FAR 49.001—Definitions.
Plain-English Summary
FAR 49.001 supplies the core definitions used throughout FAR Part 49, which governs termination of contracts. It defines key terms that control how termination settlements are handled, including "other work," "plant clearance period," "final phase of the plant clearance period," "settlement agreement," "settlement proposal," and "unsettled contract change." These definitions matter because they determine what costs and activities are included or excluded when a contract is terminated, how long property disposition and clearance actions may take, and what documents are required to close out a termination. In practice, these terms affect both the contractor’s ability to prepare a proper settlement package and the contracting officer’s ability to evaluate, negotiate, and finalize termination actions. The definition of settlement proposal is especially important because it ties termination submissions to the concept of a claim under the False Claims Acts, which raises the stakes for accuracy, completeness, and good faith. The definition of unsettled contract change also matters because it separates ordinary termination settlement issues from other contract adjustments that still require a definitive modification.
Key Rules
Other work is excluded
"Other work" means any current or scheduled work the contractor has that is not related to the terminated contract, whether that work is for the Government or for commercial customers. This definition helps distinguish termination-related costs and activities from the contractor’s broader business operations.
Plant clearance timing
The plant clearance period begins on the effective date of contract completion or termination and normally ends 90 days after the contracting officer receives acceptable inventory schedules for each property classification, unless the parties agree to a longer period. This period governs the time allowed for disposing of or accounting for government property after termination or completion.
Final phase starts after schedules
The final phase of the plant clearance period begins after the contracting officer receives acceptable inventory schedules. That means the contractor’s submission of acceptable schedules is the trigger for the last stage of property clearance actions.
Settlement agreement is a modification
A settlement agreement is a written agreement in the form of a contract modification that settles all or part of a settlement proposal. It is the formal instrument used to resolve termination settlement matters.
Settlement proposal must be supported
A settlement proposal is the contractor’s or subcontractor’s proposal to settle a contract terminated in whole or in part, and it must be submitted in the form and with the supporting data required by Part 49. The definition also states that a settlement proposal falls within the generic meaning of a "claim" under the False Claims Acts.
Unsettled changes need definitive mods
An unsettled contract change is any contract change or contract term that requires a definitive modification but has not yet been executed. This definition identifies contract adjustments that remain open and must still be formally resolved.
Responsibilities
Contracting Officer
Use these definitions to determine the proper timing, documentation, and scope of termination settlement actions. The contracting officer must review inventory schedules, manage the plant clearance period, negotiate or approve settlement agreements, and ensure unresolved contract changes are handled through definitive modifications.
Contractor
Prepare and submit settlement proposals in the required form with the required supporting data, distinguish termination-related work from other work, and provide acceptable inventory schedules for property clearance. The contractor must also recognize that inaccurate or unsupported settlement proposals may carry False Claims Act risk.
Subcontractor
When affected by a termination, prepare settlement proposals consistent with Part 49 requirements and provide supporting data as needed. Subcontractors may also need to coordinate with the prime contractor on termination-related submissions and property issues.
Agency
Administer termination and property disposition processes in accordance with Part 49, including oversight of plant clearance timelines and approval of settlement actions. The agency must ensure contract changes that require definitive modifications are properly documented and executed.
Practical Implications
These definitions control the mechanics of termination closeout, so getting them wrong can delay settlement, property disposition, or final payment.
Contractors should separate termination costs from costs tied to other ongoing work to avoid overstating a settlement proposal.
The 90-day plant clearance period is a key deadline, but it can be extended by agreement; parties should track when acceptable inventory schedules are actually received.
Because a settlement proposal is treated as a potential claim under the False Claims Acts, contractors should ensure submissions are accurate, complete, and well supported.
Open contract changes that still need definitive modifications should not be ignored during termination processing; they can create unresolved financial or administrative issues if left outstanding.
Official Regulatory Text
As used in this part- Other work means any current or scheduled work of the contractor, whether Government or commercial, other than work related to the terminated contract. Plant clearance period , as used in this subpart, means the period beginning on the effective date of contract completion or termination and ending 90 days (or such longer period as may be agreed to) after receipt by the contracting officer of acceptable inventory schedules for each property classification. The final phase of the plant clearance period means that period after receipt of acceptable inventory schedules. Settlement agreement means a written agreement in the form of a contract modification settling all or a severable portion of a settlement proposal. Settlement proposal means a proposal for effecting settlement of a contract terminated in whole or in part, submitted by a contractor or subcontractor in the form, and supported by the data, required by this part. A settlement proposal is included within the generic meaning of the word "claim" under false claims acts (see 18 U.S.C.287 and 31 U.S.C. 3729 ). Unsettled contract change means any contract change or contract term for which a definitive modification is required but has not been executed.