(ix)  Step Nine: Consider the Offset Potential of the Work in Process on the Canceled End Items.

(A)  At the time of cancellation, part of the investment made by the contractor, its subcontractors, and vendors in the canceled end items will be represented by work in process. It will consist of:

(1)  Fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the canceled end items; and

(2)  The completed or partially completed plans, drawings, information, and other property that, if the contract has been completed, would be required to be furnished to the Government.

(B)  With authority from the Contracting Officer, the contractor can do two things with such property to minimize the amount of its cancellation claim: transfer title and deliver it to the Government; or sell or otherwise dispose of it, applying any proceeds to reduce the cancellation claim.

(C)  Do you know if, at the time of cancellation, significant work in process will exist that the contracting officer would require the contractor to either deliver to the Government or sell so as to significantly reduce the contractor's cancellation claim?

(1)  If so, estimate the worth of this work in process and treat it as an offset to the cancellation ceiling estimate. Enter your estimate in Figure 6.A.

(2)  If not, assume there is no significant offset potential, enter a zero in Figure 6.A, and go on to Step Ten.