When your contract is terminated for default, the agency must issue a contract default letter. (see 49.601). Responding to the contract termination letter and taking the next steps could be problematic if you do not understand the process.
Failure to give written notice could create substantive right violations and potentially due process violations.
Termination for Default in government contract happens when you fail to meet the terms and conditions of the contract. This can either be performance issues or failure to comply with the contract clauses.
Every default termination of contract letter is not conclusive. If you have received a cure notice letter from the contracting officer, you should start building your case. You never want to wait until a termination of contract for default letter lands on your desk.
Contracting Officer’s Obligations in Contract Terminations: When a default government contract termination notice is mailed, it shall be sent by certified mail, return receipt requested. When the contracting officer arranges for hand delivery of the notice, a written acknowledgment shall be obtained from the contractor.
Notice to Contractors: In the case of termination for default, the termination of contract letter or notice shall advise you that:
- That the contract is being terminated for the convenience of the Government (or for default) under the contract clause authorizing the termination;
- The effective date of termination;
- The extent of termination;
- Any special instructions; and
- The steps the contractor should take to minimize the impact on personnel if the termination, together with all other outstanding terminations, will result in a significant reduction in the contractor’s workforce of the notice
- If the termination notice is by telegram, include these “steps” in the confirming letter or modification.
Distribution of copies of Contract Termination Letter
In addition to providing you with the default termination letter, the contracting officer must simultaneously send a copy of the contract default letter to the contract administration office and to any known assignee, guarantor, or surety of the contractor.
For additional concerns of help with the next steps after receiving a default contract termination letter, call our termination for default lawyers at 1-866-601-5518.