FAR 49.109-6—Joint settlement of two or more settlement proposals.
Plain-English Summary
FAR 49.109-6 addresses how the Government may handle the settlement of multiple termination settlement proposals submitted by the same contractor when those proposals arise under different contracts. It allows the Termination Contracting Officer (TCO), with the contractor’s consent, to negotiate two or more proposals jointly even if the contracts are administered by different contracting offices or agencies. The section also requires accounting work to be consolidated as much as practical, which is intended to reduce duplication and improve consistency in the settlement process. It explains that the final result may be documented either in one settlement agreement covering all affected contracts or in separate agreements for each contract. When one agreement covers multiple contracts, the rule requires clear identification of each contract, assignment of a modification number to each, a reasonable apportionment of the total settlement amount among the contracts, attachment or incorporation of an apportionment schedule, and distribution of the agreement with each contract file in the same manner as other contract modifications. In practice, this section exists to make multi-contract termination settlements more efficient while preserving auditability, contract-by-contract traceability, and proper administrative recordkeeping.
Key Rules
Joint negotiation allowed
With the contractor’s consent, the TCO may negotiate two or more termination settlement proposals together when they belong to the same contractor but arise under different contracts. This can be done even if the contracts are handled by different contracting offices or agencies.
Consolidate accounting work
Accounting support for the settlement should be consolidated to the greatest extent practical. The goal is to avoid duplicative analysis and ensure the settlement reflects a coordinated financial review across the affected contracts.
Single or separate agreements
The settlement may be documented in one agreement covering all involved contracts or in separate agreements for each contract. The format can be chosen based on what best fits the circumstances, so long as the settlement is properly documented.
Identify all contracts clearly
If one settlement agreement covers more than one contract, it must clearly identify every contract included. This ensures there is no ambiguity about which contracts are being settled and modified.
Assign modification numbers
Each contract covered by a multi-contract settlement agreement must receive an amendment or modification number. This ties the settlement action back to each individual contract record.
Apportion settlement reasonably
The total settlement amount must be divided among the contracts on some reasonable basis. The allocation does not have to be identical across contracts, but it must be supportable and rational.
Attach apportionment schedule
A schedule showing how the total amount is allocated among the contracts must be attached to or incorporated into the agreement. This creates a clear audit trail for the settlement calculation.
Distribute like other modifications
The agreement and related documentation must be distributed and attached to each affected contract file in the same manner as other contract modifications. This preserves the official record for each contract.
Responsibilities
Termination Contracting Officer (TCO)
Obtain the contractor’s consent before negotiating multiple settlement proposals jointly; coordinate the joint negotiation; consolidate accounting work to the extent practical; ensure the final agreement is properly structured, identified, apportioned, and filed.
Contractor
Consent to joint negotiation if it wants the proposals handled together; participate in the settlement process; support the allocation of the settlement amount among the affected contracts as needed.
Concerned contracting offices or agencies
Coordinate with the TCO when their contracts are included in a joint settlement; support consolidation of accounting work and ensure the settlement documentation is properly recorded in each contract file.
Accounting personnel
Perform and consolidate accounting work for the affected proposals to the greatest extent practical; provide the financial basis needed to support a reasonable apportionment of the settlement amount.
Contract administration staff / contract file custodians
Ensure the settlement agreement, modification numbers, apportionment schedule, and related documents are distributed and attached to each affected contract file in the same manner as other modifications.
Practical Implications
This section can save time and reduce duplication when one contractor has multiple terminated contracts, but it only works if the contractor agrees to joint handling.
The biggest compliance risk is poor allocation: if the total settlement is not apportioned on a reasonable basis, the agreement may be vulnerable to audit questions or later dispute.
Multi-contract settlements require careful recordkeeping; each contract still needs its own clear modification trail even if one agreement is used.
Contracting teams should make sure the agreement identifies every contract precisely and includes a schedule showing the allocation, or the file may be incomplete.
Because the contracts may be with different offices or agencies, coordination failures are common; the TCO should confirm who is responsible for each administrative step before finalizing the settlement.
Official Regulatory Text
(a) With the consent of the contractor, the TCO or TCO’s concerned may negotiate jointly two or more termination settlement proposals of the same contractor under different contracts, even though the contracts are with different contracting offices or agencies. In such cases, accounting work shall be consolidated to the greatest extent practical. The resulting settlement may be evidenced by one settlement agreement covering all contracts involved or by a separate agreement for each contract involved. (b) When the settlement agreement covers more than one contract, it shall- (1) Clearly identify the contracts involved, (2) Assign an amendment modification number to each contract, (3) Apportion the total amount of the settlement among the several contracts on some reasonable basis, (4) Have attached or incorporated a schedule showing the apportionment, and (5) Be distributed and attached to each contract involved in the same manner as other contract modifications.