By David Adams

MIAMI (Reuters) - Alan Gross, the contractor freed last week after five years in a Cuban jail will receive $3.2 million from the U.S. government as part of a settlement with his employer, the U.S. Agency for International Development (USAID) announced on Tuesday.

Gross was employed by Bethesda, Maryland-based DAI as part of a USAID-financed project in Cuba. DAI had sought $7 million for Gross, said a USAID spokesman.

"Our understanding is that the money will go to Alan Gross as part of an agreement between the two parties," the USAID spokesman said. The money would be paid in the next few days, he added.

DAI spokesman Steven O'Connor said the company was "delighted to have Alan home and pleased to have this legal matter settled."

Gross had been jailed in Cuba since December 2009 until his release last week as the governments of the United States and communist-run Cuba restored diplomatic relations and swapped prisoners.

His detention was a major obstacle to improvement in U.S-Cuban relations after more than 50 years of hostility.

The settlement calls for payment by USAID for unanticipated claims under a cost-reimbursement contract, including claims related to Gross, USAID said in its statement.

Gross and his wife Judy filed a $60 million lawsuit in November 2012 for gross negligence against DAI and the U.S. government. Gross settled with DAI for undisclosed terms in May 2013, and a U.S. district court rejected his claim against the government, which was upheld last month on appeal.

A lawyer for Gross declined to discuss the settlement but added that it was planning to seek a review by the Supreme Court of its case against the U.S. government.

Gross was serving a 15-year sentence for providing Internet equipment to Jewish Cubans under a U.S. program that Cuba views as subversive. Information is tightly controlled on the Caribbean island, Internet use is limited, and visitors are not allowed to carry satellite technology.

The United States says Gross was merely helping Cubans get connected as part of a democracy-building project.

(Reporting by David Adams; Editing by Grant McCool and Lisa Shumaker)