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FAR Part 49 — Termination of Contracts

FAR Part 49 addresses termination of contracts, covering both termination for convenience of the government (Subpart 49.1) and termination for default/cause (Subpart 49.4). It prescribes settlement procedures, contractor obligations upon receiving a termination notice, and the calculation of termination settlement amounts. Subpart 49.5 addresses contract termination clauses, and Subpart 49.6 covers the assignment of partial termination inventory.

Why Part 49 Matters

The government's right to terminate for convenience is a unique aspect of government contracting — it can end a contract at any time for any reason, subject to equitable settlement. Termination for default is the government's most severe remedy and results in contractor liability for reprocurement costs. Contractors must understand their immediate obligations upon receiving termination notice (stop work, protect property, cancel subcontracts) and their rights to settlement including profit on work performed. The conversion of a default termination to convenience is a significant contractor protection.

Key Topics in Part 49

FAR Part 49 addresses several critical areas of the federal acquisition process. Understanding these topics is essential for both contracting officers and contractors working within this regulatory framework.

  • Termination for convenience procedures (Subpart 49.1)
  • Termination for default/cause (Subpart 49.4)
  • Termination settlement proposals and negotiation
  • Contractor obligations upon termination notice
  • Settlement of subcontractor claims
  • Partial termination procedures
  • Conversion of default to convenience termination
  • Profit and fee in termination settlements

How FAR Part 49 Applies

The Federal Acquisition Regulation is organized into 53 parts, each covering a distinct area of the procurement process. Part 49 (Termination of Contracts) is part of this framework and works in conjunction with other FAR parts to create a comprehensive regulatory structure. Contracting officers must comply with all applicable parts when executing procurement actions, and contractors must understand the requirements that flow from these regulations into their contracts.

The requirements in Part 49 may be implemented through specific contract clauses prescribed in FAR Part 52. When a clause references Part 49, the substantive requirements originate here, while Part 52 provides the actual clause language incorporated into contracts and solicitations.

Agency supplements: Individual federal agencies may supplement FAR Part 49 with additional requirements. The most common supplements include the Defense Federal Acquisition Regulation Supplement (DFARS), General Services Administration Acquisition Manual (GSAM), and NASA FAR Supplement (NFS). Always check applicable agency supplements when working on specific procurements.

Subparts

FAR Part 49 is divided into 6 subparts, each addressing a specific aspect of termination of contracts.

  • 49.1 — General Principles
  • 49.2 — Additional Principles for Fixed-Price Contracts Terminated for Convenience
  • 49.3 — Additional Principles for Cost-Reimbursement Contracts Terminated for Convenience
  • 49.4 — Termination for Default
  • 49.5 — Contract Termination Clauses
  • 49.6 — Contract Termination Forms and Formats

Reading FAR Part 49

The full text of FAR Part 49 is available on the Electronic Code of Federal Regulations (eCFR). The eCFR provides the most current version of the regulation, including any recent amendments published through Federal Acquisition Circulars (FACs). For historical versions, use the eCFR's point-in-time search feature.

  • What does FAR Part 49 cover?

    FAR Part 49 covers termination of contracts within the federal acquisition process. FAR Part 49 addresses termination of contracts, covering both termination for convenience of the government (Subpart 49.1) and termination for default/cause (Subpart 49.4). It prescribes settlement procedures, contractor obligations upon receiving a termination notice, and the calculation of termination settlement amounts. Subpart 49.5 addresses contract termination clauses, and Subpart 49.6 covers the assignment of partial termination inventory.

  • Who must comply with FAR Part 49?

    FAR Part 49 applies to all executive branch agencies conducting acquisitions, unless a specific exemption exists. Contractors must comply with the requirements that are incorporated into their contracts through prescribed clauses from FAR Part 52. Agency-specific supplements (DFARS, GSAM, etc.) may add additional requirements beyond the base FAR.

  • Where can I read the full text of FAR Part 49?

    The full text is available on the Electronic Code of Federal Regulations (eCFR). You can also access it through acquisition.gov, which is maintained by the General Services Administration. Both sources reflect the most current version of the regulation.

  • How does FAR Part 49 relate to contract clauses?

    FAR Part 49 establishes the substantive policies and procedures. The actual clause language that gets incorporated into contracts is found in FAR Part 52. Each clause in Part 52 includes a "prescription" that references the relevant policy part, creating a direct link between the requirement and its implementation in the contract.

Adjacent Parts

Part 48 — Value EngineeringPart 50 — Extraordinary Contractual Actions and the SAFETY ActAll FAR PartsFAR Clause LookupPart 28 — Bonds and InsurancePart 31 — Contract Cost Principles and ProceduresPart 32 — Contract FinancingPart 33 — Protests, Disputes, and AppealsPart 42 — Contract Administration and Audit ServicesPart 43 — Contract ModificationsPart 45 — Government PropertyPart 52 — Solicitation Provisions and Contract Clauses

Data sourced from eCFR . Federal contracting data is public domain.