FAR and DFARS › FAR Part 49: Termination of Contracts › Subpart 49.3
FAR 49.305-1 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 the Termination Contracting Officer (TCO) determines the adjusted fee owed to a contractor after a termination for convenience. The fee is generally based on the percentage of completion of the contract or terminated portion, and the TCO compares the work actually performed against the total work required. The ratio of costs incurred to total estimated cost is only one factor and may not match the percentage of completion.
Applies to: Contractors with terminated contracts or terminated portions of contracts
Key terms: TCO · adjusted fee · percentage of completion · terminated portion · settlement proposals
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) The TCO shall determine the adjusted fee to be paid, if any, in the manner provided by the contract. The determination is generally based on a percentage of completion of the contract or of the terminated portion. When this basis is used, factors such as the extent and difficulty of the work performed by the contractor (e.g., planning, scheduling, technical study, engineering work production and supervision, placing and supervising subcontracts, and work performed by the contractor in (1) stopping performance, (2) settling terminated subcontracts, and (3) disposing of termination inventory) shall be compared with the total work required by the contract or by the terminated portion. The contractor's adjusted fee shall not include an allowance for fee for subcontract effort included in subcontractors' settlement proposals.
(b) The ratio of costs incurred to the total estimated cost of performing the contract or the terminated portion is only one factor in computing the percentage of completion. This percentage may be either greater or less than that indicated by the ratio of costs incurred, depending upon the evaluation by the TCO of other pertinent factors.
← 49.305 Adjustment of fee. · 49.305-2 Construction contracts. →
Rule changes for FAR Part 49
- Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 3 and 49 ↗ · proposed 2026-06-23 · comments due 2026-07-23
- Federal Acquisition Regulation; Technical Amendments ↗ · final rule 2024-12-16 · effective 2025-01-03
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.