative(s) for settlement negotiations:

Primary Representative:

Name: [________________________________]

Title: [________________________________]

Telephone: [________________________________]

Email: [________________________________]

Alternate Representative:

Name: [________________________________]

Title: [________________________________]

Telephone: [________________________________]

Email: [________________________________]

X. RELEASE (To be executed upon settlement)

RELEASE OF CLAIMS

Upon payment of the agreed settlement amount, [Contractor Name] hereby releases and discharges the United States, its officers, agents, and employees from all claims arising under or relating to Contract No. [________________________________] that the Contractor had, has, or may have, except:

☐ Specified claims reserved (list below)
☐ No claims reserved

Reserved Claims (if any):
[________________________________]
[________________________________]

IMPORTANT NOTES

Filing Deadline

The settlement proposal MUST be submitted within ONE (1) YEAR of the effective date of termination unless the TCO has granted a written extension. Failure to submit timely may result in unilateral settlement by the TCO.

Settlement Principles

1. Fair Compensation: Settlement should compensate the contractor fairly for work performed and preparations made.

2. Profit: Profit is limited to work performed; no profit on work not performed.

3. Allowable Costs: Only costs allowable under FAR Part 31 are recoverable.

4. No Anticipatory Profits: Contractors cannot recover profits that would have been earned had the contract been completed.

Common Cost Elements

Recoverable:
- Direct costs for work performed
- Reasonable indirect costs allocable to terminated work
- Subcontractor settlement costs
- Settlement expenses (including professional fees)
- Initial costs (startup, tooling) not yet amortized
- Rental costs under unexpired leases (with mitigation)

Not Recoverable:
- Anticipatory profits
- Loss of future business
- Costs of completed items delivered and paid for
- Unallowable costs under FAR 31.205

Professional Assistance

Settlement of termination claims is complex. Contractors are entitled to recover reasonable costs of professional help (accountants, attorneys) as settlement expenses.

SOURCES AND REFERENCES

• FAR Part 49 - Termination of Contracts
• FAR Part 31 - Contract Cost Principles
• FAR 52.249-1 through 52.249-14 - Termination Clauses
• SF 1428 - Inventory Schedule
• SF 1435 - Settlement Proposal (Inventory Basis)
• SF 1436 - Settlement Proposal (Total Cost Basis)
• SF 1438 - Settlement Proposal (Short Form)