After the government exercises it rights to terminate your contract for convenience, you then have to submit your damages in a termination for convenience settlement proposal. It must be done within one year.
The settlement proposal should be submitted in the form with the certification prescribed by the contracting officer, then the government and you should attempt to negotiate a settlement.
If the negotiations do not come to some amicable resolution, the contracting officer will typically issue a final decision to which you would have the right to appeal.
When Does a Termination for Convenience Settlement Proposal Become a Claim?
Many companies make the mistake of filing an appeal simply because the contracting officer does not make a timely decision. This can be a costly mistake.
- The CO’s request for other information by itself is not grounds to file an appeal.
- If you file an appeal, the Board of Contract Appeals will dismiss the case for lack of jurisdiction.
A termination for convenience settlement proposal submitted pursuant to the Termination clause does not become a claim under the Contract Disputes Act (CDA) until the settlement proposal negotiations required by the clause has reached an impasse and the settlement proposal has been submitted to the contracting officer for a decision. The US Court of Appeals for the Federal Circuit made this ruling in James M Ellett Construction Co. v. United States, 93 F.3d 1537, 1543-45 (Fed. Cir. 1996).
Continuing letters of deficiency should be taken as positive feedback. Although there is an extreme amount of delay, and companies need their damages, extreme care is necessary when deciding to launch litigation or appeal. See also Contractor Termination Tips.
- Sometimes more documentation and clarifications are needed to complete audits before the government can reach a final settlement decision.
When it comes to your termination for convenience settlement proposal, you are contractually obligated to follow the procedures specified in the Termination clause for a termination settlement proposal.
You cannot simply avoid this requirement by reaching for rights under the Contract Disputes Act procedures. Only when there is a final disagreement (impasse) and there is final agency decision can the settlement proposal be treated as a contract claim.
- Certain facts can constitute a final decision or impasse.
If you need help with preparing or litigating issues related to a termination for convenience settlement proposal, contact our government contract claims attorneys at 1-866-601-5518.