FAC Number: 2022-08
Effective Date: 10/28/2022

Federal Acquisition Regulation

Part 42 - Contract Administration and Audit Services

      42.000 Scope of part.

      42.001 [Reserved]

      42.002 Interagency agreements.

      42.003 Cognizant Federal agency.

      Subpart 42.1 - Contract Audit Services

           42.101 Contract audit responsibilities.

           42.102 Assignment of contract audit services.

           42.103 Contract audit services directory.

      Subpart 42.2 - Contract Administration Services

           42.201 Contract administration responsibilities.

           42.202 Assignment of contract administration.

           42.203 Contract administration services directory.

      Subpart 42.3 - Contract Administration Office Functions

           42.301 General.

           42.302 Contract administration functions.

      Subpart 42.4 - Correspondence and Visits

           42.401 Contract correspondence.

           42.402 Visits to contractors’ facilities.

           42.403 Evaluation of contract administration offices.

      Subpart 42.5 - Postaward Orientation

           42.500 Scope of subpart.

           42.501 General.

           42.502 Selecting contracts for postaward orientation.

           42.503 Postaward conferences.

                42.503-1 Postaward conference arrangements.

                42.503-2 Postaward conference procedure.

                42.503-3 Postaward conference report.

           42.504 Postaward letters.

           42.505 Postaward subcontractor conferences.

      Subpart 42.6 - Corporate Administrative Contracting Officer

           42.601 General.

           42.602 Assignment and location.

           42.603 Responsibilities.

      Subpart 42.7 - Indirect Cost Rates

           42.700 Scope of subpart.

           42.701 Definition.

           42.702 Purpose.

           42.703 General.

                42.703-1 Policy.

                42.703-2 Certificate of indirect costs.

           42.704 Billing rates.

           42.705 Final indirect cost rates.

                42.705-1 Contracting officer determination procedure.

                42.705-2 Auditor determination procedure.

                42.705-3 Educational institutions.

                42.705-4 State and local governments.

                42.705-5 Nonprofit organizations other than educational and state and local governments.

           42.706 Distribution of documents.

           42.707 Cost-sharing rates and limitations on indirect cost rates.

           42.708 Quick-closeout procedure.

           42.709 Penalties for Unallowable Costs.

                42.709-1 Scope.

                42.709-2 General.

                42.709-3 Responsibilities.

                42.709-4 Assessing the penalty.

                42.709-5 Computing Interest.

                42.709-6 Waiver of the penalty.

                42.709-7 Contract clause.

      Subpart 42.8 - Disallowance of Costs

           42.800 Scope of subpart.

           42.801 Notice of intent to disallow costs.

           42.802 Contract clause.

           42.803 Disallowing costs after incurrence.

      Subpart 42.9 - Bankruptcy

           42.900 Scope of subpart.

           42.901 General.

           42.902 Procedures.

           42.903 Solicitation provision and contract clause.

      Subpart 42.10 - [Reserved]

      Subpart 42.11 - Production Surveillance and Reporting

           42.1101 General.

           42.1102 Applicability.

           42.1103 Policy.

           42.1104 Surveillance requirements.

           42.1105 Assignment of criticality designator.

           42.1106 Reporting requirements.

           42.1107 Contract clause.

      Subpart 42.12 - Novation and Change-of-Name Agreements

           42.1200 Scope of subpart.

           42.1201 [Reserved]

           42.1202 Responsibility for executing agreements.

           42.1203 Processing agreements.

           42.1204 Applicability of novation agreements.

           42.1205 Agreement to recognize contractor’s change of name.

      Subpart 42.13 - Suspension of Work, Stop-Work Orders, and Government Delay of Work

           42.1301 General.

           42.1302 Suspension of work.

           42.1303 Stop-work orders.

           42.1304 Government delay of work.

           42.1305 Contract clauses.

      Subpart 42.14 - [Reserved]

      Subpart 42.15 - Contractor Performance Information

           42.1500 Scope of subpart.

           42.1501 General.

           42.1502 Policy.

           42.1503 Procedures.

           42.1504 Contract clause.

      Subpart 42.16 - Small Business Contract Administration

           42.1601 General.

      Subpart 42.17 - Forward Pricing Rate Agreements

           42.1701 Procedures.

42.000 Scope of part.

This part prescribes policies and procedures for assigning and performing contract administration and contract audit services.

42.001 [Reserved]

42.002 Interagency agreements.

      (a) Agencies shall avoid duplicate audits, reviews, inspections, and examinations of contractors or subcontractors, by more than one agency, through the use of interagency agreements.

      (b) Subject to the fiscal regulations of the agencies and applicable interagency agreements, the requesting agency shall reimburse the servicing agency for rendered services in accordance with the Economy Act ( 31 U.S.C.1535).

      (c) When an interagency agreement is established, the agencies are encouraged to consider establishing procedures for the resolution of issues that may arise under the agreement.

42.003 Cognizant Federal agency.

      (a) For contractors other than educational institutions and nonprofit organizations, the cognizant Federal agency normally will be the agency with the largest dollar amount of negotiated contracts, including options. For educational institutions (defined as institutions of higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart A, and 20 U .S.C. 1001) and nonprofit organizations (as defined in the OMB Uniform Guidance at 2 CFR part 200), the cognizant Federal agency for indirect costs is established according to the OMB Uniform Guidance at 2 CFR part 200, appendices III and IV, respectively.

      (b) Once a Federal agency assumes cognizance for a contractor, it should remain cognizant for at least 5 years to ensure continuity and ease of administration. If, at the end of the 5-year period, another agency has the largest dollar amount of negotiated contracts, including options, the two agencies shall coordinate and determine which will assume cognizance. However, if circumstances warrant it and the affected agencies agree, cognizance may transfer prior to the expiration of the 5-year period.

Subpart 42.10 - [Reserved]

Subpart 42.14 - [Reserved]

Part 43 - Contract Modifications

      43.000 Scope of part.

      Subpart 43.1 - General

           43.101 Definitions.

           43.102 Policy.

           43.103 Types of contract modifications.

           43.104 Notification of contract changes.

           43.105 Availability of funds.

           43.106 [Reserved]

           43.107 Contract clause.

      Subpart 43.2 - Change Orders

           43.201 General.

           43.202 Authority to issue change orders.

           43.203 Change order accounting procedures.

           43.204 Administration.

           43.205 Contract clauses.

      Subpart 43.3 - Forms

           43.301 Use of forms.

43.000 Scope of part.

This part prescribes policies and procedures for preparing and processing contract modifications for all types of contracts including construction and architect-engineer contracts. It does not apply to-

      (a) Orders for supplies or services not otherwise changing the terms of contracts or agreements (e.g., delivery orders under indefinite-delivery contracts); or

      (b) Modifications for extraordinary contractual relief (see subpart  50.1).

Part 44 - Subcontracting Policies and Procedures

      44.000 Scope of part.

      Subpart 44.1 - General

           44.101 Definitions.

      Subpart 44.2 - Consent to Subcontracts

           44.201 Consent and advance notification requirements.

                44.201-1 Consent requirements.

                44.201-2 Advance notification requirements.

           44.202 Contracting officer’s evaluation.

                44.202-1 Responsibilities.

                44.202-2 Considerations.

           44.203 Consent limitations.

           44.204 Contract clauses.

      Subpart 44.3 - Contractors’ Purchasing Systems Reviews

           44.301 Objective.

           44.302 Requirements.

           44.303 Extent of review.

           44.304 Surveillance.

           44.305 Granting, withholding, or withdrawing approval.

                44.305-1 Responsibilities.

                44.305-2 Notification.

                44.305-3 Withholding or withdrawing approval.

           44.306 Disclosure of approval status.

           44.307 Reports.

      Subpart 44.4 - Subcontracts for Commercial Products and Commercial Services

           44.400 Scope of subpart.

           44.401 Applicability.

           44.402 Policy requirements.

           44.403 Contract clause.

44.000 Scope of part.

      (a) This part prescribes policies and procedures for consent to subcontracts or advance notification of subcontracts, and for review, evaluation, and approval of contractors’ purchasing systems.

      (b) The consent and advance notification requirements of subpart  44.2 are not applicable to prime contracts for commercial supplies or commercial services acquired pursuant to part  12.

Part 45 - Government Property

      45.000 Scope of part.

      Subpart 45.1 - General

           45.101 Definitions.

           45.102 Policy.

           45.103 General.

           45.104 Responsibility and liability for Government property.

           45.105 Contractors’ property management system compliance.

           45.106 Transferring accountability.

           45.107 Contract clauses.

      Subpart 45.2 - Solicitation and Evaluation Procedures

           45.201 Solicitation.

           45.202 Evaluation procedures.

      Subpart 45.3 - Authorizing the Use and Rental of Government Property

           45.301 Use and rental.

           45.302 Contracts with foreign governments or international organizations.

           45.303 Use of Government property on independent research and development programs.

      Subpart 45.4 - Title to Government Property

           45.401 Title to Government-furnished property.

           45.402 Title to contractor-acquired property.

      Subpart 45.5 - Support Government Property Administration

           45.501 Prime contractor alternate locations.

           45.502 Subcontractor and alternate prime contractor locations.

           45.503 Support property administrator findings.

      Subpart 45.6 - Reporting, Reutilization, and Disposal

           45.600 Scope of subpart.

           45.601 [Reserved]

           45.602 Reutilization of Government property.

                45.602-1 Inventory disposal schedules.

                45.602-2 Reutilization priorities.

                45.602-3 Screening.

                45.602-4 Interagency property transfer costs.

           45.603 Abandonment or destruction of personal property.

           45.604 Sale of surplus personal property.

                45.604-1 Sales procedures.

                45.604-2 Use of GSA sponsored sales centers.

                45.604-3 Proceeds from sales of surplus property.

                45.604-4 Sale of property pursuant to the exchange/sale authority.

           45.605 Inventory disposal reports.

           45.606 Contractor scrap procedures.

45.000 Scope of part.

      (a) This part prescribes policies and procedures for providing Government property to contractors; contractors’ management and use of Government property; and reporting, redistributing, and disposing of contractor inventory.

      (b) It does not apply to-

           (1) Government property provided under any statutory leasing authority, except as to non-Government use of property under 45.301(f);

           (2) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance based payments;

           (3) Disposal of real property;

           (4) Software and intellectual property; or

           (5) Government property that is incidental to the place of performance, when the contract requires contractor personnel to be located on a Government site or installation, and when the property used by the contractor within the location remains accountable to the Government. Items considered to be incidental to the place of performance include, for example, office space, desks, chairs, telephones, computers, and fax machines.

Part 46 - Quality Assurance

      46.000 Scope of part.

      Subpart 46.1 - General

           46.101 Definitions.

           46.102 Policy.

           46.103 Contracting office responsibilities.

           46.104 Contract administration office responsibilities.

           46.105 Contractor responsibilities.

      Subpart 46.2 - Contract Quality Requirements

           46.201 General.

           46.202 Types of contract quality requirements.

                46.202-1 Contracts for commercial products and commercial services.

                46.202-2 Government reliance on inspection by contractor.

                46.202-3 Standard inspection requirements.

                46.202-4 Higher-level contract quality requirements.

           46.203 Criteria for use of contract quality requirements.

      Subpart 46.3 - Contract Clauses

           46.301 Contractor inspection requirements.

           46.302 Fixed-price supply contracts.

           46.303 Cost-reimbursement supply contracts.

           46.304 Fixed-price service contracts.

           46.305 Cost-reimbursement service contracts.

           46.306 Time-and-material and labor-hour contracts.

           46.307 Fixed-price research and development contracts.

           46.308 Cost-reimbursement research and development contracts.

           46.309 Research and development contracts (short form).

           46.310 [Reserved]

           46.311 Higher-level contract quality requirement.

           46.312 Construction contracts.

           46.313 Contracts for dismantling, demolition, or removal of improvements.

           46.314 Transportation contracts.

           46.315 Certificate of conformance.

           46.316 Responsibility for supplies.

           46.317 Reporting Nonconforming Items.

      Subpart 46.4 - Government Contract Quality Assurance

           46.401 General.

           46.402 Government contract quality assurance at source.

           46.403 Government contract quality assurance at destination.

           46.404 Government contract quality assurance for acquisitions at or below the simplified acquisition threshold.

           46.405 Subcontracts.

           46.406 Foreign governments.

           46.407 Nonconforming supplies or services.

           46.408 Single-agency assignments of Government contract quality assurance.

      Subpart 46.5 - Acceptance

           46.501 General.

           46.502 Responsibility for acceptance.

           46.503 Place of acceptance.

           46.504 Certificate of conformance.

           46.505 Transfer of title and risk of loss.

      Subpart 46.6 - Material Inspection and Receiving Reports

           46.601 General.

      Subpart 46.7 - Warranties

           46.701 [Reserved]

           46.702 General.

           46.703 Criteria for use of warranties.

           46.704 Authority for use of warranties.

           46.705 Limitations.

           46.706 Warranty terms and conditions.

           46.707 Pricing aspects of fixed-price incentive contract warranties.

           46.708 Warranties of data.

           46.709 Warranties of commercial products and commercial services.

           46.710 Contract clauses.

      Subpart 46.8 - Contractor Liability for Loss of or Damage to Property of the Government

           46.800 Scope of subpart.

           46.801 Applicability.

           46.802 Definition.

           46.803 Policy.

           46.804 [Reserved]

           46.805 Contract clauses.

46.000 Scope of part.

This part prescribes policies and procedures to ensure that supplies and services acquired under Government contract conform to the contract’s quality and quantity requirements. Included are inspection, acceptance, warranty, and other measures associated with quality requirements.

Part 47 - Transportation

      47.000 Scope of part.

      47.001 Definitions.

      47.002 Applicability.

      Subpart 47.1 - General

           47.101 Policies.

           47.102 Transportation insurance.

           47.103 Transportation Payment and Audit Regulation.

                47.103-1 General.

                47.103-2 Contract clause.

           47.104 Government rate tenders under sections 10721 and 13712 of the Interstate Commerce Act (49 U.S.C. 10721 and 13712).

                47.104-1 Government rate tender procedures.

                47.104-2 Fixed-price contracts.

                47.104-3 Cost-reimbursement contracts.

                47.104-4 Contract clauses.

                47.104-5 Citation of Government rate tenders.

           47.105 Transportation assistance.

      Subpart 47.2 - Contracts for Transportation or for Transportation-Related Services

           47.200 Scope of subpart.

           47.201 Definitions.

           47.202 Presolicitation planning.

           47.203 [Reserved]

           47.204 Single-movement contracts.

           47.205 Availability of term contracts and basic ordering agreements for transportation or for transportation-related services.

           47.206 Preparation of solicitations and contracts.

           47.207 Solicitation provisions, contract clauses, and special requirements.

                47.207-1 Qualifications of offerors.

                47.207-2 Duration of contract and time of performance.

                47.207-3 Description of shipment, origin, and destination.

                47.207-4 Determination of Weights.

                47.207-5 Contractor responsibilities.

                47.207-6 Rates and charges.

                47.207-7 Liability and insurance.

                47.207-8 Government responsibilities.

                47.207-9 Annotation and distribution of shipping and billing documents.

                47.207-10 Discrepancies incident to shipments.

                47.207-11 Volume movements within the contiguous United States.

           47.208 Report of shipment (REPSHIP).

                47.208-1 Advance notice.

                47.208-2 Contract clause.

      Subpart 47.3 - Transportation in Supply Contracts

           47.300 Scope of subpart.

           47.301 General.

                47.301-1 Responsibilities of contracting officers.

                47.301-2 Participation of transportation officers.

                47.301-3 Using the Defense Transportation System (DTS).

           47.302 Place of delivery-f.o.b. point.

           47.303 Standard delivery terms and contract clauses.

                47.303-1 F.o.b. origin.

                47.303-2 F.o.b. origin, contractor’s facility.

                47.303-3 F.o.b. origin, freight allowed.

                47.303-4 F.o.b. origin, freight prepaid.

                47.303-5 F.o.b. origin, with differentials.

                47.303-6 F.o.b. destination.

                47.303-7 F.o.b. destination, within consignee’s premises.

                47.303-8 F.a.s. vessel, port of shipment.

                47.303-9 F.o.b. vessel, port of shipment.

                47.303-10 F.o.b. inland carrier, point of exportation.

                47.303-11 F.o.b. inland point, country of importation.

                47.303-12 Ex dock, pier, or warehouse, port of importation.

                47.303-13 C. & f. destination.

                47.303-14 C.i.f. destination.

                47.303-15 F.o.b. designated air carrier’s terminal, point of exportation.

                47.303-16 F.o.b. designated air carrier’s terminal, point of importation.

                47.303-17 Contractor-prepaid commercial bills of lading, small package shipments.

           47.304 Determination of delivery terms.

                47.304-1 General.

                47.304-2 Shipments within CONUS.

                47.304-3 Shipments from CONUS for overseas delivery.

                47.304-4 Shipments originating outside CONUS.

                47.304-5 Exceptions.

           47.305 Solicitation provisions, contract clauses, and transportation factors.

                47.305-1 Solicitation requirements.

                47.305-2 Solicitations f.o.b. origin and f.o.b. destination-lowest overall cost.

                47.305-3 F.o.b. origin solicitations.

                47.305-4 F.o.b. destination solicitations.

                47.305-5 Destination unknown.

                47.305-6 Shipments to ports and air terminals.

                47.305-7 Quantity analysis, direct delivery, and reduction of crosshauling and backhauling.

                47.305-8 Consolidation of small shipments and the use of stopoff privileges.

                47.305-9 Commodity description and freight classification.

                47.305-10 Packing, marking, and consignment instructions.

                47.305-11 Options in shipment and delivery.

                47.305-12 Delivery of Government-furnished property.

                47.305-13 Transit arrangements.

                47.305-14 Mode of transportation.

                47.305-15 Loading responsibilities of contractors.

                47.305-16 Shipping characteristics.

                47.305-17 Returnable cylinders.

           47.306 Transportation factors in the evaluation of offers.

                47.306-1 Transportation cost determinations.

                47.306-2 Lowest overall transportation costs.

                47.306-3 Adequacy of loading and unloading facilities.

      Subpart 47.4 - Air Transportation by U.S.-Flag Carriers

           47.401 Definitions.

           47.402 Policy.

           47.403 Guidelines for implementation of the Fly America Act.

                47.403-1 Availability and unavailability of U.S.-flag air carrier service.

                47.403-2 Air transport agreements between the United States and foreign governments.

                47.403-3 Disallowance of expenditures.

           47.404 Air freight forwarders.

           47.405 Contract clause.

      Subpart 47.5 - Ocean Transportation by U.S.-Flag Vessels

           47.500 Scope of subpart.

           47.501 Definitions.

           47.502 Policy.

           47.503 Applicability.

           47.504 Exceptions.

           47.505 Construction contracts.

           47.506 Procedures.

           47.507 Contract clauses.

47.000 Scope of part.

      (a) This part prescribes policies and procedures for-

           (1) Applying transportation and traffic management considerations in the acquisition of supplies; and

           (2) Acquiring transportation or transportation-related services by contract methods other than bills of lading, transportation requests, transportation warrants, and similar transportation forms. Transportation and transportation services can be obtained by acquisition subject to the FAR or by acquisition under 49 U.S.C. 10721 or 49 U.S.C. 13712. Even though the FAR does not regulate the acquisition of transportation or transportation-related services when the bill of lading is the contract, this contract method is widely used and, therefore, relevant guidance on the use of the bill of lading is provided in this part (see 47.104).

      (b) The definitions in this part have been condensed from statutory definitions. In case of inconsistency between the language of this part and the statutory requirements, the statute shall prevail.

47.001 Definitions.

As used in this part-

Bill of lading means a transportation document, used as a receipt of goods, as documentary evidence of title, for clearing customs, and generally used as a contract of carriage.

           (1) "Commercial bill of lading (CBL)", unlike the Government bill of lading, is not an accountable transportation document.

           (2) "Government bill of lading (GBL)" is an accountable transportation document, authorized and prepared by a Government official.

           Carrier or "commercial carrier" means a common carrier or a contract carrier.

           Common carrier means a person holding itself out to the general public to provide transportation for compensation.

           Contract carrier means a person providing transportation for compensation under continuing agreements with one person or a limited number of persons.

           Government rate tender under 49 U.S.C. 10721 and 13712 means an offer by a common carrier to the United States at a rate below the regulated rate offered to the general public.

           Household goods in accordance with 49 U.S.C. 13102 means personal effects and property used or to be used in a dwelling, when a part of the equipment or supply of such dwelling, and similar property if the transportation of such effects or property is arranged and paid for by-

                (1) The householder, except such term does not include property moving from a factory or store, other than property that the householder has purchased with the intent to use in his or her dwelling and is transported at the request of, and the transportation charges are paid to the carrier by, the householder; or

                (2) Another party.

                Noncontiguous domestic trade means transportation (except with regard to bulk cargo, forest products, recycled metal scrap, waste paper, and paper waste) subject to regulation by the Surface Transportation Board involving traffic originating in or destined to Alaska, Hawaii, or a territory or possession of the United States (see 49 U.S.C. 13102(15) and 1 3702).

                Released or declared value means the assigned value of the cargo for reimbursement purposes, not necessarily the actual value of the cargo. Released value may be more or less than the actual value of the cargo. The released value is the maximum amount that could be recovered by the agency in the event of loss or damage for the shipments of freight and household goods.

47.002 Applicability.

All Government personnel concerned with the following activities shall follow the regulations in part  47 as applicable:

      (a) Acquisition of supplies.

      (b) Acquisition of transportation and transportation-related services.

      (c) Transportation assistance and traffic management.

      (d) Administration of transportation contracts, transportation-related services, and other contracts that involve transportation.

      (e) The making and administration of contracts under which payments are made from Government funds for-

           (1) The transportation of supplies;

           (2) Transportation-related services; or

           (3) Transportation of contractor personnel and their personal belongings.

Part 48 - Value Engineering

48.000 Scope of part.

This part prescribes policies and procedures for using and administering value engineering techniques in contracts.

48.001 Definitions.

As used in this part-

Acquisition savings means savings resulting from the application of a value engineering change proposal (VECP) to contracts awarded by the same contracting office or its successor for essentially the same unit. Acquisition savings include-

           (1) Instant contract savings, that are the net cost reductions on the contract under which the VECP is submitted and accepted, and that are equal to the instant unit cost reduction multiplied by the number of instant contract units affected by the VECP, less the contractor’s allowable development and implementation costs;

           (2) Concurrent contract savings, that are net reductions in the prices of other contracts that are definitized and ongoing at the time the VECP is accepted; and

           (3) Future contract savings, that are the product of the future unit cost reduction multiplied by the number of future contract units in the sharing base. On an instant contract, future contract savings include savings on increases in quantities after VECP acceptance that are due to contract modifications, exercise of options, additional orders, and funding of subsequent year requirements on a multiyear contract.

           Collateral costs means agency costs of operation, maintenance, logistic support, or Government-furnished property.

           Collateral savings means those measurable net reductions resulting from a VECP in the agency’s overall projected collateral costs, exclusive of acquisition savings, whether or not the acquisition cost changes.

           Contracting office includes any contracting office that the acquisition is transferred to, such as another branch of the agency or another agency’s office that is performing a joint acquisition action.

           Contractor’s development and implementation costs means those costs the contractor incurs on a VECP specifically in developing, testing, preparing, and submitting the VECP, as well as those costs the contractor incurs to make the contractual changes required by Government acceptance of a VECP.

           Future unit cost reduction means the instant unit cost reduction adjusted as the contracting officer considers necessary for projected learning or changes in quantity during the sharing period. It is calculated at the time the VECP is accepted and applies either-

                (1) Throughout the sharing period, unless the contracting officer decides that recalculation is necessary because conditions are significantly different from those previously anticipated, or

                (2) To the calculation of a lump-sum payment, that cannot later be revised.

                Government costs means those agency costs that result directly from developing and implementing the VECP, such as any net increases in the cost of testing, operations, maintenance, and logistics support. The term does not include the normal administrative costs of processing the VECP or any increase in instant contract cost or price resulting from negative instant contract savings, except that for use in 52.248-3, see the definition at 52.248-3(b).

                Instant contract means the contract under which the VECP is submitted. It does not include increases in quantities after acceptance of the VECP that are due to contract modifications, exercise of options, or additional orders. If the contract is a multiyear contract, the term does not include quantities funded after VECP acceptance. In a fixed-price contract with prospective price redetermination, the term refers to the period for which firm prices have been established.

                Instant unit cost reduction means the amount of the decrease in unit cost of performance (without deducting any contractor’s development or implementation costs) resulting from using the VECP on the instant contract. In service contracts, the instant unit cost reduction is normally equal to the number of hours per line-item task saved by using the VECP on the instant contract, multiplied by the appropriate contract labor rate.

                Negative instant contract savings means the increase in the instant contract cost or price when the acceptance of a VECP results in an excess of the contractor’s allowable development and implementation costs over the product of the instant unit cost reduction multiplied by the number of instant contract units affected.

                Net acquisition savings means total acquisition savings, including instant, concurrent, and future contract savings, less Government costs.

                Sharing base means the number of affected end items on contracts of the contracting office accepting the VECP.

                Sharing period means the period beginning with acceptance of the first unit incorporating the VECP and ending at a calendar date or event determined by the contracting officer for each VECP.

                Unit means the item or task to which the contracting officer and the contractor agree the VECP applies.

                Value engineering proposal means, in connection with an A-E contract, a change proposal developed by employees of the Federal Government or contractor value engineering personnel under contract to an agency to provide value engineering services for the contract or program.

Part 49 - Termination of Contracts

      49.000 Scope of part.

      49.001 Definitions.

      49.002 Applicability.

      Subpart 49.1 - General Principles

           49.100 Scope of subpart.

           49.101 Authorities and responsibilities.

           49.102 Notice of termination.

           49.103 Methods of settlement.

           49.104 Duties of prime contractor after receipt of notice of termination.

           49.105 Duties of termination contracting officer after issuance of notice of termination.

                49.105-1 Termination status reports.

                49.105-2 Release of excess funds.

                49.105-3 Termination case file.

                49.105-4 Cleanup of construction site.

           49.106 Fraud or other criminal conduct.

           49.107 Audit of prime contract settlement proposals and subcontract settlements.

           49.108 Settlement of subcontract settlement proposals.

                49.108-1 Subcontractor’s rights.

                49.108-2 Prime contractor’s rights and obligations.

                49.108-3 Settlement procedure.

                49.108-4 Authorization for subcontract settlements without approval or ratification.

                49.108-5 Recognition of judgments and arbitration awards.

                49.108-6 Delay in settling subcontractor settlement proposals.

                49.108-7 Government assistance in settling subcontracts.

                49.108-8 Assignment of rights under subcontracts.

           49.109 Settlement agreements.

                49.109-1 General.

                49.109-2 Reservations.

                49.109-3 Government property.

                49.109-4 No-cost settlement.

                49.109-5 Partial settlements.

                49.109-6 Joint settlement of two or more settlement proposals.

                49.109-7 Settlement by determination.

           49.110 Settlement negotiation memorandum.

           49.111 Review of proposed settlements.

           49.112 Payment.

                49.112-1 Partial payments.

                49.112-2 Final payment.

           49.113 Cost principles.

           49.114 Unsettled contract changes.

           49.115 Settlement of terminated incentive contracts.

      Subpart 49.2 - Additional Principles for Fixed-Price Contracts Terminated for Convenience

           49.201 General.

           49.202 Profit.

           49.203 Adjustment for loss.

           49.204 Deductions.

           49.205 Completed end items.

           49.206 Settlement proposals.

                49.206-1 Submission of settlement proposals.

                49.206-2 Bases for settlement proposals.

                49.206-3 Submission of inventory disposal schedules.

           49.207 Limitation on settlements.

           49.208 Equitable adjustment after partial termination.

      Subpart 49.3 - Additional Principles for Cost-Reimbursement Contracts Terminated for Convenience

           49.301 General.

           49.302 Discontinuance of vouchers.

           49.303 Procedure after discontinuing vouchers.

                49.303-1 Submission of settlement proposal.

                49.303-2 Submission of inventory disposal schedules.

                49.303-3 Audit of settlement proposal.

                49.303-4 Adjustment of indirect costs.

                49.303-5 Final settlement.

           49.304 Procedure for partial termination.

                49.304-1 General.

                49.304-2 Submission of settlement proposal (fee only).

                49.304-3 Submission of vouchers.

           49.305 Adjustment of fee.

                49.305-1 General.

                49.305-2 Construction contracts.

      Subpart 49.4 - Termination for Default

           49.401 General.

           49.402 Termination of fixed-price contracts for default.

                49.402-1 The Government’s right.

                49.402-2 Effect of termination for default.

                49.402-3 Procedure for default.

                49.402-4 Procedure in lieu of termination for default.

                49.402-5 Memorandum by the contracting officer.

                49.402-6 Repurchase against contractor’s account.

                49.402-7 Other damages.

                49.402-8 Reporting Information.

           49.403 Termination of cost-reimbursement contracts for default.

           49.404 Surety-takeover agreements.

           49.405 Completion by another contractor.

           49.406 Liquidation of liability.

      Subpart 49.5 - Contract Termination Clauses

           49.501 General.

           49.502 Termination for convenience of the Government.

           49.503 Termination for convenience of the Government and default.

           49.504 Termination of fixed-price contracts for default.

           49.505 Other termination clauses.

      Subpart 49.6 - Contract Termination Forms and Formats

           49.601 Notice of termination for convenience.

                49.601-1 Electronic notice.

                49.601-2 Letter notice.

           49.602 Forms for settlement of terminated contracts.

                49.602-1 Termination settlement proposal forms.

                49.602-2 Inventory forms.

                49.602-3 Schedule of accounting information.

                49.602-4 Partial payments.

                49.602-5 Settlement agreement.

           49.603 Formats for termination for convenience settlement agreements.

                49.603-1 Fixed price contracts-complete termination.

                49.603-2 Fixed-price contracts-partial termination.

                49.603-3 Cost reimbursement contracts-complete termination, if settlement includes cost.

                49.603-4 Cost-reimbursement contracts-complete termination, with settlement limited to fee.

                49.603-5 Cost-reimbursement contracts-partial termination.

                49.603-6 No-cost settlement agreement-complete termination.

                49.603-7 No-cost settlement agreement-partial termination.

                49.603-8 Fixed-price contracts-settlements with subcontractors only.

                49.603-9 Settlement of reservations.

           49.604 Release of excess funds under terminated contracts.

           49.605 Request to settle subcontractor settlement proposals.

           49.606 Granting subcontract settlement authorization.

           49.607 Delinquency notices.

49.000 Scope of part.

This part establishes policies and procedures relating to the complete or partial termination of contracts for the convenience of the Government or for default. It prescribes contract clauses relating to termination and excusable delay and includes instructions for using termination and settlement forms.

49.001 Definitions.

As used in this part-

Other work means any current or scheduled work of the contractor, whether Government or commercial, other than work related to the terminated contract.

Plant clearance period, as used in this subpart, means the period beginning on the effective date of contract completion or termination and ending 90 days (or such longer period as may be agreed to) after receipt by the contracting officer of acceptable inventory schedules for each property classification. The final phase of the plant clearance period means that period after receipt of acceptable inventory schedules.

Settlement agreement means a written agreement in the form of a contract modification settling all or a severable portion of a settlement proposal.

Settlement proposal means a proposal for effecting settlement of a contract terminated in whole or in part, submitted by a contractor or subcontractor in the form, and supported by the data, required by this part. A settlement proposal is included within the generic meaning of the word "claim" under false claims acts (see 18 U.S.C.287 and 31 U.S.C.3729).

Unsettled contract change means any contract change or contract term for which a definitive modification is required but has not been executed.

49.002 Applicability.


(1) This part applies to contracts that provide for termination for the convenience of the Government or for the default of the contractor (see also 12.403 and 13.302-4).

           (2) This part does not apply to commercial product and commercial service contracts awarded using part 12 procedures. See 12.403 for termination policies for contracts for the acquisition of commercial products and commercial services. However, for contracts for the acquisition of commercial products and commercial services, this part provides administrative guidance which may be followed unless it is inconsistent with the requirements and procedures in 12.403, Termination, and the clause at 52.212-4, Contract Terms and Conditions-Commercial Products and Commercial Services.

      (b) Contractors shall use this part, unless inappropriate, to settle subcontracts terminated as a result of modification of prime contracts. The contracting officer shall use this part as a guide in evaluating settlements of subcontracts terminated for the convenience of a contractor whenever the settlement will be the basis of a proposal for reimbursement from the Government under a cost-reimbursement contract.

      (c) The contracting officer may use this part in determining an equitable adjustment resulting from a modification under the Changes clause of any contract, except cost-reimbursement contracts.

      (d) When action to be taken or authority to be exercised under this part depends upon the "amount" of the settlement proposal, that amount shall be determined by deducting from the gross settlement proposed the amounts payable for completed articles or work at the contract price and amounts for the settlement of subcontractor settlement proposals. Credits for retention or other disposal of termination inventory and amounts for advance or partial payments shall not be deducted.

Part 50 - Extraordinary Contractual Actions and the safety act

      50.000 Scope of part.

      Subpart 50.1 - Extraordinary Contractual Actions

           50.100 Definitions.

           50.101 General.

                50.101-1 Authority.

                50.101-2 Policy.

                50.101-3 Records.

           50.102 Delegation of and limitations on exercise of authority.

                50.102-1 Delegation of authority.

                50.102-2 Contract adjustment boards.

                50.102-3 Limitations on exercise of authority.

           50.103 Contract adjustments.

                50.103-1 General.

                50.103-2 Types of contract adjustment.

                50.103-3 Contract adjustment.

                50.103-4 Facts and evidence.

                50.103-5 Processing cases.

                50.103-6 Disposition.

                50.103-7 Contract requirements.

           50.104 Residual powers.

                50.104-1 Standards for use.

                50.104-2 General.

                50.104-3 Special procedures for unusually hazardous or nuclear risks.

                50.104-4 Contract clause.

      Subpart 50.2 - Support Anti-terrorism by Fostering Effective Technologies Act of 2002

           50.200 Scope of subpart.

           50.201 Definitions.

           50.202 Authorities.

           50.203 General.

           50.204 Policy.

           50.205 Procedures.

                50.205-1 SAFETY Act Considerations.

                50.205-2 Pre-qualification designation notice.

                50.205-3 Authorization of offers contingent upon SAFETY Act designation or certification before contract award.

                50.205-4 Authorization of awards made presuming SAFETY Act designation or certification after contract award.

           50.206 Solicitation provisions and contract clause.

50.000 Scope of part.

This part-


(1) Prescribes policies and procedures for entering into, amending, or modifying contracts in order to facilitate the national defense under the extraordinary emergency authority granted by Public Law 85-804 ( 50 U. S.C. 1431-1434) and Executive Order 10789, dated November 14, 1958. It does not cover advance payments (see subpart  32.4); and

           (2) Implements indemnification authority granted by Pub. L. 85-804 and paragraph 1 A of E.O. 10789 with respect to any matter that has been, or could be, designated by the Secretary of Homeland Security as a qualified anti-terrorism technology as defined in the Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (SAFETY Act); and

      (b) Implements SAFETY Act liability protections to promote development and use of anti-terrorism technologies.

Part 51 - Use of Government Sources by Contractors

51.000 Scope of part.

This part prescribes policies and procedures for the use by contractors of Government supply sources and interagency fleet management system (IFMS) vehicles and related services.

Far Parts