2004 CANCELLATION CEILING

2004.1 For each fiscal year of a multiyear contract subject to cancellation, the contracting officer shall establish a cancellation ceiling which shall be stated in the contract.

2004.2 Each ceiling amount shall exclude amounts for items included in prior fiscal years.

2004.3 The contracting officer shall reduce the cancellation ceiling for each fiscal year in direct proportion to the remaining requirements subject to cancellation.

2004.4 In determining cancellation ceilings, the contracting officer shall estimate and include the reasonable preproduction and other nonrecurring costs that would be incurred by an average contractor or subcontractor, and which would be applicable to the items or services being furnished and normally amortized over the life of the contract.

2004.5 The contracting officer may modify a cancellation ceiling contained in an invitation for bids by amending the solicitation prior to bid opening.

2004.6 The contracting officer may modify a cancellation ceiling in any other type of solicitation by informing the prospective contractor(s) prior to final negotiation and contract execution.

SOURCE: Final Rulemaking published at 35 DCR 1509 (February 26, 1988).