FAR 49.603-9—Settlement of reservations.
Plain-English Summary
FAR 49.603-9 provides a model supplemental agreement for settling “reservations” or “excepted items” left open when a termination settlement is otherwise completed. It tells contracting officers how to document, in Block 14 of SF 30, the final resolution of specific items that were intentionally excluded from the earlier termination settlement agreement, such as disputed costs, unresolved claims, or other matters the parties agreed to defer. The form language states that the supplemental agreement is tied to the prior termination settlement, identifies the reserved items, and then closes them out by either requiring the Government to pay the contractor or, if the contractor owes money, reversing the payment language. It also includes a release clause so the contractor gives up further liability claims for the items being settled. In practice, this section matters because it creates a clean, enforceable paper trail that prevents later disputes over items the parties meant to resolve separately from the main termination settlement.
Key Rules
Use Block 14 of SF 30
This model language is specifically intended for insertion in Block 14 of Standard Form 30. The purpose is to document the supplemental agreement that settles previously reserved items after a termination settlement.
Tie to prior settlement
The agreement must identify the earlier supplemental agreement, including its number and date, and explain that the earlier settlement excepted certain items. This links the new agreement to the original termination settlement and shows exactly what is being resolved now.
List reserved items clearly
The parties must identify the specific reserved or excepted items being settled. The agreement should describe the items with enough precision that there is no ambiguity about what is included and what remains outside the settlement.
State the payment amount
If the Government owes the contractor, the agreement must state the dollar amount to be paid for the reserved items. If the contractor owes the Government, the form instructs the drafter to reverse the words 'Government' and 'contractor' so the payment obligation is correctly stated.
Include a release of claims
The contractor must release and forever discharge the Government from liability and from existing and future claims and demands under the contract, but only as to the items described in the supplemental agreement. This release is what gives the settlement finality for the reserved matters.
Limit the release to settled items
The release language applies only to the items identified in paragraph (b)(1), not to unrelated contract matters. That limitation is important because it preserves rights and obligations outside the scope of the reserved-item settlement.
Responsibilities
Contracting Officer
Prepare or approve the supplemental agreement language in SF 30 Block 14, ensure the prior settlement and the reserved items are accurately identified, and make sure the payment direction is correct depending on whether the Government or contractor owes money.
Contractor
Agree to the settlement terms for the reserved items, accept the stated payment if the Government owes money, or pay the Government if the contractor owes money, and execute the release of claims for the items being settled.
Government
Pay the contractor the agreed amount when the settlement requires Government payment, or receive payment from the contractor when the contractor owes money, and rely on the release to close out liability for the settled items.
Settlement Drafters / Contract Administration Staff
Draft the supplemental agreement accurately, ensure the reserved items are described consistently with the earlier termination settlement, and verify that the release and payment language match the actual settlement outcome.
Practical Implications
This section is mainly about finality: it closes out leftover issues from a termination settlement so they do not keep resurfacing later. If the reserved items are not described precisely, the parties may still end up disputing what was actually settled.
The release language is powerful, so contractors should review it carefully before signing. Once executed, it can bar later claims tied to the listed items, even if the contractor later believes the amount was too low.
The payment direction must be drafted correctly. The parenthetical instruction to reverse 'Government' and 'contractor' when the contractor owes money is easy to miss and can create an incorrect or unenforceable document if overlooked.
This form is a model, not a substitute for careful legal and factual review. Contracting officers should confirm that the supplemental agreement matches the actual settlement history, the reserved items, and any prior correspondence or negotiations.
A common pitfall is using broad release language without matching it to the exact reserved items. That can create confusion about whether unrelated claims were waived, so the settlement should be narrowly and clearly tied to the items being resolved.
Official Regulatory Text
[ Insert the following in Block14 of SF 30 for settlement of reservations. ] (a) Supplemental Agreement No. ___, dated , was executed to reflect the settlement of the termination of this contract. The supplemental agreement excepted from the settlement certain items described in the agreement including the items described in paragraph (b) of this section. This supplemental agreement settles those items listed in paragraph (b) of this section. (b) The parties agree to the following: (1) The Government agrees to pay the contractor $ for the following reserved or excepted items:* [ List items. ] (2) The Contractor releases and forever discharges the Government from all liability and from all existing and future claims and demands that it may have under this contract, insofar as it pertains to the contract, for the items described in paragraph (1) of this section.* *When payment is due the Government, reverse the words "Government" and "contractor" in paragraphs (b)(1) and (b)(2) . (End of agreement)