fixed-price supply contracts over $1,000 and under $5,000 in lieu of any other termination for convenience of the Government clause:

TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT

The performance of work under this contract may be terminated by the Government whenever the Contracting Officer shall determine that such action is for the best interests of the Government. If this contract is so terminated, fair compensation, within the meaning of and as provided by Section VIII of the Armed Services Procurement Regulation, as in effect on the date of this contract, will be paid to the Contractor, and any termination inventory will be disposed of in accordance with said Section VIII.

The performance of work (services) under this contract may be terminated, in whole or in part, whenever the Contracting Officer shall determine that termination of this contract is in the best interests of the Government. In such event, the Government shall be liable only for payment in accordance with the payment provisions of this contract for work (services) performed (furnished) prior to the effective date of termination. Termination of work hereunder shall be effected by delivery to the Contractor of a Notice of Termination prior to the date upon which termination shall become effective.

days

§ 8.706 Subcontract termination clause. The following form of termination clause is suggested for use in fixedprice subcontracts:

TERMINATION

(a) The performance of work under this contract may be terminated in whole or from time to time in part by the buyer in accordance with this clause. Termination of work hereunder shall be effected by delivery to the seller of a Notice of Termination specifying the extent to which performance of work under the contract is terminated, and date upon which such termination becomes effective.

(b) After receipt of a Notice of Termination and except as otherwise directed by the buyer, the seller shall, (1) stop work under the contract on the date and to the extent specified in the Notice of Termination; (2)

place no further orders or subcontracts for materials, services, or facilities except as may be necessary for completion of such portions of the work under the contract as may not be terminated; (3) terminate all orders and subcontracts to the extent that they relate to the performance of any work terminated by the Notice of Termination; (4) assign to the buyer, in the manner and to the extent directed by the buyer, all of the right, title and interest of its seller under the orders or subcontracts so terminated; (5) settle all outstanding liabilities and all claims arising out of such termination of orders and subcontracts subject to the approval or ratification of the buyer to the extent he may require, which approval or ratification shall be final for all the purposes of this clause; (6) transfer title and deliver to the buyer in the manner, to the extent, and at the times directed by the buyer (1) the fabricated or unfabricated parts, work in process, completed work, supplies and other material produced as a part of, or acquired in connection with the performance of, the work terminated by the Notice of Termination, and (ii) the completed or partially completed plans, drawings, information, and other property which, if the contract had been completed, would be required to be furnished to buyer; (7) use his best efforts to sell in the manner, to the extent, at the time, and at the price or prices directed or authorized by the buyer, any property of the types referred to in provision (6) of this paragraph: Provided, however, That the seller (i) shall not be required to extend credit to any purchaser and (ii) may acquire any such property under the conditions prescribed by and at a price or prices approved by buyer: And provided further, That the proceeds of any such transfer or disposition shall be applied in reduction of any payments to be made by the buyer to the seller under this contract or shall otherwise be credited to the price or cost of the work covered by this contract or paid in such other manner as the buyer may direct; (8) complete performance of such part of the work as shall not have been terminated by the Notice of Termination; and (9) take such action as may be necessary or as the buyer may direct for protection and preservation of the property related to this contract which is in the possession of the seller and in which the buyer or the Government has or may acquire an interest.

(c) After receipt of a Notice of Termination, the seller shall submit to the buyer its termination claim, in the form and with the certification prescribed by the buyer. Such claim shall be submitted promptly, but not later than twelve (12) months from the effective date of termination. Upon failure of the seller to submit its termination claim within the time allowed, the buyer may determine, on the basis of information available to it, the amount, if any, due to the seller in respect to the termination and such determination shall be final. After the

buyer has made a determination under this paragraph, it shall pay the seller the amount so determined.

(d) Subject to the provisions of paragraph (c) the seller and the buyer may agree upon the whole or any part of the amount or amounts to be paid to the seller by reason of the total or partial termination of work pursuant to this clause, which amount or amounts may include a reasonable allowance for profit on work done and the buyer shall pay the agreed amount or amounts. Nothing in paragraph (e) of this clause, prescribing the amount to be paid to the seller in the event of the failure of the seller and the buyer to agree upon the whole amount to be paid to the seller by reason of the termination of work pursuant to this clause, shall be deemed to limit, restrict, or otherwise determine or effect the amount or amounts which may be agreed upon to be paid to the seller pursuant to this paragraph (d).

(e) In the event of the failure of the seller and the buyer to agree as provided in paragraph (d) upon the whole amount to be paid to the seller by reason of the termination of work pursuant to this clause, the buyer, but without duplication of any amounts agreed upon in accordance with paragraph (d), shall pay to the seller the following amounts:

(1) For completed supplies accepted by the buyer (or sold or acquired as provided in paragraph (b) (7) above) and not theretofore paid for, forthwith a sum equivalent to the aggregate price for such supplies computed in accordance with the price or prices specified in the contract, appropriately adjusted for any saving of freight or other charges.

(2) In respect of the work terminated as permitted by this clause, the total (without duplication of any items) of (1) the cost of such work, including initial costs and preparatory expenses allocable thereto, exclusive of any costs attributable to supplies paid or to be paid for under paragraph (e) (1) hereof; and (ii) the cost of settling and paying claims arising out of the termination of work under subcontracts or orders as provided in paragraph (b) (5) above, exclusive of the amounts paid or payable on account of supplies or materials delivered or services furnished by the subcontractor prior to the effective date of the Notice of Termination of work under this contract, which amounts shall be included in the cost on account of which payment is made under subdivision (1) above; and (iii) a sum equal to 2 percent of the part of the amount determined under subdivision (1) which represents the cost of articles and materials not processed by the seller plus a sum equal to 8 percent of the remainder of such amount, but the aggregate of such sum shall not exceed 6 percent of the whole of the amount determined under subdivision (1) above, which amount for the purpose of this subdivision (iii) shall exclude any charges for interest on borrowings; Provided, however,

That if it appears that the seller would have sustained a loss on the entire contract had it been completed, no profit shall be included or allowed under this subdivision (iii) and an appropriate adjustment shall be made reducing the amount of the settlement to reflect the indicated rate of loss.

(3) The reasonable costs of settlement, including accounting, legal, clerical, and other expenses reasonably necessary for the preparation of settlement claims and supporting data with respect to the terminated portion of the contract and for the termination and settlement of subcontracts thereunder, together with reasonable storage, transportation, and other costs incurred in connection with the protection or disposition of the property allocable to this

contract.

The total sum to be paid to the seller under subdivisions (1) and (2) of this paragraph (e) shall not exceed the total contract price reduced by the amount of payments otherwise made and as further reduced by the contract price of work not terminated. Except for normal spoilage and except to the extent that the buyer or the Government shall have otherwise expressly assumed the risk of loss, there shall be excluded from the amounts payable to the seller as provided in paragraph (e) (1) and paragraph (e) (2) (1), the fair value as determined by the buyer of property which is destroyed, lost, stolen, or damaged so as to become undeliverable to the buyer or to a purchaser pursuant to paragraph (b) (7).

(f) The obligation of the buyer to make any payments under this clause shall be subject to deductions in respect of (1) all unliquidated advance or other payments on account theretofore made to the seller, (2) any claim which the buyer may have against the seller, in connection with this contract, and (3) the agreed price for, or the proceeds of sale of, any materials, supplies, or other things retained by the seller or sold, and not otherwise recovered by or credited to the buyer.

(g) If the termination hereunder be partial, prior to the settlement of the terminated portion of this contract, the seller may file with the buyer a request in writing that an equitable adjustment be made in the price or prices specified in the contract for the work in connection with the continued portion not terminated by the notice of termination, and the appropriate fair and reasonable adjustment shall be made in such price or prices.

(h) The buyer may from time to time, under such terms and conditions as it may prescribe, make partial payments and payments on account against costs incurred by the seller in respect to the terminated portion of the contract, whenever in the opinion of the buyer the aggregate of such payments shall be within the amount to which the seller will be entitled hereunder. If the total of such payments is in excess of the amount finally agreed upon or determined to be due

with the clause thereof entitled "Termination for the Convenience of the Government" [or, in the case of a cost-type contract, "Termination"]. Such termination will be effective:

[Here insert either "immediately upon your receipt of this Notice" or "on

19---," (inserting the date), or "as soon as you have delivered under the contract the following number of each of the items listed below, including those heretofore delivered, to wit: or, "on

19, on which date you are hereby directed to reduce the total number of items to be delivered under the contract as follows": (here insert instructions as to reduced deliveries.)]

2. Cessation of work and notification to your immediate subcontractors. (a) You shall stop all work, make no further shipments, and place no further orders in connection with the contract, except (1) to the extent necessary to perform any portion thereof not terminated by this Notice, or (2) to the extent that you may wish to retain and continue any work in process or other materials for your own account, or (3) to the extent the Contracting Officer authorizes you to continue work-in-process for reasons of safety, or to clear [or avoid damage to] equipment or to avoid immediate complete spoilage of work-in-process having a definite commercial value, or otherwise to prevent undue loss to the Government. [If you believe the authorization referred to in subparagraph (3) above is necessary or advisable, you shall immediately notify the Contracting Officer by telephone or personal conference and obtain instructions.] You shall keep adequate records of your compliance with this paragraph 2 (a) showing (i) the date you received your Notice of Termination, (ii) the effective date of such termination, and (iii) the extent of completion of performance on such effective date.

(b) You shall give notice of termination to each of your immediate subcontractors (including suppliers) who will be affected by the termination of your Contract. In such notice you shall (1) give him the number of your Contract with the Government, (2) state that it has been terminated (or terminated in part, if that is the case) for the convenience of the Government, (3) give him the name and address of the Contracting Officer, (4) instruct him to stop all work, to make no further shipments, to place no more orders, and to terminate all subcontracts under this contract with you (subject to the same exceptions stated in paragraph 2(a)), (5) direct him to submit his settlement proposal promptly in order to expedite settlement, and (6) request him to give similar notice and instructions to his immediate subcontractors.

(c) You shall notify the Contracting Officer of the number of articles completed under the Contract and still on hand, and arrange with him for their delivery or other disposal.

(d) You shall forthwith transfer title to and deliver to the Government, in accordance with any instructions of the Contracting Officer, all items of termination inventory (including subcontractor termination inventory which under the terms of the subcontract or purchase order concerned you have the right to take over) of the following types or classes: [Insert proper identification or "none."]

(e) You shall notify the Contracting officer of any pending legal proceedings which relate to any subcontracts or purchase orders under the terminated contract or which have resulted in or which are intended to result in a lien or encumbrance on any termination inventory ather than termination inventory you propose and are authorized to purchase, retain, or dispose of. (The Contracting Officer shall also be promptly notified of any such proceedings brought after receipt of this Notice.)

(f) You shall take such other action as may be required by the Contracting Officer or under the termination clause contained in your contract.

3. Termination inventory. In connection with settlement of your claim, it will be necessary to establish that all your termination inventory and that of your subcontractors has been properly accounted for. For detailed information, see Part 6 of Section VIII of ASPR.

4. Completed articles. Subject to paragraph 8-502 of ASPR, you will invoice acceptable completed articles under the contract in the usual way and not include them in your settlement proposal.

5. Submission of settlement proposal. To assist you in prompt submission of your settlement proposal, there is inclosed one set of the standard forms.

6. Patents. Your attention is called to any provisions of the contract which may require you to make a disclosure of, and to deliver to the Government instruments of license or assignment respecting all inventions, discoveries, and patent applications made by you in the performance of the contract. You are urged to forward such disclosures and instruments of license or assignment to the Contracting Officer promptly, inasmuch as these contractual obligations must be complied with before execution of the final settlement agreement. This paragraph may be disregarded if the contract contains no such patent provisions.

Enclosures:

(Contracting Officer)

(Name of Office)

ally be obtained at + Offices of the proc cerned.

§ 8.710 Not DD Form use by di

with

§ 8.708 Standard forms for settlement of fixed-price contracts. The standard forms listed below are prescribed for use in settling fixed-price contracts terminated under this part. Copies may generally be obtained at the Contracting Offices of the procuring agency concerned.

Forms to be used by the contractor in submitting its claim for the termination of a fixed price contract:

DD Form No. 540: Settlement ProposalInventory Basis.

DD Form No. 541: Settlement ProposalTotal Cost Basis.

DD Form No. 542: Inventory Schedule AMetals.

DD Form No. 543: Inventory Schedule BRaw Materials.

DD Form No. 545: Inventory Schedule DDies, Jigs, Fixtures, etc., and Special Tools. DD Form No. 546: Schedule of Accounting Information (To be used by prime contractors submitting termination claims under Section VIII [Termination for Convenience of the Government] of the Armed Services Procurement Regulation. Also suitable for use by subcontractor in effecting subcontract settlements with prime contractor or intermediate subcontractors).

DD Form No. 548: Application for partial payments (For use by prime contractor or subcontractor under contracts terminated for the convenience of the government).

§ 8.709 Settlement proposal form for cost-type contracts. DD Form No. 547 is prescribed for use by prime contractors submitting termination claims on costtype contracts under this part. It is also suitable for use in connection with terminated cost-type subcontracts. Copies of DD Form No. 547 may gener

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