Termination Settlement Proposal - Interest vs. Settlement Expenses
Some fear that if a termination proposal is submitted as a CDA claim, the Government may attempt to disallow termination settlement expenses under the FAR cost principle "Costs relating to legal and other proceedings" which clearly states costs in pursuit of a "claim" against the Government are unallowable. Though it is quite common for such costs to be unallowable in nontermination cases, the authors state such costs under termination cases are allowable. Thus a contractor should be able to initially submit a termination proposal as a CDA claim and hence accrue interest and also submit a settlement proposal and not prejudice a contractor’s right to recover settlement expenses.
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