4 hours ago, Retreadfed said:

Agree. Also, consider that FAR 49.201 is a guiding principle even in terminations of contracts for commercial items/services.

Just thoughts as I already voiced my agreement with Vern's approach.

I understand using the FAR as guidance but then I wonder highlighting something that Vern already did in previous post. That is FAR clause (same language in current FAR and RFO) 52.214-4 at (l) which states in part - "...Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination....."

In applying Joel's concerns about duplicate consideration being given for a cost that the contractor is requesting is it not "the terms of the contract" and the "standard record keeping" of the contractor are what is to be considered and not FAR Part 31 or even FAR Part 49 for that matter? Maybe my view is too simple but to me it is all that is needed to reach a negotiated agreement for the termination for convenience.

Edited - It would then be the contract and the recordkeeping of the contractor that would help sort out if there are duplicative costs that should be addressed in negotiation.

On 1/20/2026 at 3:20 PM, C Culham said:

Just thoughts as I already voiced my agreement with Vern's approach.

I understand using the FAR as guidance but then I wonder highlighting something that Vern already did in previous post. That is FAR clause (same language in current FAR and RFO) 52.214-4 at (l) which states in part - "...Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination....."

In applying Joel's concerns about duplicate consideration being given for a cost that the contractor is requesting is it not "the terms of the contract" and the "standard record keeping" of the contractor are what is to be considered and not FAR Part 31 or even FAR Part 49 for that matter? Maybe my view is too simple but to me it is all that is needed to reach a negotiated agreement for the termination for convenience.

Edited - It would then be the contract and the recordkeeping of the contractor that would help sort out if there are duplicative costs that should be addressed in negotiation.

C Culham, that is a good point. Also, FAR 49.303-5 at paragraph (d) says:

(d) If an overall settlement of costs is agreed upon, agreement on each element of cost is not necessary. If appropriate, differences may be compromised and doubtful questions settled by agreement. An overall settlement shall not include costs that are clearly not allowable under the terms of the contract.

See also RFO 15.407(a), Price negotiation, which states in part:

A fair and reasonable price does not require that agreement be reached on every element of cost, nor is it mandatory that the agreed price be within the contracting officer's initial negotiation position. Contracting officers are responsible for exercising the requisite judgment needed to reach a negotiated settlement with the offeror and is solely responsible for the final price agreement.

And see RFO 33.205-5, Contracting officer's authority [to settle claims and disputes]:

(a) Contracting officers are authorized, within any specific limitations defined in their warrants, to decide or resolve all claims arising under or relating to a contract subject to the Disputes statute, except this authority does not extend to—

(1)A claim or dispute for penalties or forfeitures prescribed by statute or regulation that another Federal agency is specifically authorized to administer, settle, or determine; or

(2)The settlement, compromise, payment or adjustment of any claim involving fraud.

(b) Contracting officers can use ADR procedures to resolve claims, according to agency policies and 33.205-8.

With regard to the RFO one might also consider FAR 1.102. By my read it has been changed significantly from the former FAR wording and promotes the ideal as voiced by Vern in a previous post - "Keep it simple and fair". An approach supported by the guiding principles no matter the value of the settlement effort.

The principle is really similar to not paying for dealer prep costs as part of the car price and the dealer adding it on as an additional, duplicate cost.

It’s not rocket science or difficult.

As applicable to the contract, FAR 52.214-4 at (l)states in part - "...Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination....."

Paying for the percentage of the contract price reflecting work performed (which may presumably include overheads/G&A) plus CONSIDERING DEMONSTRABLE CHARGES…etc. is not very difficult.

How hard is it to require the contractor to demonstrate to your satisfaction that those charges have resulted from the cancellation?

And that, if they are accounted for as overhead or G&A, etc. “[USING the contractors] standard record keeping system”, they already have been considered in the payment reflecting the percentage of work performed.

We don’t generally pay for G&A (or profit) on the unperformed/“unearned” portion of the contract price, except for markups on additional charges that have resulted from the cancellation.

For Gosh sakes, the clause applicable to your contract termination clearly REQUIRES the contractor to “demonstrate to the satisfaction of the government using its standard record keeping system” that those charges “have resulted from the contract termination.”

I interpret “to the satisfaction of the government” to mean that you have to consider the applicability and reasonableness of the submitted charges.

According to your description, they were performed prior to award in case the contract was awarded to them…

SHEESH!!!

Vern already said that he doesn’t consider those costs to be a result of the termination and govt2310 seems to have agreed with that.

Start up costs are a consideration in Part 31 and related case law, which isn’t applicable to this contract.

So - the contractor apparently hasn’t demonstrated to govt2310 that they are as a result of the termination. So how can you be “satisfied” to add them to the portion of the contract price reflecting the percentage of the work performed prior to the cancellation???

Ahhh but lets go full circle.

On 1/16/2026 at 6:12 AM, govt2310 said:

Let's say the Contractor wants to get compensated for the following: interviewing and hiring employees during the Bid Proposal Preparation Stage to work on the Contract if they win the Contract Award. Are these costs allowable?

On 1/16/2026 at 6:54 AM, joel hoffman said:

If so, charging as a direct cost for the settlement, then applying the applicable overhead to those direct costs would be duplicative, would it not?

But what if their records indicate otherwise?

On 1/16/2026 at 7:11 AM, Vern Edwards said:

But is start-up part of the "work performed" after contract award? If you think so, consider it in the settlement.

On 1/16/2026 at 7:26 AM, joel hoffman said:

To pay as a direct cost then apply indirect costs would be duplicative.

But maybe not....their records right?

On 1/16/2026 at 7:48 AM, joel hoffman said:

Just trying to say, don’t pay twice

Agreed but what if the government can not within reason adequately decide about the question of paying twice based on the records of the contractor (and the contract terms)? Does the government dig in and call in say FAR Part 31? Or, does the government make their best informed deicision they can and with reason negotiate a settlement in dollars and cents that both parties believe to be the fair and prompt settlement thereby putting the matter behind them. And behind them I mean signed, sealed and delivered and all move on,no claim, no forced determination by the CO.

Everyone may consider me to be all wet but my concern is the car scenerio is not a good comparison. If one does not like the dealer prep you might reach agreement but if you cannot you walk away and find another dealer/car. A competitive procurement if you will. In the case of settlement of a T4C it is completely different, not even a sole source procurement in my book. You have to do the best one can ( I will even throw in the best that the team can do) in considering, in this case, the contract and records and get it settled and move on. I believe it is the priority, the main goal, coupled with a value judgement and the value is to apply reason and fairness to reach a final total payment for the T4C by mutual agreement.

I say this as on one hand a settlement that includes duplicative costs is a concern but on the other hand the concern needs to be weighed against the best interest of all parties. It is a T4C for a reason and that reason is the government wants to move on!

Looks to me that there is no indication of intent to examine or discuss anything, just look at the bottom line and say, ok it’s reasonable.

The contractor has to demonstrate to the satisfaction of the government that these additional, pre-contract costs have resulted from the termination. How Would that happen?

Pre-contract costs and associated case law are covered in Part 31, which is not applicable here.

The language in the clause is applicable.

“the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination....."

I can think of an example in a simple commercial type contract for , say replacing an air conditioner. Charges resulting from a termination - could be those costs for returning and restocking materials delivered to the project but not used during the partial performance that the government has no need for after the termination.

The charges occurred after the contract was terminated.