C.F.R. » Title 48 » CHAPTER 1—FEDERAL ACQUISITION REGULATION › SUBCHAPTER G—CONTRACT MANAGEMENT › PART 49—TERMINATION OF CONTRACTS › Subpart 49.2—Additional Principles for Fixed-Price Contracts Terminated for Convenience

48 C.F.R. § 49.201

49.201 General.

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(a) A settlement should compensate the contractor fairly for the work done and the preparations made for the terminated portions of the contract, including a reasonable allowance for profit. Fair compensation is a matter of judgment and cannot be measured exactly. In a given case, various methods may be equally appropriate for arriving at fair compensation. The use of business judgment, as distinguished from strict accounting principles, is the heart of a settlement.

(b) The primary objective is to negotiate a settlement by agreement. The parties may agree upon a total amount to be paid the contractor without agreeing on or segregating the particular elements of costs or profit comprising this amount.

(c) Cost and accounting data may provide guides, but are not rigid measures, for ascertaining fair compensation. In appropriate cases, costs may be estimated, differences compromised, and doubtful questions settled by agreement. Other types of data, criteria, or standards may furnish equally reliable guides to fair compensation. The amount of recordkeeping, reporting, and accounting related to the settlement of terminated contracts should be kept to a minimum compatible with the reasonable protection of the public interest.

Notes of Decisions
Cited in 8 cases, 1994–2011 · leading case: Nicon, Inc. v. United States
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Nicon, Inc. v. United States (2003) cafc · cites it 4× “” 48 C.F.R. § 49.201 (a) (2002); see also id.”
Morrison Knudsen Corp. v. Fireman's Fund Insurance (1999) ca10 · cites it 2× “See 48 C.F.R. §§ 49.201 & .303 — 5(d) 40 ; see also id.”
Century Marine Incorporated v. United States (1998) ca5 · cites it 2× “In contrast, under a fixed-price contract terminated for the convenience of the Government, a settlement should compensate the contractor fairly for the work actually done and for the preparations made for the terminated portions of the contract, including a reasonable allowance…”
International Data Products Corp. v. United States (2007) cafc “48 C.F.R. §§ 49.201 et seq.; 48 C.F.R. §§ 49.”
Engineered Maintenance Services, Inc. v. United States (2003) uscfc “48 C.F.R. § 49.201 (2002). B. Analysis 1.”
Red River Holdings, LLC v. United States (2011) mdd “” 48 C.F.R. § 49.201 (a) (emphasis added). .”
United States v. Frequency Electronics (1994) nyed “See 48 C.F.R. § 49.201 (c). 1 With respect to the FOX contracts, the government knew that FEI did not keep accurate records of time spent on each project and thus had to estimate and often transfer costs from one project to another when asked to account for outlays pursuant to a…”
Century Marine Inc v. United States (1998) ca5 “48 C.F.R. §§ 49.201 , 49.202. Anticipatory profits and consequential damages shall not be allowed under either a termination for convenience or a termination for default of a fixed-price contract.”
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