Release of Claims

A release of claims is a legal instrument executed by the contractor at or near contract closeout, acknowledging receipt of full and final payment and releasing the government from any future financial claims arising under the contract, with limited exceptions for matters expressly reserved.

What is a Release of Claims?

A release of claims, sometimes called a "release of all claims," is the document that formally ends the financial obligations between a contractor and the government. When a contractor signs a release of claims, it represents that it has been fully compensated under the contract and has no outstanding financial claims against the government arising from that contract's performance.

The standard FAR clause for this document appears at FAR 52.232-25 and in contract-specific closeout procedures. The release typically covers all claims for payment of money, adjustment or interpretation of contract terms, and any other matter arising under or related to the contract. Exceptions are provided for fraud and for claims specifically identified and reserved in the release document itself.

The release of claims is distinct from, but related to, the contractor's final invoice. The final invoice is the payment request; the release of claims is the acknowledgment that payment was received and all claims are settled. In some contracts, contractors execute the release contemporaneously with the final invoice submission; in others, it is signed after final payment is received. Contractors should review both the final invoice amount and any pending or potential claims before signing, because the release bars future recovery.

Why Release of Claims matters for government contractors

Signing a release of claims before identifying and reserving all outstanding claims is one of the most common and costly mistakes in contract closeout. Once signed, the release bars virtually all future financial claims against the government for that contract. Contractors must audit their contract files for unresolved requests for equitable adjustment, unprocessed modifications, subcontractor claims flowing up through the prime, and any potential claims before executing a release.

Example

A construction contractor completes a federal office building renovation project. At closeout, the contracting officer sends a release of claims for signature along with the final payment check. The contractor's project manager notices that a request for equitable adjustment for differing site conditions submitted six months earlier has never been resolved. The contractor contacts its attorney, who advises them to reserve the claim explicitly before signing. The executed release reads: "Contractor releases all claims except the pending REA for differing site conditions dated November 3, 2025, reference REA-2025-003, which is expressly reserved." The release is signed with that reservation, and the REA proceeds to resolution.

Frequently Asked Questions

Can a contractor reserve claims in a release of claims?

Yes. A contractor may expressly reserve specific pending or known claims in the release document. A reservation must be specific enough to identify the claim, a vague reservation of "all claims" typically does not survive scrutiny. Each reserved claim should be identified by description, date of submission, and dollar amount if known.

What happens if a contractor discovers a valid claim after signing a release of claims?

In most cases, a signed release of claims bars recovery of previously unknown claims. The narrow exceptions include fraud, mutual mistake of fact, and claims that were incapable of being known at the time of signing. Courts and boards of contract appeals have consistently enforced releases of claims as written. Prevention, identifying all claims before signing, is the only reliable protection.

Is a release of claims required at contract closeout?

Not under all contracts. FAR 4.804 governs closeout procedures, and the requirement for a release of claims depends on contract type and agency procedures. Many contracts include FAR clause 52.232-25 or agency-specific clauses that require a release; others do not. Contractors should review their contract terms. Regardless of whether required, the government may condition final payment on execution of a release.

Can the government ever revive claims after accepting a release of claims?

Yes, in limited circumstances. Government fraud investigators and the Department of Justice can pursue fraud-based claims under the False Claims Act regardless of a release of claims. The release does not protect contractors from criminal liability or civil False Claims Act liability for knowingly false certifications or fraudulent billing.