A Termination Settlement Proposal (TSP) is the contractor’s opportunity to recover costs after a termination for convenience. A well-prepared TSP ensures that no eligible costs are left unclaimed and that the contractor is properly compensated.
The first step in preparing a strong TSP is gathering documentation. This includes direct costs such as labor, materials, and equipment, as well as indirect costs like overhead and general administrative expenses. The more comprehensive and organized your records, the easier it will be to substantiate your claims. The government expects clear and detailed evidence of expenditures, so maintaining well-structured cost-tracking systems is essential.
Settlement expenses—such as legal fees, accounting costs, and consultant expenses—should also be included in the proposal. These costs are often necessary when handling the administrative burden of termination. Additionally, contractors may seek fair profit on work performed, although they cannot claim anticipated profit on unperformed portions of the contract.
Timeliness is critical. The FAR establishes deadlines for submitting termination settlement proposals. Contractors should not delay in preparing their TSP, as missing deadlines could result in reduced recovery or denial of claims. Working with an experienced government contracts attorney can help ensure compliance with FAR-mandated procedures and avoid unnecessary delays.
Once the proposal is complete, contractors should be prepared for negotiations. The Termination Contracting Officer (TCO) may challenge or reduce claimed costs. Having a well-documented and defensible proposal will strengthen the contractor’s position in securing a fair settlement.
By being proactive and meticulous in documentation, contractors can maximize their financial recovery following a termination for convenience.
Martin & Jones’s professionals have experience assisting and advising clients who have had their federal contracts terminated. We can assist clients preparing and negotiating a termination settlement proposal. If your organization’s contract has been terminated, contact Martin & Jones immediately and one of our attorneys will discuss with you how we can be of assistance to your organization.
Have you had your government contract terminated for convenience? Our experienced legal team can help you recover what you’re owed. Contact us today for a consultation.