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This SOP has internal roles only.
Standard Operating Procedure Table of Contents
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Purpose
To partly or fully terminate a contract for convenience or default.
Procedure
Termination of a contract for convenience does
not hold a contractor at fault. The government might terminate for convenience
if in its best interest, e.g., due to requirement changes or insufficient
funds. This decision should be taken only after serious consideration
because it is potentially costly.
Termination of a contract for default holds a contractor
at fault due to an actual or anticipated failure to perform obligations, breach of contract conditions, or breaking federal law.
Non-profit and educational organizations can be terminated for convenience
but not default.
Procedures differ for terminating a contract for convenience or default.
When considering a termination, the government bases its decision on
a review by contracting and technical personnel and counsel. For details
on conditions and procedures, see FAR
Part 49.
Termination for Convenience
Project Officers
- Promptly notify contracting officer when contemplating a termination
for convenience.
- Prepare memo to contracting officer requesting termination and stating
the reasons. Get program division director approval of the request.
See FAR
Part 49 for details.
- After contracting officer sends contractor a notice of termination,
end contact with contractor unless directed otherwise by contracting
officer. Any action that might encourage a contractor to continue performance
may waive the government's rights.
Contracting Officers
- Inform Office of Acquisitions (OA) and Division of Extramural
Activities (DEA) directors of the impending action before issuing a
termination notice.
- Terminate a contract by sending contractor a written termination
notice. See FAR Part 49 for requirements.
- Evaluate contractor settlement claims, perform cost or price analyses,
negotiate termination settlements, and execute settlement agreements
on SF
30, Amendment of Solicitation/Modification of Contract. Place memorandum
documenting negotiations in the contract file.
Termination for Default
Project Officers
- After identifying unsatisfactory performance, failure to perform obligations, breach of contract conditions, or federal law violations, promptly notify contracting
officer in writing. Contractor could interpret silence by the government
as changed expectations of performance.
- To begin termination, prepare a memo to contracting officer requesting
termination and defining the reasons. See FAR
Part 49. Get program division director approval.
- After contracting officer sends contractor notice of termination,
end contact with contractor unless directed otherwise by contracting
officer. Any action that might encourage a contractor to continue performance
may waive the government's rights.
Contracting Officers
- After project officer identifies unsatisfactory performance, failure to perform obligations, breach of contract conditions, or federal law violations, issue
a written "cure notice" stating that the government will withhold payments
if a default is not "cured" or determined to be excusable. Cure notices
formally point out a deficiency in performance and give the contractor
a specified time, usually 10 days, to correct it.
- If a default is not excusable or a contractor does not send a response
in time, initiate withholding of payments and determine whether termination
for default or other action is in the government's best interest.
- If termination for default is appropriate, notify contractor with
a written "show cause notice." This notice states the contractual liabilities
of termination for default and asks contractor to "show cause" why
the contract should not be terminated.
- Before formally issuing a termination notice, inform the OA chief, the DEA director, and the program division director of the impending action.
- Terminate a contract by sending contractor a written termination
notice.
- Evaluate contractor settlement claims, perform cost or price analyses,
negotiate termination settlements, and execute settlement agreements
on SF
30, Amendment of Solicitation/Modification of Contract. Place memorandum
documenting negotiations in the contract file.
Contacts
See the Office of Acquisitions staff listing for the appropriate contract specialist.
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Links
Contract
Modifications SOP
Contracting
Officer SOP
Project
Officer SOP
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