FAR 49.206-3—Submission of inventory disposal schedules.
Plain-English Summary
FAR 49.206-3 explains how a contractor must submit inventory disposal schedules when a contract is terminated and termination inventory exists. It covers three main subjects: the duty to prepare a complete schedule of inventory allocable to the terminated portion of the contract, the deadline for submitting that schedule to the Termination Contracting Officer (TCO), and the required use of Standard Form 1428, Inventory Disposal Schedule. The rule operates subject to the termination clause, meaning the contract’s termination provisions and any applicable agency procedures still control the details of the process. In practice, this section is important because the inventory disposal schedule is the contractor’s formal accounting of property, materials, and other inventory that may be subject to Government disposition, settlement, or reimbursement decisions after termination. Timely and accurate submission helps the TCO evaluate the Government’s interest, process the termination settlement, and avoid delays, disputes, or unsupported claims for inventory costs.
Key Rules
Submit complete schedules
When termination inventory is involved, the contractor must submit complete inventory disposal schedules covering inventory allocable to the terminated portion of the contract. The schedule must be sufficiently complete to allow the TCO to identify the items and determine how they should be handled in the termination settlement process.
Use the TCO as recipient
The inventory disposal schedules are submitted to the Termination Contracting Officer, not simply to the normal contracting officer. This ensures the official responsible for the termination settlement receives the inventory information needed to administer the termination.
120-day submission deadline
The contractor must submit the schedules within 120 days from the effective date of termination. This is the default deadline and begins running from the termination’s effective date, so contractors must act quickly to gather, verify, and document inventory data.
Extensions require justification
The TCO may extend the 120-day deadline, but only based on a written justification supporting the extension. The contractor should not assume extra time is automatic; it must request or support an extension with a documented reason.
Standard Form 1428 required
The inventory disposal schedules must be prepared on Standard Form 1428, Inventory Disposal Schedule. Using the prescribed form promotes consistency and ensures the TCO receives the information in the format expected for termination inventory review.
Subject to termination clause
This requirement applies subject to the terms of the termination clause. If the contract clause or other applicable provisions impose additional procedures, those requirements must also be followed.
Responsibilities
Contractor
Identify all inventory allocable to the terminated portion of the contract, prepare complete inventory disposal schedules on Standard Form 1428, and submit them to the TCO within 120 days of the effective termination date unless an extension is justified and granted.
Termination Contracting Officer (TCO)
Receive and review the inventory disposal schedules, determine whether the submission is complete and timely, and decide whether to grant an extension based on written justification when appropriate.
Agency
Administer termination procedures through the applicable termination clause and support the TCO’s review and settlement process, including any agency-specific procedures for handling termination inventory.
Practical Implications
Contractors should start inventory identification immediately after termination because the 120-day clock can pass quickly, especially when records, subcontractor data, or physical inventory must be reconciled.
A common pitfall is submitting an incomplete schedule or using the wrong form, which can delay settlement and create questions about the allowability or disposition of inventory costs.
If the contractor cannot meet the deadline, it should document the reason early and seek an extension with written support rather than waiting until the deadline has passed.
The schedule should clearly separate inventory tied to the terminated portion from inventory needed for continuing work, because only the terminated portion belongs on this submission.
Poor inventory records, missing quantities, or unsupported valuations can lead to disputes, reduced settlement amounts, or requests for additional documentation from the TCO.
Official Regulatory Text
Subject to the terms of the termination clause, and whenever termination inventory is involved, the contractor shall submit complete inventory disposal schedules to the TCO reflecting inventory that is allocable to the terminated portion of the contract. The inventory disposal schedules shall be submitted within 120 days from the effective date of termination unless otherwise extended by the TCO based on a written justification to support the extension. The inventory schedules shall be prepared on Standard Form 1428 , Inventory Disposal Schedule.