What is FAR Part 49?

FAR Part 49 is the section of the Federal Acquisition Regulation that governs what happens when a federal contract is terminated. It covers both termination for convenience (the government's choice) and termination for default (contractor failure).

For contractors who have received a T4C notice, the most relevant subparts are:

FAR 49.1 — General: The government's right to terminate and the basic settlement framework. FAR 49.102 covers procedures for issuing T4C notices.

FAR 49.2 — Additional Principles for Fixed-Price Contracts: Settlement methods, partial payments during settlement, TCO authority.

FAR 49.3 — Additional Principles for Cost-Reimbursement Contracts: Applies to CPFF, CPAF, and other cost-type contracts.

FAR 49.108 — Subcontract Settlement Proposals: Requires you to terminate subcontractors and obtain their settlement proposals before finalizing your prime proposal.

FAR 49.201–49.207 — The Settlement Process: The core section. Settlement forms, proposal requirements, profit negotiation, TCO procedures, and contractor certifications.

FAR 49.206 — Settlement Proposals: Specifies what your proposal must include (49.206-2), the deadline to file (49.206-3), and partial payments during the process (49.206-4).

FAR 49.207 — Contractor Certification: You must certify that your settlement proposal accurately represents your costs. This certification carries legal weight under the False Claims Act.

The full text of FAR Part 49 is at acquisition.gov/far/part-49.

RELATED GUIDES

• → What is a T4C?
• → What is a FAR 49.206 settlement proposal?
• → FAR Part 31 allowable costs