FAR 49.303-1—Submission of settlement proposal.
Plain-English Summary
FAR 49.303-1 governs how a contractor submits a final settlement proposal after a termination for convenience. It addresses four core subjects: the deadline for filing the proposal, the required form for submission, the scope of costs that may be included, and the exclusion of certain costs that have already been finally disallowed or previously questioned by the Government. In practice, this section is meant to move the termination closeout process forward in an orderly way by requiring the contractor to present a complete, timely, and properly formatted claim for unvouchered costs and any proposed fee. It also protects the Government from paying twice or revisiting costs that have already been resolved against the contractor or are still under formal review. For contractors, this rule is critical because missing the deadline or including improper costs can delay settlement, reduce recovery, or create disputes over allowability. For contracting officers and termination contracting officers, it provides a clear framework for reviewing the proposal and ensuring the settlement is limited to costs that remain open and properly supportable.
Key Rules
Submit within one year
The contractor must submit the final settlement proposal within 1 year from the effective date of termination. The TCO may extend this period, but absent an extension, the deadline is mandatory.
Use the prescribed form
The contractor must use the form prescribed in FAR 49.602-1 unless the TCO authorizes another format. This ensures the proposal is presented in the standard termination settlement structure the Government expects.
Include unvouchered costs and fee
The settlement proposal is intended to cover unvouchered costs and any proposed fee. In other words, it is the contractor’s final request for amounts not yet billed or otherwise settled, plus any fee recovery sought under the termination settlement.
Exclude finally disallowed costs
The proposal may not include costs that the contracting officer has already finally disallowed. Once a cost has been finally rejected, it is not part of the settlement proposal and should not be resubmitted as recoverable.
Exclude questioned but unresolved costs
The proposal also may not include costs that were previously vouchered and formally questioned by the Government but not yet decided as to allowability. These costs are outside the settlement proposal until the allowability issue is resolved.
Responsibilities
Contractor
Prepare and submit a final settlement proposal for unvouchered costs and any proposed fee within 1 year of the termination effective date, unless an extension is granted. The contractor must use the required form unless the TCO authorizes a different format, and must exclude costs that have been finally disallowed or are already formally questioned and unresolved.
Termination Contracting Officer (TCO)
Review the contractor’s submission, determine whether an extension of the filing period is warranted, and authorize any alternate form if appropriate. The TCO also ensures the proposal complies with the rule excluding disallowed and unresolved questioned costs.
Contracting Officer
Finally disallow costs when appropriate and thereby establish which costs cannot be included in the settlement proposal. The contracting officer’s prior determinations affect the scope of the contractor’s allowable settlement submission.
Government reviewers/auditors
Formally question costs when they are vouchered but not yet resolved, creating a category of costs that must be excluded from the final settlement proposal until allowability is decided.
Practical Implications
The 1-year filing deadline is a major closeout milestone; contractors should start assembling support early because delays can jeopardize recovery or require a formal extension request.
Using the wrong form or an incomplete package can slow settlement review, so contractors should follow the prescribed format unless they have explicit TCO approval to do otherwise.
Contractors should carefully separate unvouchered costs from costs already billed, disallowed, or questioned; mixing these categories is a common source of rejection or rework.
If a cost has already been finally disallowed, resubmitting it in the settlement proposal will not make it recoverable and may undermine credibility with the TCO.
Where costs are formally questioned but unresolved, contractors should track them separately and avoid including them in the final settlement proposal until the allowability issue is decided.
Official Regulatory Text
The contractor shall submit a final settlement proposal covering unvouchered costs and any proposed fee to within 1 year from the effective date of termination, unless the period is extended by the TCO. The contractor shall use the form prescribed in 49.602-1 , unless the TCO authorizes otherwise. The proposal shall not include costs that have been- (a) Finally disallowed by the contracting officer; or (b) Previously vouchered and formally questioned by the Government but not yet decided as to allowability.