As a general rule, the contracting officer can terminate a federal contract for convenience of the government. Termination for convenience of the government usually occurs when mission requirements change, lack of funding as other ‘legitimate’ reasons. Contractors usually are entitled to some form of statutory damages. However, there are situations when terminating the contract can be questionable.
When can the Government Terminate for Convenience?
Your contract can be terminated for convenience when it is in the government’s best interest. Yet, oftentimes agencies do abuse their discretion. Contractors have to look at the facts carefully to see whether there are some indications of unlawful activity. Despite the appearance of unlawful activity, court decisions tend to agree with the agencies.
Termination for Convenience Damages
Unless there is some clear fact of bad faith or unusually unreasonable agency actions, focusing on the statutory damages result is better served. The the process for filing termination for convenience of the government claims is very specific. The amount of termination costs and damages is not set in stone. Instead, it typically becomes more of a negotiation process.
If there is a termination for convenience of the government, the contracting officer should provide you written notice with and provide some guidance.
- The government has no obligation to give you legal advice.
- You will more than likely be asked to stop work, asked to stop any subcontracts in place.
- Sometimes only part of the contract is terminated. This referred to as a partial termination for convenience.
- If you are in this in this situation, the government should instruct you on how to proceed.
- Note that termination settlement proposals must be submitted within one year.
- You want to follow the termination letter and do exactly what it tells you to.
Terminations for convenience of the government requires the agency to provide prompt and fair settlement. Some profit (for completed work) is allowed but you will not receive the full contract price.
- Remember, that clauses discussing termination for convenience of the government are typically included in the original contract.
Subcontractor Termination for Convenience of the Government
It is usually a good practice to write subcontracts that pass through the federal contract clauses imposed to you by the government. Some prime contractors forget to do this and can face serious consequences when there is termination for convenience of the government. Depending on the facts, the Government Contracts Christian Doctrine may apply.
For questions or help with termination for convenience of the government, please call our contract termination lawyers for help at 1-866-601-5518. FREE INITIAL CONSULTATION.