DCMA Manual 2501-06
Terminations
__________________________________________________________________
Office of Primary
Responsibility Contract Maintenance
Effective: October 2, 2018
Change 1 Effective: September 11, 2020
Releasability: Cleared for public release
Implements: DCMA-INST 2501, “Contract Maintenance,” August 15, 2017
Incorporates and Cancels: DCMA-INST 101, “Termination for Convenience,”
October 10, 2014
Internal Control: Process flow and key controls are located on the Resource Page
Labor Codes: Located on the Resource Page
Resource Page Link: https://360.intranet.dcma.mil/Sites/Policy/CM/SitePages/
2501-06r.aspx
Approved by: David H. Lewis, VADM, USN, Director
Change 1 Approved by: David G. Bassett, LTG, USA, Director
__________________________________________________________________
Purpose: This issuance, in accordance with the authority in DoD Directive 5105.64:
• Implements DCMA-INST 2501, “Contract Maintenance”
• Defines procedures for negotiating settlements of contracts terminated for the
convenience of the Government that were previously covered in DCMA-INST 101,
“Termination for Convenience”
DCMA-MAN 2501-06, October 2, 2018
Change 1 Effective, September 11, 2020
Summary of Changes 2
SUMMARY OF CHANGES
The changes to this issuance are substantive. The most notable changes are:
• Clarify Termination Contracting Officer responsibilities
• Clarify Administrative Contracting Officer responsibilities
• Define Termination forms used
• Changed the Manual to active voice, where applicable
• Administrative updates
DCMA-MAN 2501-06, October 2, 2018
Change 1 Effective, September 11, 2020
Table of Contents 3
TABLE OF CONTENTS
SUMMARY OF CHANGES ………………………………………….....................………..…..2
SECTION 1: GENERAL ISSUANCE INFORMATION ..........................................................4
1.1. Applicability .......................................................................................................................4
1.2. Policy .................................................................................................................................4
SECTION 2: RESPONSIBILITIES ............................................................................................5
2.1. Terminations Group Director. ............................................................................................5
2.2. Terminations Team Supervisor ..........................................................................................5
2.3. Terminations Contracting Officer ......................................................................................5
2.4. Administrative Contracting Officer ....................................................................................6
2.5. Plant Clearance Officer ......................................................................................................7
2.6. DCMA International ..........................................................................................................7
2.7. DCMA Special Programs ...................................................................................................7
SECTION 3: TERMINATION FOR CONVENIENCE PROCEDURES ................................8
3.1. Overview ...........................................................................................................................8
3.2. Receive the Termination Notification ...............................................................................8
3.3. Conduct Post-Termination Conference. .............................................................................9
3.4. Termination Case File. ..................................................................................................... 10
3.5. Issue DD Form 1598. ....................................................................................................... 10
3.6. Release of Excess Funds ................................................................................................. 11
3.7. Review Settlement Proposal. .......................................................................................... 11
3.8. Obtain Field Reviews. ...................................................................................................... 11
3.9. Prepare Pre-Negotiation Objective Memorandum ........................................................... 12
3.10. Obtain Appropriate Clearance. ....................................................................................... 12
3.11. Negotiate Settlement and Issue Settlement Modification ............................................... 13
3.12. Return Termination File to Administrative Contracting Officer for Close Out .............. 14
SECTION 4: UNILATERAL AND NO COST SETTLEMENT PROCEDURES ................ 15
4.1. Unilateral Settlements ..................................................................................................... 15
4.2. No Cost Settlements ........................................................................................................ 15
4.3. Return Termination File to Administrative Contracting Officer for Close Out ................ 15
GLOSSARY
G.1. Definitions ...................................................................................................................... 16
G.2. Acronyms ........................................................................................................................ 17
REFERENCES ............................................................................................................................. 18
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Section 1: General Issuance Information 4
SECTION 1: GENERAL ISSUANCE INFORMATION
1.1. APPLICABILITY. This issuance applies to all DCMA activities that perform contract
maintenance activities.
1.2. POLICY. This Manual expands on the contract administration policies established in
DCMA-INST 2501. It is DCMA policy to:
a. Settle contract terminations for convenience as delegated by the Procurement Contracting
Officer (PCO) in a timely manner and coordinate with the required functional and technical
specialists and assigned DCMA legal counsel.
b. Communicate with all parties for a successful settlement that ensures the contractor is
fairly compensated on a timely basis while protecting the rights and interests of the Government.
c. Execute this Manual in a safe, efficient, effective, and ethical manner.
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Section 2: Responsibilities 5
SECTION 2: RESPONSIBILITIES
2.1. TERMINATIONS GROUP DIRECTOR. The Terminations Group Director must:
a. Plan and direct Terminations Group mission accomplishments.
b. Evaluate and resolve operational issues.
c. Provide technical expertise as the senior government expert for all terminations for
convenience actions.
d. Foster teamwork and provide resource management.
e. Ensure group compliance with regulatory requirements and guidance.
f. Review termination settlement proposals in excess of $5 million.
g. Ensure Boards of Review are conducted in accordance with (IAW) Agency policy.
h. Approve or disapprove submitted partial payments.
i. Accept or reject work IAW DCMA Manual 4502-02, “Workload Acceptance.”
2.2. TERMINATIONS TEAM SUPERVISOR. The Terminations Team Supervisor must:
a. Monitor the terminations inbox for timely workload assignment.
b. Provide guidance and assistance to Termination Contracting Officers (TCO) and
Termination Contracts Specialists.
c. Oversee and manage TCO workload as assigned.
d. Ensure group compliance with regulatory requirements and guidance.
e. Review proposed settlements in excess of $1 million.
f. Oversee TCO compliance with required annual and functional training.
2.3. TERMINATION CONTRACTING OFFICER. The TCO will:
a. Execute the duties of a TCO IAW Federal Acquisition Regulation (FAR) 49.105 (a); and
ensure that all training requirements are met.
b. Maintain the termination contract file.
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Section 2: Responsibilities 6
c. Prepare and distribute the DD Form 1598, “Contract Termination Status Report,” to the
Administrative Contracting Officer (ACO) and PCO. The DD Form 1598 must be uploaded to
Integrated Workload Management System (IWMS) contract file.
d. Review the notice of termination.
e. Establish initial contact and conduct post termination conference with contractor within 3
working days of receipt of docket assignment.
f. Notify PCO and ACO of excess funds eligible for release, or request additional funding if
required.
g. Check for canceling funds.
h. Coordinate plant clearance action(s).
i. Review and accept the contractor’s inventory schedule.
j. Review contractor’s settlement proposal for adequacy.
k. Request Defense Contract Audit Agency (DCAA) audit of contractors’ proposal(s) and
assist audits of subcontractor(s) settlement proposal(s), as applicable.
l. Update Contract Audit Follow-Up (CAFU) eTool IAW DCMA Manual 2201-04 “Contract
Audit Follow Up.”
m. Request technical review as applicable.
n. Ratify subcontractor settlement proposals.
o. Execute a Pre-negotiation Objective Memorandum.
p. Negotiate termination settlement.
q. Execute Settlement Negotiation Memorandum.
r. Execute a settlement modification.
s. Send final termination settlement package(s) to the ACO and PCO.
2.4. ADMINISTRATIVE CONTRACTING OFFICER. The ACO must:
a. Review Termination for Convenience (T4C) and ensure that DCMA has contract
administration rights
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Section 2: Responsibilities 7
b. Complete a DCMA Form 1797 “Request for MOCAS Action/Information,” to update and
move terminated contract to section 3, and ensure Reason Code TERM-C is added in
Mechanization of Contract Administration Services (MOCAS).
c. Provide the T4C package to the Terminations Inbox (located on the Resource Page) for
TCO assignment, to include: contract award, T4C modification and/or termination notice, PCO
and contractor contact information (name, email, phone number).
d. Review the notice and notify the TCO of any outstanding issues and claims.
e. Coordinate with TCO regarding cancelling funds.
f. Perform contract close out functions.
g. Issue inventory transfer modifications when applicable (prior to issuance, the ACO must
coordinate with the assigned PCO).
h. Coordinate with functional specialists to support technical report request submitted by
TCO.
2.5. PLANT CLEARANCE OFFICER. The Plant Clearance Officer (PLCO) must:
a. Accept termination inventory schedules submitted into the Plant Clearance Automated
Reutilization Screening System (PCARSS), only after receiving concurrence from the TCO.
Upon acceptance, provide the TCO with the Plant Clearance Case number.
b. Ensure inventory verification and allocability reviews are completed and documented on
Standard Form (SF) 1423, “Inventory Verification Survey.” Provide the TCO with a copy of the
SF 1423 upon completion.
c. Coordinate disposal plan with the TCO prior to issuing disposition instructions to the
contractor. Provide a copy of the SF 1424, “Inventory Disposal Report,” to the TCO
immediately upon closure of Plant Clearance cases associated with the termination inventory.
d. Inventory schedules for Special Program terminations are manually created documents;
PCARSS is not used.
2.6. DCMA INTERNATIONAL. The ACOs of DCMA International must coordinate with
Host Nation partners as applicable.
2.7. DCMA SPECIAL PROGRAMS. The ACOs of the DCMA Special Programs retains the
authority to negotiate and settle terminations for convenience.
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Section 3: Termination for Convenience Procedures 8
SECTION 3: TERMINATION FOR CONVENIENCE PROCEDURES
3.1. OVERVIEW. FAR Part 49, Termination of Contracts and the FAR clauses that apply the
Government’s termination rights to contractors provide authorization for contracting officers to
terminate contracts and to enter into settlement agreements. Termination authority resides with
the PCO. After termination, the PCO delegates settlement administration to TCOs. Upon
receipt of a termination case, the TCO provides cradle-to-grave settlement services to buying
commands. The TCO advises the PCO of any excess funds that can be released from the
contract and provides status reports when the termination case is initially established,
semiannually by 30 April and 30 October, and upon final settlement. The TCO contacts the
contractor advising on the settlement process, settlement forms, instructions on creating a
settlement proposal, and guidelines on termination inventory, if applicable. The TCO evaluates
settlement proposals for adequacy, obtains the appropriate field reviews, if required, coordinates
the return of government furnished property, disposes of termination inventory, and issues the
final settlement modification. After final settlement, the TCO returns the termination file to the
assigned ACO for inclusion in the contract file and for close out of the contract. A termination
case may be returned to the appropriate PCO if, after three requests for assistance or additional
information, a response is not provided to the TCO. The responsibility for settling Terminations
for Default remains with the PCO and is not delegated to the TCO. This Manual provides
guidance for executing the termination settlement process.
3.2. RECEIVE THE TERMINATION NOTIFICATION. The PCO issues a written
termination notice to the contractor. The executed notice is distributed to the contractor and
ACO. Upon receipt, the ACO shall upload the termination notice and all documents related to
the termination into the Agency system of record for termination files. (In some instances,
termination notices are submitted directly to the Terminations Group from the PCO via email or
the termination inbox. The terminations inbox email address is located on the Resource Page of
this Manual). If the notification is received via the inbox, the TCO must provide notice to the
ACO of the termination. When received by the Terminations Group, a termination supervisor
creates a termination case and assigns to the TCO.
a. The TCO must review the termination notice to ensure compliance with the requirements
of FAR Part 49 (non-commercial items), FAR Part 12 (commercial items), and, if FAR Part 49
applies, Defense Federal Acquisition Regulations Supplement (DFARS) Part 249. The TCO
must review the notice to ensure it contains the requirements outlined in FAR 49.102, Notice of
Termination. If the notice is not in compliance, the TCO must notify the PCO. The termination
notice must state:
(1) The contract is being terminated for the convenience of the Government under the
contract clause authorizing the termination;
(2) The effective date of termination;
(3) The extent of termination; and
(4) Any special instructions.
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Section 3: Termination for Convenience Procedures 9
b. The TCO must review the notice for applicability with the termination for convenience
clause to determine if it is a termination as identified within FAR Part 49, and applicable to the
contractor through FAR 52.249 clause; or a termination of a commercial item as identified
within FAR Part 12, and applicable to the contractor through FAR 52.212-4(l).
c. Review the notice to ensure the PCO has not included settlement language (i.e., “no cost
cancellation, canceled in its entirety or is authorized to invoice”). If settlement language is
included in the termination notice, the TCO must return the termination to the PCO for final
processing.
d. Review the notice to confirm the date of termination.
e. Review the notice to determine if the contract was completely or partially terminated.
3.3. CONDUCT POST-TERMINATION CONFERENCE. The TCO must conduct a post-
termination conference as outlined in FAR 49.105 and direct the action required of the prime
contractor. The TCO will:
a. Provide the PCO with an initial release of excess funds notification within 30 days after
receipt of the termination notice. Once the proposal is received, the TCO must provide the PCO
an interim release of funds notification. This notice is sent via email and a copy is uploaded to
the termination case file.
b. Notify the contractor that complete inventory schedules, to include termination inventory
located at subcontractor(s) facilities, after complete inventory schedules are due within 120 days
of the effective date of the termination notice (FAR 49.206-3 or FAR 49.303-2) for cost
contracts. Advise on general principles and procedures to be followed in the protection,
preservation, and disposition of the contractor’s and subcontractors’ termination inventories,
including the preparation of termination inventory schedules. Contracts awarded after 2010 are
required to submit inventory in PCARSS.
c. Notify the contractor of the forms required to submit a settlement proposal.
d. Advise the contractor of the timeline requirement for submission of termination settlement
proposal. Non-commercial termination proposals must be submitted to the TCO within 1-year of
the effective date of the termination notice, unless extended by the TCO, and the applicable
clause is in the contract (FAR 49.206-1 and FAR 49.303-1). In the instance of a Commercial
contract that is terminated for the convenience of the government, the settlement proposal must
be submitted within 6 years from the effective date of the termination notice.
e.
Obtain a list of subcontractors and the date subcontractor termination notices were issued.
f. Review contract to determine existence of first article testing requirements. If identified,
obtain information on whether approval was issued by the Contracting Officer.
g. Determine if there are any government claims or claims against the government.
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Section 3: Termination for Convenience Procedures 10
h. Coordinate with Host Nation Partners, as applicable, when the termination involves
DCMA International.
3.4. TERMINATION CASE FILE. The TCO responsible for negotiating the final settlement
must maintain a separate case file for each termination. The files should be uploaded into the
Agency system of record Termination case file. The file will include:
a. Memoranda and records of all actions relative to the settlement.
b. Copy of the termination notice.
c. Opening letters to PCO, ACO, and contractor.
d. All applicable DD Form 1598s, “Contract Termination Status Report” (initial,
semiannual(s), and final).
e. Funding documents (MOCAS).
f. Contractor Proposal.
g. Subcontractor Proposal, if applicable.
h. Audit Report/correspondence.
i. Technical Reports.
j. Negotiation Memorandum(s).
k. Inventory Schedules/Disposal Report.
3.5. ISSUE DD FORM 1598.
a. The TCO will:
(1) Prepare the initial DD Form 1598.
(2) Send one copy to the PCO and one copy to the ACO within 30 days of receipt of
docket assignment.
(3) Continue reporting semiannually to cover the 6-month periods ending March and
September. The semiannual reports must be submitted within 30 days after the end of the
reporting period.
(4) Submit a final report within 30 days after closing the termination case.
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Section 3: Termination for Convenience Procedures 11
b. The TCO distributes the reports via email to the PCO and a copy will be uploaded in the
Agency system of record termination case file. The DD Form 1598 is located in Agency system
of record for terminations under termination forms.
3.6. RELEASE OF EXCESS FUNDS. The TCO must notify the PCO and the ACO, within 3
working days after receipt of the termination notice, the amount of excess funds that can be
removed from the contract. This notification is completed via letter and a copy of the notice
must be filed in the termination case file in the Agency system of record for terminations. The
notification letter is found in the Agency system of record under termination forms.
3.7. REVIEW SETTLEMENT PROPOSAL. The contractor must submit a final settlement
proposal covering unvouchered costs and any proposed fee within 1 year from the effective date
of termination, unless the period is extended by the TCO. The contractor must use the form(s)
prescribed in FAR 49.602-1 unless it is a commercial contract as stated in FAR 49.002(a)(2).
The proposal should not include costs that have been disallowed by the contracting officer or
previously vouchered and formally questioned by the government. When the contractor submits
a settlement proposal, the TCO must review the proposal for adequacy. The TCO must:
a. Review the proposal to ensure the appropriate proposal form(s) was utilized.
b. Ensure the proposal contains all required contractor information (i.e., signature and date).
3.8. OBTAIN FIELD REVIEWS. The TCO must obtain the appropriate field review for each
prime contractor settlement proposal, if applicable. After review of contractor’s settlement
proposal, the TCO may request assistance from other functional or technical specialists. The
TCO will:
a. Refer all settlement proposals that exceed $100,000 or any applicable threshold
deviations, at either the prime or subcontract level to the appropriate audit agency for review and
recommendation. The referral should indicate any specific information or data that the TCO
desires and should include facts and circumstances that will assist the audit agency in performing
the evaluation function. The TCO will utilize the Audit Request memorandum located in the
Agency system of record when requesting an audit. The TCO must also include a completed
adequacy checklist when submitting a request for audit to DCAA. The TCO will determine the
appropriate branch office by inquiring through the DCAA web page. The audit request is
submitted to DCAA via email (the email address for DCAA can be located on the Resource Page
of this Manual). The TCO must:
(1) Check for any current audit threshold deviations on the Resource Page of this
Manual.
(2) Request an agreed-upon procedures audit from DCAA for complete termination of a
cost-reimbursable contract and upon receipt of final voucher from contractor.
b. Ensure the contractor submits the complete inventory disposal schedules in PCARSS,
reflecting inventory that is allocable to the terminated portion of the contract. The inventory
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Section 3: Termination for Convenience Procedures 12
schedules must be submitted within 120 days from the effective date of the termination unless
otherwise extended by the TCO based on written justification to support the extension. The TCO
must request plant clearance for terminations requiring disposition of termination inventory. The
TCO must:
(1) Ensure the contractor submits complete inventory schedules in the Agency system of
record, PCARSS.
(2) Complete a request for Plant Clearance Memorandum and a DD Form 1640,
“Request for Plant Clearance.” The request is then submitted to the appropriate PLCO via email.
The request will include the contract number and the Inventory Schedule number (if known).
The TCO will identify the assigned PLCO by emailing the plant clearance inbox or accessing the
Contract Management Team eTool module on the DCMA Homepage. The DD Form 1640 is
located in the Agency system of record under termination Forms.
(3) Classified inventory/data. The TCO must request that the contractor prepare a listing
of all classified inventory/data. Classified inventory cannot be submitted in PCARSS. The
listing must be coordinated with the security office of the buying command, the contractor, and
the DCMA Special Programs Property Center.
c. Notify the PLCO if the contract contains a First Article requirement by annotating the DD
Form 1640, “This contract has a first article testing requirement. Please contact the TCO prior to
inventory verification/allocability review.”
d. Request Technical assistance through the assigned ACO to:
(1) Obtain the contract percentage of completion for commercial contract terminations.
(2) Obtain percent complete for partial terminations.
(3) Support a request from DCAA in support of a termination proposal audit.
3.9. PREPARE PRE-NEGOTIATION OBJECTIVES MEMORANDUM. Prior to entering
into negotiation, the TCO must establish pre-negotiation objectives. The TCO must resolve and
disposition all contract audit and technical findings. The pre-negotiation objectives must include
results from DCMA field support and the DCAA audit as applicable (refer to DFARS 249.110).
The contractor proposed amounts, audit recommendation amounts, and the TCO’s position must
also be included in the pre-negotiation position. The Pre-Negotiation Objectives Memorandum
(PNOM) should also include evidence that sufficient funding is available.
3.10. OBTAIN APPROPRIATE CLEARANCE. The TCO must obtain the appropriate level
of review prior to entering negotiations:
a. Supervisor review is required for a proposed settlement amount in excess of $1 million.
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Section 3: Termination for Convenience Procedures 13
b. Termination Group Director’s review required for a proposed settlement amount in excess
of $5 million.
c. DCMA-INST 134, “Boards of Review,” requires a Board of Review for a proposed
settlement amount greater than $10 million.
3.11. NEGOTIATE SETTLEMENT AND ISSUE SETTLEMENT MODIFICATION. The
TCO should proceed with the settlement and execution of a settlement agreement upon
completion of required reviews. At the completion of negotiation and if agreement is reached,
the TCO must:
a. Prepare a Settlement Negotiation Memorandum supporting the amount, if any, that is due
to the contractor (FAR 49.110, Settlement Negotiation Memorandum). See DFARS Procedures,
Guidance, and Information (PGI), 249.110, Settlement negotiation memorandum for guidance
regarding fixed-price and cost-reimbursement contracts.
b. The final settlement agreement may include all demands of the Government and proposals
of the contractor under the terminated contract. However, no amount will be allowed for any
item of cost disallowed by the Government, nor for any other item of cost of the same nature.
c. The TCO may, with PCO approval, deobligate excess funds as part of the final settlement
modification.
d. Issue a final settlement modification if an agreement can be reached IAW FAR 49.109.
Modifications are completed through the Agency system of record for modifications (identified
on the Resource Page). If the TCO does not have access to the terminated contract in the
Agency system of record for modifications, the termination file is returned to the buying
command for issuance of the settlement modification.
e. Issue a Contracting Officer’s Final Decision when the contractor and the TCO cannot
agree on a termination settlement. Before the issuance of a final decision, the TCO must issue a
15-day notice giving the contractor the opportunity to submit additional information. The 15-day
notice must be sent by certified mail (return receipt requested). The TCO must coordinate the
issuance of the 15-day letter and any final decisions with the Office of General Counsel before
release. The 15-day notice is located in the Agency system of record under termination forms.
(1) After considering the additional information provided, if any, and an agreement is
reached, the TCO must issue the final settlement modification.
(2) If, after considering the additional information an agreement is not reached, the TCO
will use Alternate Dispute Resolution, when appropriate, prior to issuing a final decision. If an
agreement cannot be reached, the TCO will then issue a final decision (see FAR 49.109-7,
Settlement by Determination, and DFARS PGI 249.109-7, Settlement by Determination, for use
of SF 30, “Amendment of Solicitation/ Modification of Contract”). All Settlement by
Determinations require review of the Office of General Counsel before release. The TCO should
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Section 3: Termination for Convenience Procedures 14
retain file until the appeal period for a final decision has passed and the TCO is sure contractor
has not appealed its determination.
f. Issue the final DD Form 1598. The TCO will submit a final contract termination report
within 30 days after closing the termination case (DFARS PGI 249.105-1). A copy of the final
DD Form 1598 must be filed in the Agency system of record for termination case file.
3.12. RETURN TERMINATION FILE TO ACO FOR CLOSE OUT. Once the TCO
executes the final settlement modification, all files will be forwarded to the ACO for
incorporation into the official contract file.
a. The TCO must send the termination file to the ACO advising if there are excess funds to
be deobligated. A deobligation is the downward adjustment of the obligation recorded in a
contract document. It is caused by factors such as (1) termination of a part of the project, (2)
reduction in material prices, (3) cost under-run, or (4) correction of recorded amounts. The ACO
will proceed with normal administration activities on the balance of the remaining contract or
coordinates with the PCO to ensure funds are deobligated.
b. If the termination is partial, the documents are included in the active contract file. If the
termination is complete, the ACO will be notified to proceed with close out of the contract.
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Section 4: Unilateral and No Cost Settlement Procedures 15
SECTION 4: UNILATERAL AND NO COST SETTLEMENT
PROCEDURES
4.1. UNILATERAL SETTLEMENTS. If the TCO does not receive the settlement proposal
within the 1-year time requirement as stated in FAR 49.206-1, the TCO will issue a unilateral
determination settlement modification.
a. Prior to issuing the unilateral modification, the TCO is responsible for the collection of
any unliquidated progress payments remaining on the contract or debts owed to the government
(i.e., overpayment made to contractor).
b. The TCO must also obtain from the Property Administrator or the contracting officer, a
confirmation indicating the status of government furnished property or contractor acquired under
the contract, if applicable.
c. The TCO shall issue a unilateral modification and the modification is created in the
Agency system of record for modifications.
4.2. NO-COST SETTLEMENTS.
a. The TCO will issue a no cost agreement when:
(1) The contractor has not incurred costs for the terminated portion of the contract.
(2) The contractor is willing to waive the costs incurred.
(3) No amounts are due to the government under the contract.
b. When the TCO determines that a no-cost settlement is appropriate, the TCO will ensure
the collection of any unliquidated progress payments remaining on the contract or debts owed to
the government (i.e., overpayment made to contractor) are processed prior to issuance.
c. The TCO must also obtain confirmation, if applicable, indicating the status of government
furnished property or material furnished to, or acquired by the contract from the Property
Administrator, the contracting officer, or the PLCO.
d. The TCO shall issue a bilateral no cost modification reflecting the settlement agreement.
4.3. RETURN TERMINATION FILE TO ACO FOR CLOSE OUT. Once the TCO
executes the final settlement modification, all files are forwarded to the ACO for incorporation
into the official contract file. The TCO will advise the ACO of any excess funds to be
deobligated and to proceed with close out functions.
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Glossary - Definitions 16
GLOSSARY
G.1. DEFINITIONS.
Complete Termination. A contract terminated in its entirety, regardless of contract
performance prior to termination. No additional work is to be done on the contract after the
termination effective date.
First Article. A preproduction model, initial production sample, test sample, first lot, pilot lot,
or pilot models.
Partial Termination. Termination of a severable portion of a contract. (i.e., a line item or a
modification). When a contract is partially terminated, work continues on the remainder of the
contract requirement.
Settlement Agreement. A written agreement in the form of a contract modification settling all
or a severable portion of a settlement proposal. (FAR Part 49.001, Definitions).
Settlement Proposal. A proposal for effecting a settlement of a contract terminated in whole or
part, submitted by a contractor or subcontractor in the form, and supported by the data, required
from FAR Part 49. A settlement proposal is included within the generic meaning of the work
“claim” under false claims acts. (FAR 49.001, Definitions).
Termination for Convenience. The exercise of the Government’s right to completely or
partially terminate performance of work under a contract when it is in the Government’s interest.
Termination Inventory. Property purchased, supplied, manufactured, furnished, or otherwise
acquired for the performance of a contract subsequently terminated and properly allocable to the
terminated portion of the contract. It includes Government-furnished property. It does not
include any facilities, material, special test equipment, or special tooling that are subject to a
separate contract or to a special contract requirement governing their use or disposition
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Glossary - Acronyms 17
G.2 ACRONYMS
ACO Administrative Contracting Officer
CAFU Contract Audit Follow-Up
DCAA Defense Contract Audit Agency
DCMA Form 1797 Request for MOCAS Action/Information
DCMA-INST DCMA Instruction
DD Form 1598 Contract Termination Status Report
DD Form 1640 Request for Plant Clearance
DFARS Department of Defense Federal Acquisition Regulation Supplement
FAR Federal Acquisition Regulation
IAW in accordance with
MOCAS Mechanization of Contract Administration Services
PCARSS Plant Clearance Automated Reutilization Screening System
PCO Procuring Contracting Officer
PGI Procedures, Guidance, and Information
PLCO Plant Clearance Officer
PNOM Pre-Negotiation Objectives Memorandum
SF Standard Form
SF 30 Amendment of Solicitation/Modification of Contract
SF 1423 Inventory Verification Survey
SF 1424 Inventory Disposal Report
TCO Termination Contracting Officer
T4C Termination for Convenience
DCMA-MAN 2501-06, October 2, 2018
Change 1 Effective, September 11, 2020
References 18
REFERENCES
DCMA Instruction 134, “Boards of Review,” October 15, 2012, as amended
DFARS Part 249, Termination of Contracts
DFARS PGI 249.105, Duties of the termination contracting officer after issuance of notice of
termination
DFARS PGI 249.110, Settlement negotiation memorandum
DoD Directive 5105.64, “Defense Contract Management Agency (DCMA),” January 10, 2013
FAR Part 12, Acquisition of Commercial Items
FAR Part 49, Termination of Contracts
