2. Description of terminated contract. a. Date of contract and contract number.

b. Type of contract (e.g., fixed price, or fixed price incentive).

c. General description of contract items. d. Total contract price.

e. Furnish reference to the contract termination provisions (cite ASPR designation or other special provisions).

3. Termination notice. a. Reference termination notice and state effective date of termination.

b. Scope and nature of termination (complete or partial), items terminated, unit price and total price of items terminated.

c. State whether termination notice was amended, and if so, explain.

d. Statement whether contractor stopped work on effective termination date. If he did not, furnish details. Also state whether sub

contracts were terminated promptly by the contractor.

e. Statement as to diversion of common items and return of goods to suppliers, if any. 1. Furnish information as to contract performance and timely deliveries on part of contractor.

PART II-CONTRACTOR'S SETTLEMENT PROPOSAL

1. Date and amount. Indicate date and location where claim was filled. State gross amount of claim. (If interim settlement proposals were filled, furnish information for each claim.)

2. Basis of claim. State whether claim was filed on inventory, total cost or other basis. Explain approval granted in connection with submission on other than inventory basis.

3. Examination of proposal. State type of reviews made and by whom (audit, engineering, legal, or other).

PART IV-DISCUSSION OF SETTLEMENT

1. Contractor's cost. a. If the settlement was negotiated on the basis of individual items, specify the factors and consideration with respect to each item.

b. In the case of a lump sum settlement, comment on the general basis for and major factors concerning each element of cost and profit included therein.

c. Comment on any important adjustments made to costs claimed or any significant amounts in relation to the total claim.

d. If a partial termination is involved, state whether the contractor has requested an equitable adjustment in the price of the continued portion of the contract.

e. Comment on any unadjusted contrac

tual changes which are included in the settlement.

1. Comment on whether or not a loss would have been incurred and explain adjustment for loss, if any.

g. Furnish other information believed helpful to the Settlement Review Board or any reviewing authority in understanding the recommended settlement.

2. Profit. Explain the basis and factors considered in arriving at a fair profit.

3. Settlement expenses. Comment on and summarize those expenses not included in audit review.

4. Subcontractor's settlements.

Total..

5. Partial payments. Furnish total amount of partial payments, if any.

6. Progress or advance payments. Furnish total of unliquidated amounts, if any.

7. Claims of the Government against the contractor included in settlement agreement reservations. List all outstanding claims, if any, which the Government has against the contractor in connection with the terminated contract or terminated portion thereof.

8. Assignments. List any assignments, giving name and address of assignee.

9. Disposal credits. Furnish information as to applicable disposal credits and give dollar amounts of all disposal credits.

10. Plant clearance. State whether all plant clearance action has been complete and all inventory sold, retained or otherwise properly disposed of in accordance with applicable plant clearance regulations. Comment on any unusual matters pertaining to plant clearance. Consolidated closing plant clearance report is attached.

11. Government property. State whether all Government property has been accounted for.

12. Special tooling. If involved, furnish comment on disposition.

13. Summary of settlement. Summarize the settlement in tabular form substantially as follows:

be appropriately modified and used to cover subcontract settlements.

PART I-GENERAL INFORMATION

1. Identification. (Identify memorandum as to its purpose and content.)

a. Name and address of the contractor. Comment on any pertinent affiliation between prime and subcontractors relative to the overall settlement.

b. Names and titles of contractor and Government personnel who participated in the negotiation.

2. Description of Terminated Contract. a. Date of contract and contract number. b. Type of contract.

c. General description of contract items. d. State total contract cost and fee data if complete termination.

or

e. Furnish reference to the contract termination provisions (cite ASPR other special provisions).

3. Termination Notice.

a. Reference termination notice and state effective date of termination.

b. Scope and nature of termination (complete or partial, items terminated, estimated costs and fee data applicable to items terminated).

c. State whether termination notice was amended, and if so, explain.

d. Explain scope of the settlement as to whether settlement concerns fee only or whether costs are also included.

PART II-Contractor's SETTLEMENT PROPOSAL

1. Date and Amount. Indicate date and location where claim was filed. State gross amount of claim. (If interim settlement proposals were filed, furnish information for each claim.)

2. Examination of Proposal. State type of reviews made and by whom (audit, engineering, legal, or other).

PART III-Tabular SUMMARY OF SETTLEMENT

1. Summary. Summarize the proposed settlement in tabular form substantially as shown in Attachments A and B. Partial settlements may be summarized on Attachment B.

2. Comments. Furnish comments in amplification of tabular summaries.

a. Summary of Final Settlement (see Attachment A).

(1) If the auditor's final report was not available for consideration, state the circumstances.

(2) Explain how the fixed fee was adjusted. Identify basis used, such as percentage of completion. Include a description of factors considered and how they were considered. Include any tabular summaries and breakdowns deemed helpful to an understanding of the process. Factors which may be given consideration are outlined in 8-406.

(3) Briefly identify matters included in liability for property and other charges against the contractor arising from the contract.

(4) Identify reservations included in the settlement that are other than standard reservations required by regulations and which are concerned with pending claims and refunds.

(5) Explain substantial or otherwise important adjustments made in cost figures submitted by the contractor in arriving at the proposed settlement.

(6) If unreimbursed costs were settled on a lump sum basis, explain the general basis for and the major factors considered in arriving at this settlement.

(7) Comment on an unusual items of cost included in the claim and on any phase of cost allocation requiring particular attention and not covered above.

(8) If auditor's recommendations for nonacceptance were not followed, explain briefly the main reasons why such recommendations were not followed.

(9) On items recommended for further consideration by the auditor, explain, in general, the basis for the action taken thereon.

(10) If any cost previously disallowed by a contracting officer is included in the proposed settlement, identify and explain the reason for inclusion of such costs.

(11) Show settlements with subcontractors by breakdown as follows:

Approved by Termi- Number Total dollar nation Contract- settlement amount ing Officer__

Net settlement..
Estimated reserve for
exclusions

Final contract price
(Consisting of

$ for reimbursement of costs and $------ for adjusted fixed fee)... Reduction in contract price (credit) –

(13) Plant clearance. Indicate dollar value of termination inventory and state whether plant clearance has been completed. Attach consolidated plant clearance report (DD Form 1636, Inventory Disposal Report).

(14) Government property. State whether all Government property has been accounted for.

(15) If the settlement is restricted to an adjustment of the fixed fee only, then the following summary will be included. Amount of reduction in estimated costs

Amount of reduction in fixed fee__ Reduction in contract price (credit)

9. Net payment...

b. Audit status date.......

1 Use applicable portion of partial settlement.

Costs

Amount claimed

Amount allowed

$

$

$.

1. Direct material

2. Direct labor

3. Indirect factory expense

4. Dies, jigs, fixtures and special tools

5. Other costs

6. General and administrative expense

7. Fee

8. Settlement expense

9. Settlements with subs

10. Total costs (Items 1-9)

§ 8.810 Format for application for grant of authorization.

APPLICATION FOR GRANT OF AUTHORIZATION (a) Name of contractor.

(b) Address of the principal of the

contractor.

(c) Name and location of divisions of the applicant's plant for which authorization requested.

ATTACHMENT B

(d) An explanation of the necessity and Justification for the authorization requested. (e) A full description of the applicant's organization for handling terminations, including the names of the officials in charge of processing and settling claims.

(1) The number and dollar amount (estimated if necessary) of uncompleted contracts with Government contracting agencies and the percentage thereof applicable to each Military Department.

(g) The number and dollar amount estimated if necessary) of uncompleted subcontracts under Government contracts and the percentage thereof applicable to each Military Department.

(h) The extent of the applicant's experience in termination matters, including the handling of claims of subcontractors.

(1) The approximate amount and general nature of termination of the applicant currently in process.

(1) A statement that no other such application has been made for any division of the applicant's plant covered by the application; or, if one has been made, a full statement of the facts.

(k) The limits of authorization requested. § 8.810-1

tion.

Format of letter of authoriza

LETTER OF AUTHORIZATION

(a) In consideration of your written request of (Date) and pursuant to paragraph 8-209.4 of the Armed Services Procurement Regulation (ASPR), you are authorized, subject to the limitations of ASPR and those stated below, to settle, without further approval of the Government, all subcontracts and purchase orders terminated by you as a result of a Department of Defense contract being modified or terminated for the convenience of the Government, or subcontracts or purchase orders which have been terminated under any other circumstances that may require the Government to bear the cost of their settlement. This authorization does not extend to the disposition of Government-furnished material and completed articles not delivered under the subcontract or purchase order, as these require screening and approval of disposal actions by the Government; except that allocable completed articles may be disposed of without Government approval or screening if the total amount (at subcontract price) when added to the amount of settlement (as computed below) does not exceed $--(insert limit of authorization being granted). (b) This authorization is subject to the following conditions and requirements:

(1) The amount of such subcontract termination settlement does not exceed $----(insert limit of authorization being granted), computed as follows:

(A) Credits for retention or other disposal of termination inventory allocated to the claim, and for advance or partial payments, shall not be deducted from the gross claim or settlement; but

(B) Amounts payable for completed articles or work at the contract price, or for the settlement or discharge of termination claims of subcontractors (except those settlements which have not been approved by the Government), shall be deducted.

(11) Any termination inventory involved has been disposed of in accordance with the Armed Services Procurement Regulation,

except that screening and Government approval of scrap and salvage determinations are not required.

(ii) The contracting officer may incorporate specific instructions in each Notice of Termination as to the disposition of specific items of termination inventory, or the contracting officer may, at any time prior to final settlement, issue such specific instructions. No such instructions, however, will affect any disposal action taken by you or your subcontractors prior to receipt thereof.

(iv) The settlements made by you with your subcontractors and suppliers pursuant to the authorization granted herein, including sales, retention, or other dispositions of property involved in making such settlements, shall thereupon be reimbursable in accordance with the Armed Services Procurement Regulation, Section VIII, and the termination clause of the contract, and will not require approval of the contracting officer or his authorized representative.

(v) Any number of separate settlements of $... (insert limit of authorization granted) or less may be made with a single subcontractor. Claims which would normally be included in a single settlement proposal, such as those based on a series of separate orders for the same item under one contract, should be consolidated whenever possible and must not be divided in such a way as to bring them within the authorization.

(vi) The authorization to make settlements provided for herein is not to be exercised in the case of a subcontractor or supplier who is affiliated with you. For this purpose, you should consider a contractor to be affiliated with you if you are under common control or there is any common interest between you by reason of stock ownership, or otherwise, which is sufficient to create a reasonable doubt that the bargaining between you is completely at arm's length.

(vii) A representative of this office will, from time to time, review your methods used in negotiating settlements with your subcontractors and make a selective examination of such settlements made by you. Where such a review indicates that you are not adequately protecting the Government's interest, this delegation will be revoked. § 8.811 Delinquency notices.

The following are formats of delinquency notices which may be used to satisfy the requirements of § 8.602–3. All notices will be sent with proof of delivery requested.

CURE NOTICE 1

You are notified that the Government considers your (specify the Contractor's failure or failures), a condition that is endangering performance of the contract in accordance with its terms. Therefore, unless such condition is cured within ten (10) days after receipt hereof (or such longer time as the Contracting Officer may deem reasonably neces