FAR 52.237-9—Waiver of Limitation on Severance Payments to Foreign Nationals.
Plain-English Summary
FAR 52.237-9, Waiver of Limitation on Severance Payments to Foreign Nationals, is a narrow cost-allowability clause used when the Government decides to waive the normal limitation in FAR 31.205-6(g)(6) on severance payments to foreign nationals. The clause implements the statutory authority in 10 U.S.C. 3744(b) or 41 U.S.C. 4304(b)(1), depending on the procurement, and it is prescribed by FAR 37.113-2(b). In practical terms, the clause tells contractors that certain severance costs for foreign nationals may be treated as allowable even though they would otherwise be limited or unallowable under the standard cost principle. It also addresses subcontract flowdown by allowing the clause to be included in subcontracts only if the Contracting Officer approves that inclusion. This section therefore covers the legal basis for the waiver, the effect on cost allowability, the role of the Contracting Officer, and the limited subcontracting use of the clause. For contractors, the key significance is that severance costs for foreign nationals may be recoverable only when this waiver is expressly in place; absent the clause, the normal FAR limitation applies.
Key Rules
Waiver of cost limitation
When this clause is used, the cost allowability limitations in FAR 31.205-6(g)(6) are waived for the contract. That means the normal restriction on severance payments to foreign nationals does not apply to the extent covered by the waiver.
Statutory authority controls
The waiver is grounded in either 10 U.S.C. 3744(b) or 41 U.S.C. 4304(b)(1), as applicable. The clause is not a general exception; it is a specific statutory waiver that must be used only when authorized under the governing procurement statute.
Applies to foreign nationals
The clause is specifically about severance payments to foreign nationals, not severance generally. Contractors should not assume it changes the allowability of severance for U.S. nationals or other compensation costs.
Subcontract use requires approval
The clause may be incorporated into subcontracts issued under the prime contract only if the Contracting Officer approves. Contractors cannot unilaterally flow it down as a matter of course.
Prescription limits use
FAR 37.113-2(b) prescribes this clause for use in the circumstances identified by that section. Its inclusion is therefore tied to the contracting context and is not a standard clause for all service contracts.
Responsibilities
Contracting Officer
Determine whether the statutory waiver applies and whether the clause should be included in the contract. Approve any incorporation of the clause into subcontracts when appropriate.
Contractor
Apply the waiver only to severance payments to foreign nationals covered by the clause, and ensure claimed costs are otherwise properly supported and consistent with the contract. Seek Contracting Officer approval before inserting the clause into subcontracts.
Subcontractor
If the clause is flowed down with approval, treat the waiver as applicable only to the extent stated in the subcontract and maintain adequate cost documentation for severance payments to foreign nationals.
Agency
Use the clause only in accordance with the governing statute and FAR prescription, and ensure contract administration reflects the approved cost-allowability treatment.
Practical Implications
This clause can materially affect whether severance costs for foreign nationals are reimbursable, so contractors should identify it early when pricing and administering the contract.
A common pitfall is assuming all severance payments are covered; the waiver is limited to foreign nationals and only when the clause is actually included.
Another risk is flowing the clause to subcontracts without Contracting Officer approval, which can create compliance and allowability problems.
Contractors should keep clear records showing which severance costs relate to foreign nationals and how the waiver applies, because allowability may be questioned in audit or invoice review.
Contracting Officers should be deliberate about whether subcontract inclusion is necessary and approved, since the clause does not automatically flow down.
Official Regulatory Text
As prescribed in 37.113-2 (b) , use the following clause: Waiver of Limitation on Severance Payments to Foreign Nationals (Dec 2022) (a) Pursuant to 10 U.S.C. 3744(b) or 41 U.S.C. 4304(b)(1) , as applicable, the cost allowability limitations in FAR 31.205-6 (g)(6) are waived. (b) This clause may be incorporated into subcontracts issued under this contract, if approved by the Contracting Officer. (End of clause)