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FAR and DFARS › DFARS Part 249: Termination of Contracts › Subpart 249.5

DFARS 249.501-70 Special termination costs.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains when and how the Special Termination Costs clause (252.249-7000) may be used in incrementally funded contracts. It requires agency head approval and sets conditions based on contract length, estimated financing amounts, and availability of funds for the contingent reserve liability. The contractor and contracting officer must agree on a best estimate of special termination costs to insert in the clause.

Applies to: Incrementally funded contracts meeting specified conditions

What it requires

  • Obtain agency head approval before using the clause
  • Ensure the contract term is 2 years or more
  • Ensure adequate funds are available to cover the contingent reserve liability
  • Agree with the contracting officer on an amount representing the best estimate of total special termination costs and insert it in paragraph (c) of the clause

Key terms: Special Termination Costs · incrementally funded contract · agency head · contingent reserve liability · RDT&E financing

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) The clause at 252.249-7000, Special Termination Costs, may be used in an incrementally funded contract when its use is approved by the agency head.

(b) The clause is authorized when—

(1) The contract term is 2 years or more;

(2) The contract is estimated to require—

(i) Total RDT&E financing in excess of $25 million; or

(ii) Total production investment in excess of $100 million; and

(3) Adequate funds are available to cover the contingent reserve liability for special termination costs.

(c) The contractor and the contracting officer must agree upon an amount that represents their best estimate of the total special termination costs to which the contractor would be entitled in the event of termination of the contract. Insert this amount in paragraph (c) of the clause.

(d)(1) Consider substituting an alternate paragraph (c) for paragraph (c) of the basic clause when—

(i) The contract covers an unusually long performance period; or

(ii) The contractor's cost risk associated with contingent special termination costs is expected to fluctuate extensively over the period of the contract.

(2) The alternate paragraph (c) should provide for periodic negotiation and adjustment of the amount reserved for special termination costs. Occasions for periodic adjustment may include—

(i) The Government's incremental assignment of funds to the contract;

(ii) The time when certain performance milestones are accomplished by the contractor; or

(iii) Other specific time periods agreed upon by the contracting officer and the contractor.

Sections it refers to

Sections that refer to it

← 249.501 General. · 249.7000 Terminated contracts with Canadian Commercial Corporation. →

Rule changes for DFARS Part 249

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

DFARS 249.501-70 Special termination costs · SpendQuery