FAR 49.302—Discontinuance of vouchers.
Plain-English Summary
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.
Key Rules
Voucher use ends after six months
For a completely terminated contract, the contractor may not use SF 1034 after the last day of the sixth month following the month in which the termination becomes effective. This creates a hard outer limit on voucher billing under the termination settlement process.
Early discontinuance is allowed
The contractor may stop using vouchers at any time during the six-month period. The rule gives flexibility to move from periodic voucher billing to a final settlement proposal once costs are sufficiently complete.
Fee may be submitted after costs are vouched out
If all costs are vouched out within the six-month period, the contractor may submit a proposal for fee, if any, on SF 1437 or by an appropriately certified letter. This separates final fee settlement from cost voucher processing.
Substantiated fee proposal deadline
The contractor must submit a substantiated proposal for fee to the TCO within one year from the effective date of termination, unless the TCO extends that period. This is a separate deadline from the voucher cutoff and applies to fee recovery.
Unvouchered costs must still be settled
When voucher use stops, the contractor must submit all unvouchered costs and any proposed fee as required by FAR 49.303. Ending voucher use does not eliminate the need to account for remaining allowable termination costs.
Partial terminations follow a different rule
If the contract is only partially terminated, FAR 49.304 applies instead of the complete-termination voucher discontinuance rule. Contractors and contracting officers must use the correct procedure based on the type of termination.
Responsibilities
Contractor
Stop using SF 1034 no later than the end of the sixth month after the month the complete termination becomes effective, unless stopping earlier by choice. Submit all unvouchered costs and any proposed fee in the required settlement format, and provide a substantiated fee proposal to the TCO within one year unless the TCO extends the deadline.
Termination Contracting Officer (TCO)
Receive and review the contractor’s substantiated fee proposal and, if appropriate, extend the one-year submission period. Ensure the contractor uses the correct settlement procedure and that remaining costs and fee are handled under FAR 49.303 when voucher use ends.
Contracting Officer / Agency
Apply the correct rule based on whether the termination is complete or partial, and route partial terminations to FAR 49.304. Oversee settlement timing so the contractor does not continue voucher billing beyond the permitted period.
Practical Implications
The six-month voucher cutoff is a common trap: contractors may assume they can keep billing until settlement is finished, but the rule imposes a firm deadline tied to the effective termination month.
Stopping vouchers early can be efficient, but it requires the contractor to be ready to capture all remaining unvouchered costs and prepare a proper final fee submission.
The fee deadline is separate from the voucher deadline; missing the one-year substantiated fee submission can put fee recovery at risk unless the TCO grants an extension.
Contractors should keep termination accounting records organized so they can distinguish vouched costs from unvouchered costs and support the final settlement proposal.
Parties must confirm whether the termination is complete or partial before applying this section, because partial terminations are governed by a different FAR provision and using the wrong process can delay settlement.
Official Regulatory Text
(a) When the contract has been completely terminated, the contractor shall not use Standard Form 1034 (Public Voucher for Purchases and Services Other than Personal) after the last day of the sixth month following the month in which the termination is effective. The contractor may elect to stop using vouchers at any time during the 6-month period. When the contractor has vouchered out all costs within the 6-month period, a proposal for fee, if any, may be submitted on SF 1437 (see 49.602-1 ) or by letter appropriately certified. The contractor must submit a substantiated proposal for fee to the TCO within 1 year from the effective date of termination, unless the period is extended by the TCO. When the use of vouchers is discontinued, the contractor shall submit all unvouchered costs and the proposed fee, if any, as specified in 49.303 . (b) When the contract is partially terminated, 49.304 shall apply.