FAR 49.304-3—Submission of vouchers.
Plain-English Summary
FAR 49.304-3 addresses how a contractor submits payment vouchers after a partial termination settlement when the settlement is limited to an adjustment of fee only. It explains that, in that situation, the contractor must keep submitting the SF 1034, Public Voucher for Purchases and Services Other Than Personal, for all costs that remain reimbursable under the contract. The section also limits reimbursement for amounts the contractor pays to settle with subcontractors: those settlement costs are not reimbursable unless the required approvals or ratifications have been obtained under FAR 49.108. In practice, this provision keeps the normal billing process moving for allowable contract costs while preventing unauthorized subcontractor settlement payments from being shifted to the Government. It is a narrow but important rule for contractors and contracting officers working through partial terminations, especially where only the fee is being adjusted and the underlying cost-reimbursement billing structure continues.
Key Rules
Continue SF 1034 billing
If the partial termination settlement only adjusts fee, the contractor must keep submitting the SF 1034 for reimbursable contract costs. The termination settlement does not replace the normal voucher process for allowable costs that remain payable under the contract.
Only reimbursable costs may be billed
The voucher may cover only costs that are reimbursable under the contract. The contractor cannot use the voucher to recover amounts that are outside the contract’s cost-reimbursement terms or otherwise unallowable.
Subcontractor settlements need approval
The contractor may not be reimbursed for costs of settlements with subcontractors unless the required approvals or ratifications have been obtained. This ties reimbursement to compliance with FAR 49.108 and prevents unauthorized settlement actions from becoming Government liability.
Fee-only settlement is a special case
This rule applies when the partial termination settlement is limited to an adjustment of fee. In that circumstance, the contractor’s billing for reimbursable costs continues separately from the fee adjustment process.
Responsibilities
Contractor
Continue submitting SF 1034 vouchers for all costs that remain reimbursable under the contract when the partial termination settlement only adjusts fee. Ensure any claimed subcontractor settlement costs have the necessary approvals or ratifications before seeking reimbursement.
Contracting Officer
Review vouchers to confirm they cover only reimbursable contract costs and that any subcontractor settlement costs claimed for reimbursement are supported by the required approvals or ratifications under FAR 49.108.
Agency
Apply the termination settlement and voucher rules consistently so that fee adjustments do not interrupt proper billing for allowable costs and unauthorized subcontractor settlement costs are not reimbursed.
Practical Implications
Contractors should keep normal cost vouchers going even after a fee-only partial termination settlement; stopping vouchers can delay payment for otherwise allowable costs.
Settlement payments to subcontractors are a common risk area. If the contractor did not obtain the required approval or ratification, those costs should not be billed to the Government.
Contracting officers should check that the voucher is limited to reimbursable costs and does not include unsupported termination-related settlement amounts.
This section helps separate two issues that are often confused in practice: ongoing reimbursement for allowable contract costs and the separate adjustment of fee after partial termination.
Documentation matters. Contractors should retain evidence of approvals or ratifications for subcontractor settlements before including those amounts in any reimbursement request.
Official Regulatory Text
When a partial termination settlement is limited to adjustment of fee, the contractor shall continue to submit the SF 1034 , Public Voucher for Purchases and Services Other than Personal, for costs reimbursable under the contract. The contractor shall not be reimbursed for costs of settlements with subcontractors unless required approvals or ratifications have been obtained (see 49.108 ).