FAR Termination for Default, Convenience & Termination for Cause

Termination For Convenience & FAR Termination for Default Lawyers

Whether the contracting officer issues you a notice of FAR termination for default or termination for cause, the consequences are equally devastating.  Not only does the termination severely impact your ability to get future government contracts, but your business could also be destined for a downward spiral.

A Termination for Default means either a complete or partial termination of a government contract because of your actual or anticipated failure to meet contractual obligations.  Whereas, a FAR Termination for Cause is used for contract procurements for commercial items under FAR PT 12.

Watson & Associates’ government contractor lawyers help companies aggressively defend and appeal contract terminations for default or cause. We have actual experience working for federal contracting agencies and understand the mistakes they make.

Both a contract termination for cause or termination for default government contract action can severely cripple your business because of the leverage that the agency has to collect damages if successful on appeal. 

Under FAR 8.406-4 an ordering activity contracting officer may terminate individual orders for cause when the contract is issued under FAR Part 12 – commercial items. The termination for cause shall comply with FAR 12.403, and may include charging the contractor with excess costs resulting from repurchase. In addition, the schedule contracting office shall be notified of all instances where an ordering activity contracting officer has terminated for cause an individual order to a Federal Supply Schedule contractor, or if fraud is suspected.  Under a FAR Part 12 termination for cause, the contractor can defend by asserting that the failed performance of the contract was excusable. If so, the ordering activity contracting officer shall follow the procedures at FAR 8.406-6, as appropriate.

However, under FAR Part 49, the contracting officer can terminate the contract for default when there is evidence to support the contractor’s actual or anticipated failure to perform its contractual obligations.

Watson & Associates, LLC provides experienced government contract termination attorneys to aggressively defend against improper and unlawful terminations for default or cause. We frequently represent small businesses and large defense contractors throughout the United States and overseas to get terminations for default converted to a termination for convenience and or breach damages, if appropriate.

You no longer can make a profit on the contract that you worked so hard to get. If you receive a notice of contract default, having the best attorney to handle your case is imperative.

A Federal government contract Termination for Default or cause can be either in whole or in part. Neither one is good news for a small business or even a large government contractor.

How you deal with a contract default is equally important. Furthermore, your approach to how and where you appeal a FAR government contract termination for cause is critical.  The contracting officer will more than likely defend her position by a claim that your company actually failed to comply with the contract terms and conditions or that you provided enough to support her conclusion that you have an anticipated failure to meet the contractual obligations.

What is the Impact of a Government Contract Termination for Default Clause or Cause?

 A government contract default or cause can be referred to as the ‘kiss of death” for a contractor that has serious consequences. Not only does it impair your chances to potentially do business with the federal government but you can also be subjected to paid progress payments, re-procurement costs, and more. The more obvious impact is that the default harms the contractor’s past performance rating when trying to bid on future contracts. For these reasons, it is often wise to investigate and even appeal the default.

FAR Termination for Default Attorney Services

With law offices in Washington DC and in Denver, Colorado, the government contract termination appeal lawyers at Watson & Associates, LLC can provide experienced legal counsel, litigation, and the following: 

  • Analyze and assess your specific facts
  • FAR 49 Termination for default Clause government contracts support(T4D)
  • Responding to FAR cure notices
  • Procurement law disputes and Court’s appellate jurisdiction
  • Terminations for default consulting
  • Show cause notice FAR responses
  • Providing legal advice from the early stages of the cure notice or show cause letter.
  • Help you apply the types of contract damages allowed and avoid excess costs incurred by the government;
  • Help with defenses such as latent defects in construction projects
  • Help to gather supporting documentation including agreements and communications
  • Assessment of liquidated damages in contract defaults 
  • Help you to prepare your settlement proposal under FAR termination for convenience clauses.
  • Help with contract negotiation with the relevant parties
  • Appeal the Agency decision on your behalf to CBCA, ASBCA or the US Court of Federal Claims
  • Termination appeals to the Federal Circuit Court of Appeals

To speak with a government contract disputes Attorney and your show cause notice of termination or appeal the contracting officer’s final decision, Call  1-866-601-5518 for a Free Initial Consultation. 

WE HELP GOVERNMENT CONTRACTORS NATIONWIDE AND OVERSEAS 

We help you to avoid the most costly mistakes when the agency terminates your federal contracts. When your contract is terminated for convenience by the government, the first thing that you should do is to assess the facts when you receive the termination for convenience letter to see if the agency is liable for a breach of contract. When the contracting officer determines that the contractor fails to prove its case may not always be a legal one.

  • When there is a contract action or contract default, you want to also see whether the facts of your case have merit for a potential appeal. 

Sometimes, assessing the wrongful actions upfront can save your company thousands of dollars in litigation fees in termination for default cases. 

Without the proper approach to either situation, the agency usually wins. Your goal when there is a termination for default is to make a determination whether you have a strong appeal case. You have to act quickly or lose your right to appeal.

At Watson & Associates, LLC our federal contract attorneys help small businesses and large DOD contractors to effectively deal with contract termination of procurement contracts and FAR compliance matters, and guide our clients to the next steps of appealing the contracting officer’s final decision.

Termination for Default Appeals and Litigation 

When the contracting officer determines that he or she, in the government s interest, will issue a termination for default letter and a final decision, you must promptly make a decision to appeal or not to appeal to the Armed Services Board of Contract Appeals (ASBCA), Civilian Board of Contract Appeals (CBCA) or  U.S. Court of Federal Claims (COFC). Obviously, your business’s future is at risk.  With the short appeal deadline before you, you want to have an appellate lawyer that can assess the facts and agency record and help you to decide whether there is merit to filing an appeal. Depending on the reason for your termination, you may also be investigated for false claims charges. If that is the case, our defense attorneys can also help.

See How to Defend Qui Tam and False Claims Act charges that Involve Government Contracts

When you appeal a termination for default, the court’s options are limited. The most common remedy is to convert the default into a termination for convenience. However, sometimes one may find that the government actually breached the contract. The remedy in those situations will be different.

You want to hire an experienced government contract termination for default appeal lawyer that understands how these cases are litigated. At Watson & Associates, LLC our goal is to seek out where the government committed a serious error and we can put your company back on track.

What Happens If You Default on a Government Contract? What Are the Consequences?  

The agency’s termination of a contract for default will have serious consequences for your company. Not only does your business lose work that can create profitable incomes but the impact on your past performance can cripple your company when bidding on future contracts.

When there is a contract default on your record, you might also be forced to return progress payments to the agency; you may also have to pay the government any excess costs of re-procurement. Another obvious consequence is the cost of expensive litigation. Whether you are appealing the default decision to the ASBCA, CBCA or Court of Federal Claims, the cost of hiring a government contracts appellate attorney will be expensive.

FAR Part 49 Termination for Default Process

Under FAR Part 49.402-3, the termination for default clause process requires the contracting officer to do certain things. When he or she fails to follow these requirements, there can be an argument for abuse of discretion since the FAR makes it the below requirements part of the mandatory process.

Under FAR Part 49.402-3, the contracting officer shall consider the following factors in determining whether to terminate a contract for default:

           (1) The terms of the contract and applicable laws and regulations.

           (2) The specific failure of the contractor and the excuses for the failure.

           (3) The availability of the supplies or services from other sources.

           (4) The urgency of the need for the supplies or services and the period of time required to obtain them from other sources, as compared with the time delivery could be obtained from the delinquent contractor.

           (5) The degree of essentiality of the contractor in the Government acquisition program and the effect of a termination for default upon the contractor’s capability as a supplier under other contracts.

           (6) The effect of a termination for default on the ability of the contractor to liquidate guaranteed loans, progress payments, or advance payments.

           (7) Any other pertinent facts and circumstances.

Contractor Defenses to a Government Contract Termination for Default

Excusable Delay

The standard FAR “Default” clauses suggest that an excusable delay is present if the delay is beyond the control of the contractor. As a practical matter,  you must be aware of the government’s argument that the delay was foreseeable. It cannot be foreseeable. As contract termination for default attorneys, we help you to comb the facts to make sure that the situation is “beyond the control and without the fault or negligence” of the contractor.

If you have either a fixed priced contact supply and service, R&D, and construction contract “Default” clauses all list the following nine “examples” of excusable delays (when you appeal the contracting officer’s final decision to terminate your contract for cause, the following is not all-inclusive:

  1. acts of God or of the public enemy,
  2. acts of the Government in either its sovereign or contractual capacity,
  3. fires,
  4. floods,
  5. epidemics,
  6. quarantine restrictions,
  7. strikes,
  8. freight embargoes, and
  9. unusually severe weather.

Tip: Did you recieve a notice of default construction contract letter?If you are a federal construction contractor, be mindful that you can assert a legal defense if another contractor, at the direction of the government causes the delay. The standard “Default” clauses used in fixed-price Government contracts generally give contracting officers the right to terminate a contract for default if you fail to (a) deliver supplies or to perform the services or work within the time specified in the contract, (b) make progress on the progress to endanger contract performance or to prosecute the work with the diligence that will ensure its completion, or (c) perform any other provisions of the contract.

Tip: Events listed in the FAR clause are only examples. Other situations can count for legal defense of excusable delay in a termination for default or termination for cause government contract appeals case. Always stop work when you receive notice from the CO.

Defective Specifications and Impossibility

 Federal contractors can assert a defense to contract default actions if failure to perform is caused by defective specifications furnished by the Government.

Defective specification legal defenses can arise from inconsistencies, legibility problems, and ambiguities that may entitle companies to additional time or money damages to defects that render performance commercially impracticable or impossible.

Tip: Excusable delay or excuse of performance for defective specifications is based on the implied warranty of Government-furnished specifications.

Tip: The key to asserting legal defenses to termination for default is whether you promptly notified the government about the problem.  You cannot wait until the contracting officer issues you a default to raise the defense. You have a legal duty to mitigate your damages.

Contracting Officer’s Failure to Follow Procedural Requirements

When termination cases come about, small businesses and federal contractors should realize that under fixed-price supply and service and R&D contracts, the contracting officer must issue you a cure notice giving at least 10 days to cure the problem before issuing a default for failure to make progress or to prosecute the work or to comply with other provisions of the contract.

Other legal defenses to termination of government contracts for default include:

  • Contracting Officer’s Failure to Exercise Discretion
  • Abuse of Discretion by the Agency / CO

Need Help With a FAR Cure Notice?

Government contracts include FAR cure notice clause. Before issuing a termination for default or termination for cause, the contracting officer will issues a cure notice. Failure to sufficiently respond to the cure notice will justify the government default termination.

Avoid Costly Mistakes When Responding to a Cure Notice

Making serious mistakes when responding to a FAR cure notice will seriously impact your ability to get a termination for default converted to a termination for convenience on appeal. Your response must convenience the contracting officer that you can remediate the defect within 10 days, of at least develop a plan of action to convince the CO that you can actually perform and finish the contract. This. is another reason why have a termination for default attorney on board early in pre- default stage is essential.

Federal Acquisition Regulation – FAR 52.212-4 Termination for Convenience (T4C) Legal Services 

Did You Receive a Notice of Termination or Termination Letter From the Contracting Officer?

If yes, then your next steps are critical. A T4C government contract relates to the federal government’s unilateral right to end performance on an existing contract for legitimate reasons.

This level of termination can be for the entire contract or part of the contract. Companies subject to this level of statutory termination, however, have to be for legitimate reasons by the government. Federal contractors are sometimes unaware of what those legitimate reasons are.  

When it comes to federal contract defaults, claims, and other actions,  companies also are unaware of their legal rights, the appeals process, or statutory allowable damages when the agency terminates the contract for convenience. This is where Watson’s government contracts lawyers can help.

T4C Government Contract termination for convenience settlement proposal consulting

When the government legitimately terminates your contract for convenience, our attorneys and consulting help you get to the next steps.  Our FAR 52.212-4 termination for convenience settlement proposal consulting includes helping you to prepare and submit a viable settlement proposal that articulates your claims; qualifies your claims to meet statutory allowable recoveries.

  • Contracting Officers will usually find a way to either reject your claims or try to settle a lower price.
  • Understand how termination and settlement strategies must keep your company’s future in mind.

FAR Termination for Convenience vs default

FAR Termination for convenience (t4c government contract action) in government contracting occurs through no fault of the contractor. Depending on the facts of your case, you may be able to settle with the government for statutory-allowed damages. Profits in this type of contract termination is limited. 

On the other hand, a termination for default is similar to a breach of contract in the commercial world. The government in most cases are terminating the contract for non-compliance, failure to meet schedules or some other reason. The contractor can be liable to the government for additional re-procurement costs and other associated breach damages.

What is Termination for Default?

Termination for Default in a government contract means that there is the complete or partial termination of a federal contract. Often the default is issued because of a contractor’s actual or anticipated failure to meet the obligations of the contract.  The type of termination is often referred to as a FAR Termination for Cause under FAR Part 12 for the acquisition of commercial items.

What is the Difference Between Contract Termination for Cause Vs Default

FAR Termination for Default is the complete or partial termination of a federal contract because of a contractor’s actual or anticipated failure to meet its contractual obligations. On the other hand,  Termination for Cause is the term used for a Termination for Default in a FAR PT 12 contract for the procurement of commercial items.

Besides terminology, there is really no difference between a government contract termination for cause vs default. Some agencies refer to them differently. However, the termination for default process and litigation requirements are the same. Remembering that the contracting officer should not issue a termination action when it is through no fault of the contractor.  Our government contract disputes attorneys can help you to develop a strategy to push back and even convince the court that the government acted unreasonably or violated procurement law.

What Does The Contracting Officer Have to Do Before Issuing a Default Termination Under FAR Part 49?

For fixed priced contracts, When defending against contract termination for cause or termination for default, contractors should look to see if the contracting officer complied with his or her statutory obligations. This could be a course of attacking a completely terminated contract. For example, under FAR Part 49.402-3(f), the contracting officer shall consider the following factors in determining whether to terminate a contract for default:

           (1) The terms of the contract and applicable laws and regulations.

           (2) The specific failure of the contractor and the excuses for the failure.

           (3) The availability of supplies or services from other sources.

           (4) The urgency of the need for the supplies or services and the period of time required to obtain them from other sources, as compared with the time delivery could be obtained from the delinquent contractor.

           (5) The degree of essentiality of the contractor in the Government acquisition program and the effect of a termination for default upon the contractor’s capability as a supplier under other contracts.

           (6) The effect of a termination for default on the ability of the contractor to liquidate guaranteed loans, progress payments, or advance payments.

           (7) Any other pertinent facts and circumstances.

What Must the Contractor Do After Receiving a Notice of Default?

Under FAR 49.104, after receipt of the notice of termination, you should follow the directions in the written notice of contract default. Most should advise you to:

  1.  Stop work immediately on the terminated portion of the contract and stop placing subcontracts thereunder;
  2. Terminate all subcontracts related to the terminated portion of the prime contract;
  3. Immediately advise the TCO of any special circumstances precluding the stoppage of work;
  4. Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price for the continued portion, supported by evidence of any increase in the cost, if the termination is partial;
  5. Take necessary or directed action to protect and preserve property in the contractor’s possession in which the Government has or may acquire an interest and, as directed by the TCO, deliver the property to the Government;
  6. Promptly notify the TCO in writing of any legal proceedings growing out of any subcontract or other commitment related to the terminated portion of the contract;
  7. Settle outstanding liabilities and proposals arising out of termination of subcontracts, obtaining any approvals or ratifications required by the TCO;
  8. Promptly submit the contractor’s own settlement proposal, supported by appropriate schedules; and
  9. Dispose of termination inventory, as directed or authorized by the TCO.

Converting a Termination for Default into a Termination for Convenience

At the end of the day, a contractors’ main goal after the CO issues a default termination is to get it overturned on appeal. As a general rule, the only remedy that the appellate court has is to covert the termination for default to one of convenience. You will have to show that the government’s contract termination was not justified. You will have to also raise legal defenses that have been presented to the contracting officer.   If you claim breach of contract damages on appeal, you must show that either directly or indirectly, you presented your issue to the CO at the agency level. Watson’s termination for default appeal lawyers can help with the common problem.

Can a contractor terminate a government contract? Generally no. The termination clauses are primarily for the government’s benefit.

Overseas & Nationwide Government Contractor Termination Washington DC Appeals 

Our Government termination for default (FAR Part 49 T4D) and termination for cause lawyers provide legal counsel to federal government contractors throughout the United States and overseas including Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming, and Virgin Islands. In addition to T4C government contracts, we also provide terminations for default consulting to clients in Dubai, Afghanistan, Iraq, Turkey, Saudi Arabia, UK, and Middle Eastern regions. Find out more about debarment of government contractors.

Call Watson’s FAR Termination for Default Clause Appeal Lawyers

To maximize your damages for convenience terminations or help appeal federal government contract termination for default clause cases, call our Colorado or Washington DC T4D and T4C government contract lawyers. Call  Toll-Free 1-866-601-5518.

Watson & Associates’ government contract law lawyers represent clients with government procurement claims, FAR termination for default government contracts disputes, termination for cause, termination settlement proposal litigation, and appeals in the U.S. Court of Federal Claims, and Boards of Contract Appeals if you are terminated for cause.

Watson & Associates, LLC Only Practices Exclusively in the Areas of Federal Law in Washington DC.