FAR 49.105-2—Release of excess funds.
Plain-English Summary
FAR 49.105-2 explains how excess funds are identified, recommended for release, deobligated, and monitored after a termination for convenience or other termination settlement action. It focuses on the Termination Contracting Officer’s (TCO’s) duty to estimate the funds needed to settle the termination, recommend release of excess funds within 30 days after receiving the termination notice, and continue watching funding needs so additional excess funds can be released as the settlement develops. The section also sets a practical threshold: the TCO should not recommend releasing amounts under $1,000 unless the contracting officer asks for it. In addition, it addresses what happens if earlier releases create a funding shortfall, requiring the TCO to notify the contracting officer promptly and the contracting officer to reinstate funds within 30 days. In practice, this provision is about keeping termination settlements properly funded without leaving unnecessary money tied up, while also preventing underfunding that could delay or disrupt settlement negotiations and payment.
Key Rules
Estimate settlement funds
The TCO must estimate the funds needed to settle the termination. This estimate is the basis for deciding how much excess funding can be safely released.
Recommend release within 30 days
Within 30 days after receiving the termination notice, the TCO must recommend release of excess funds to the contracting officer. The initial deobligation should be completed promptly by the contracting officer, or by the TCO if that authority has been delegated.
Do not recommend tiny releases
The TCO should not recommend releasing amounts under $1,000 unless the contracting officer specifically requests it. This avoids administrative effort for very small amounts unless there is a reason to act.
Continuously monitor funding needs
The TCO must maintain continuous surveillance of the funds required for settlement so additional excess funds can be released in a timely manner as the settlement picture becomes clearer.
Use prescribed release format
A recommended format for releasing excess funds is provided in FAR 49.604. While the regulation points to a format rather than mandating a specific form here, it signals that the release action should be documented consistently.
Restore funds if shortfall occurs
If prior releases leave the settlement underfunded, the TCO must promptly inform the contracting officer, and the contracting officer must reinstate the funds within 30 days.
Responsibilities
Termination Contracting Officer (TCO)
Estimate the funds needed to settle the termination; recommend release of excess funds within 30 days after receiving the termination notice; avoid recommending releases under $1,000 unless requested by the contracting officer; continuously monitor funding requirements; promptly notify the contracting officer if prior releases create a shortage.
Contracting Officer
Act on the TCO’s recommendation by deobligating excess funds in a timely manner, unless the TCO has been delegated that responsibility; request release of amounts under $1,000 when appropriate; reinstate funds within 30 days if earlier releases caused a funding shortfall.
Delegated TCO (if applicable)
If delegated the responsibility, accomplish the initial deobligation of excess funds in a timely manner and continue the funding-release process consistent with the TCO role.
Practical Implications
This section is mainly about cash control and settlement readiness: agencies should not leave more money obligated than needed, but they also must avoid releasing funds so aggressively that the settlement becomes underfunded.
The 30-day timing requirement means the TCO should act quickly after the termination notice; delays can slow financial cleanup and create avoidable administrative issues.
The $1,000 threshold is a practical filter, not an absolute prohibition. Small releases are generally not worth pursuing unless the contracting officer wants them.
Continuous surveillance matters because settlement costs often change as claims, inventory, and allowable costs are resolved; a one-time estimate is not enough.
A common pitfall is premature deobligation based on an incomplete settlement picture. If that happens, the contracting officer must move fast to reinstate funds so the settlement can be completed without disruption.
Official Regulatory Text
(a) The TCO shall estimate the funds required to settle the termination, and within 30 days after the receipt of the termination notice, recommend the release of excess funds to the contracting officer. The initial deobligation of excess funds should be accomplished in a timely manner by the contracting officer, or the TCO, if delegated the responsibility. The TCO shall not recommend the release of amounts under $1,000, unless requested by the contracting officer. (b) The TCO shall maintain continuous surveillance of required funds to permit timely release of any additional excess funds (a recommended format for release of excess funds is in 49.604 ). If previous releases of excess funds result in a shortage of the amount required for settlement, the TCO shall promptly inform the contracting officer, who shall reinstate the funds within 30 days.