FAR Release of Claims Requirements for Government Contractors

Under the Federal Acquisition Regulation, a release of claims is the document a contractor signs at closeout to discharge the government from every remaining obligation under the contract, and it is a condition precedent to final payment. Sign it without listing your open claims in dollar amounts and those claims are gone. This is the last meaningful decision point in a federal contract, and the consequences of getting it wrong are permanent.

What the Release Does

The operative language is broad on purpose. Once executed, the release discharges the government, its officers, agents, and employees from all liabilities, obligations, and claims arising out of or under the contract.¹ Whether the contractor knew about a particular claim at signing is irrelevant. The scope covers everything connected to the contract unless it is expressly reserved on the face of the release.

The government’s reason for insisting on it is straightforward: contract closeout is an administrative process with defined targets, and the contracting officer needs a clean financial endpoint before the file can close.² Without a release, a contractor could collect the last payment and then surface additional claims months or years later. The release closes that door.

Which Contracts Trigger the Requirement

The release requirement is not tucked into one obscure regulation. It runs through the payment clauses of every major contract type.

For fixed-price construction, FAR 52.232-5 conditions final payment on completion and acceptance of the work, a proper voucher, and a release of all claims against the government arising from the contract, with the only carve-out being specific claims listed in stated amounts.³

For commercial products and commercial services, FAR 52.212-4 (Alternate I) requires the contractor and any assignee to execute a release as a condition precedent to final payment, and it spells out three specific exceptions the contractor can preserve.¹

For cost-reimbursement work, FAR 52.216-7 imposes the same release requirement and adds an extra obligation: the contractor must assign to the government any refunds, rebates, credits, or similar amounts properly allocable to costs the government already reimbursed.⁴ Cost-reimbursement closeout is inherently slower because it depends on settling final indirect cost rates first.

Three Exceptions You Can Reserve

The FAR builds in three categories of claims that survive the release if the contractor preserves them correctly. This is where contractors get hurt, because anything not expressly excepted is waived.

Specified claims in stated amounts. A pending request for equitable adjustment, a disputed change order, or any other outstanding claim can be carved out of the release by listing it with an exact dollar amount, or with a reasonable estimate if the exact figure is not yet known. Vague references to “potential claims” without dollar figures do not satisfy this requirement.¹
Unknown third-party liability claims. If the contractor later discovers it owes money to a third party because of work performed under the contract, and the liability was genuinely unknown at the time the release was signed, those costs can be recovered. The notice requirement is strict: written notice to the contracting officer no later than six years after the release date or the date the government indicated it was ready to make final payment, whichever comes first.¹
Patent-related costs. Costs the contractor incurs under the patent clauses of the contract, including reasonable incidental expenses, are excluded from the release. Expenses arising from the contractor’s own obligation to indemnify the government against patent infringement liability are not preserved.⁴

These three categories appear in substantially identical form across FAR 52.212-4, FAR 52.216-7, and the standard release language used elsewhere. FAR 52.232-5 for construction is more concise and recognizes only the first category, but the practical rule is the same across contract types: if you want to preserve a claim, put it in writing with a dollar figure attached.

Reserving a Contract Disputes Act Claim

The first exception is the one that matters most in practice. A contractor with a pending or planned claim under the Contract Disputes Act needs to reserve it explicitly, in a stated or estimated amount, on the face of the release.

Claims exceeding $100,000 must be certified. The contractor affirms the claim is made in good faith, the supporting data are accurate and complete, the amount reflects what the contractor believes the government owes, and the person signing the certification is authorized to do so.⁵ Once a certified claim is submitted, the contracting officer has 60 days to issue a decision or, for claims over $100,000, notify the contractor of when a decision will come. Silence past that period is treated as a denial, and the contractor can appeal to a board of contract appeals or the Court of Federal Claims.⁶ All claims against the government must be submitted within six years of accrual.

Here is the trap. If you sign the release without reserving a pending CDA claim in a stated or estimated amount, the claim is waived. It does not matter that the claim was previously submitted, that the contracting officer knew about it, or that everyone discussed it in meetings. The release language controls.

Subcontractor Releases and the Severin Doctrine

Primes have a related problem downstream. When a subcontractor has a claim against the government but can only reach the government through the prime, the prime “passes through” that claim. Under the Severin Doctrine, the prime has no standing to pursue a subcontractor’s claim unless the prime remains liable to the subcontractor for the amount at issue. If the subcontractor has already signed a broad, unqualified release to the prime, a court can conclude the prime has no remaining liability to the sub, and the pass-through claim dies.

In one notable case, a subcontractor’s lien waiver stating it waived “any other claim whatsoever in connection with this Contract” was held to bar the prime from sponsoring the sub’s pass-through claim. Releases tied specifically to periodic progress payments have been found narrow enough to preserve separate delay and disruption claims. The drafting lesson is clear: releases and settlement agreements between a prime and its subcontractors should be tied to the specific payment or action they cover, not written as blanket discharges. The agreement should also state expressly that the prime remains liable to the sub for amounts the prime recovers from the government on the sub’s behalf.

Separately, before certifying final payment on a construction contract, the prime must confirm that all subcontractors and suppliers have been paid from earlier progress payments.⁷ The contracting officer verifies that all subcontracts have been settled before the file can close.⁸

Who Must Sign

The release has to be executed by someone with actual authority to bind the contractor. The FAR’s assignment-of-claims procedures offer useful guidance for corporate contractors: the instrument should be executed by an authorized representative, attested by the corporate secretary or assistant secretary, and either impressed with the corporate seal or accompanied by a board resolution authorizing the signer.⁹ A project manager or field supervisor without documented signing authority is not enough. If the contracting officer questions the signer’s authority, the release can be rejected and final payment delayed.

Timing and Final Payment

The release is typically submitted with the contractor’s final invoice or voucher. For cost-reimbursement contracts, the contractor has 120 days after final indirect cost rates are settled to submit the completion invoice. Miss that window and the contracting officer can unilaterally determine the amounts due and record the determination as a contract modification issued as a final decision under FAR 33.211.¹⁰ After that, the contractor either appeals or lives with the result.

Once a proper final invoice and executed release are on file, the government has to pay. Under the Prompt Payment Act, as implemented by FAR 52.232-25, payment is due within 30 days after the later of two events: the billing office receiving a proper invoice, or the government accepting the delivered supplies or completed services. If the deadline is missed and the amount is not subject to further settlement actions, interest runs automatically. For final invoices where payment depends on settlement actions still in progress, acceptance is deemed to occur on the effective date of the settlement, and the 30-day clock starts from there.¹¹

Before You Sign

Audit your open items first. Every pending request for equitable adjustment, every disputed change order, every unresolved claim needs to be identified and listed in the release with a dollar figure. An estimated amount works when the exact figure is still uncertain. “TBD” does not. If you can’t attach a number to it, you are not preserving it.

Coordinate with your subcontractors. A carelessly worded subcontractor release can destroy a pass-through claim you were counting on. Tie any release language between prime and sub to specific payments, and preserve the prime’s continuing liability to the sub in writing.

Confirm the signer has documented authority. A release executed by someone who cannot bind the company can be rejected, delaying final payment at the worst possible stage of the relationship.

And read the release language against the exceptions the FAR actually allows. The three categories are narrow, the notice deadlines are strict, and the release itself is written to sweep everything else away. That is what it is designed to do.

1
Acquisition.GOV. FAR 52.212-4 Contract Terms and Conditions – Commercial Products and Commercial Services
2
Acquisition.GOV. FAR 4.804-1 Closeout by the Office Administering the Contract
3
Acquisition.GOV. FAR 52.232-5 Payments Under Fixed-Price Construction Contracts
4
eCFR. 48 CFR 52.216-7 Allowable Cost and Payment
5
Office of the Law Revision Counsel. 41 USC 7103 Decision by Contracting Officer
6
eCFR. 48 CFR 33.211 Contracting Officers Decision
7
eCFR. 48 CFR 52.232-5 Payments Under Fixed-Price Construction Contracts
8
Acquisition.GOV. FAR 4.804-5 Procedures for Closing Out Contract Files
9
Acquisition.GOV. FAR 32.805 Procedure for Assignment of Claims
10
Acquisition.GOV. FAR 42.705 Final Indirect Cost Rates
11
Acquisition.GOV. FAR 52.232-25 Prompt Payment