FAR 49.3—Subpart 49.3

General.

FAR 49.301 is a short but important general rule for terminations of cost-reimbursement contracts. It explains that the termination clauses used in these contracts must address settlement of both costs and fee, if any, and it ties the allowability of costs to the contract’s governing cost clauses rather than to the termination clause itself. In practice, this means a contractor’s recovery after termination is not determined by the termination provision alone; the underlying cost principles and contract clauses control which costs are allowable, allocable, and recoverable. The section matters because it sets the framework for how termination settlements are calculated in cost-reimbursement contracting, including what can be claimed, what cannot, and how any fee is treated. It also signals that termination settlement is a specialized process that depends on the contract’s cost-reimbursement structure and incorporated cost clauses. For contracting officers and contractors, this section is a reminder to look first to the contract’s cost provisions when evaluating a termination settlement proposal.

Discontinuance of vouchers.

FAR 49.302 explains when a contractor must stop using Standard Form 1034 (Public Voucher for Purchases and Services Other Than Personal) after a termination, and what must happen next. It covers the deadline for discontinuing vouchers after a complete termination, the contractor’s option to stop using vouchers earlier, the special treatment of fee proposals once all costs have been vouched out, the requirement to submit a substantiated fee proposal to the Termination Contracting Officer (TCO) within one year unless extended, and the need to submit any remaining unvouchered costs and proposed fee in accordance with FAR 49.303. It also states that partial terminations are handled under FAR 49.304 instead of this rule. In practice, this section is about closing out termination settlement accounting in an orderly way and preventing contractors from continuing to bill under a voucher process after the termination accounting period has ended. It matters because missing the voucher cutoff or fee-submission deadline can delay settlement, create unsupported claims, or jeopardize recovery of allowable termination costs and fee.

Procedure after discontinuing vouchers.

Procedure for partial termination.

Adjustment of fee.