What is the difference between SF 1435 and SF 1436?

The two standard forms for T4C settlement proposals differ based on whether your contract involved physical inventory that must be disposed of.

SF 1435 — Settlement Proposal (Inventory Basis): Used when your contract involved manufacturing, production, or acquisition of materials and inventory the government needs to account for and dispose of. This form requires you to list and value work-in-process, finished goods, raw materials, and other inventory separately. It is more complex and typically associated with manufacturing or production contracts.

SF 1436 — Settlement Proposal (Total Cost Basis): Used for most service contracts, professional services, IT contracts, consulting, and other work where the primary deliverable is labor and expertise rather than goods. This is the form most small business contractors use. It organizes your claim by cost category — labor, overhead, materials, G&A, profit, settlement expenses — without requiring inventory valuation.

How to choose: If your contract involved purchasing equipment, materials, or inventory that you still possess and that the government has an interest in, use SF 1435. If your contract was primarily for services — IT, professional services, staffing, consulting, program management — use SF 1436.

When in doubt, use SF 1436 and confirm with your TCO. TCOs will specify if they need inventory-basis data instead.

As a rule: cost-reimbursement and time-and-materials contracts almost always use SF 1436. Fixed-price contracts may use either, depending on whether inventory is involved.

RELATED GUIDES

• → What is a FAR 49.206 settlement proposal?
• → Recoverable costs in a T4C settlement
• → FAR Part 49 explained