FAR 49.112—Payment.

Partial payments.

FAR 49.112-1 explains how partial payments work after a contract termination when the contract authorizes them. It covers who may request partial payments, how subcontractor requests must flow through the prime contractor, what the Termination Contracting Officer (TCO) must consider before approving payment, how much may be paid for completed end items, subcontract settlements, termination inventory, and other allowable costs, and how assignments of claims affect payment. It also addresses the Government’s security interest in completed items or inventory, required deductions for prior progress or advance payments and property credits, the overall cap that partial payments cannot exceed the amount expected to become due under the termination, and the contractor’s repayment and interest obligations if overpaid. Finally, it prescribes the certification language for the contractor’s voucher and the TCO’s approval notation. In practice, this section is the operating rulebook for getting money out before final settlement while protecting the Government from overpayment and ensuring subcontractors, inventory, and prior financing are handled correctly.

Final payment.

FAR 49.112-2 explains how final payment is handled after a termination settlement has been reached or determined, and it covers the paperwork and payment steps that follow. It addresses negotiated settlements, settlements by determination, the effect of appeals, special handling for construction contracts with possible labor violations, and whether interest is payable on settlement amounts. In practice, this section tells the contractor how to submit the final voucher or invoice, tells the termination contracting officer (TCO) how to process and forward the payment package, and tells the contracting officer when to withhold funds in construction cases. It also clarifies that the Government generally does not pay interest on settlement amounts, except that interest may be payable on a successful appeal under the Disputes clause. The section exists to make final closeout of termination claims orderly, to protect the Government from improper payment, and to ensure contractors are paid the correct amount once the settlement process is complete.