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FAR and DFARS › FAR Part 49: Termination of Contracts › Subpart 49.3

FAR 49.304-1 General.

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 how a termination contracting officer (TCO) handles a partial termination. Generally, the TCO limits the settlement to adjusting the fee and, with the contracting office's agreement, reducing the estimated cost. However, if the terminated part is clearly severable or the remaining work is not substantial, different procedures apply.

Applies to: Termination contracting officers handling partial terminations

What it requires

  • Limit the settlement to an adjustment of the fee, if any, and with the concurrence of the contracting office, to a reduction in the estimated cost
  • Adjust the fee as provided in 49.304-2 and 49.305, unless the exceptions in paragraph (a) apply

Key terms: partial termination · TCO · settlement · fee · estimated cost

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

The text

(a) In a partial termination, the TCO shall limit the settlement to an adjustment of the fee, if any, and with the concurrence of the contracting office, to a reduction in the estimated cost. The TCO shall adjust the fee as provided in 49.304-2 and 49.305, unless—

(1) The terminated portion is clearly severable from the balance of the contract; or

(2) Performance of the contract is virtually complete, or performance of any continued portion is only on subsidiary items or spare parts, or is otherwise not substantial.

(b) In the case of the exceptions in paragraph (a), the procedures in 49.302 and 49.303 apply.

Sections it refers to

  • 49.304-2 Submission of settlement proposal (fee only).
  • 49.305 Adjustment of fee.
  • 49.302 Discontinuance of vouchers.
  • 49.303 Procedure after discontinuing vouchers.

← 49.304 Procedure for partial termination. · 49.304-2 Submission of settlement proposal (fee only). →

Rule changes for FAR Part 49

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

FAR 49.304-1 General · SpendQuery