The One That Never Happens
rarely sees a straight proration of a re- turn of funds based on the completed efort.
When a commercial contract is ter- minated for cause due to noncompli- ance with a contract term (except for late delivery), a cure notice must be sent to understand the circumstances surrounding the noncompliance. Un- like the noncommercial termination for default and convenience, a show cause letter is seldom sent because the contractor should have notifed the government of the impending late delivery under the “excusable delay” requirement in the clause. The reality is that the government does not often receive this notification, and more show cause letters should probably be sent. Contract Administration All terminations must be in writ- ing and sent by certifed mail with a return receipt requested. When the contracting ofce arranges for hand delivery of the notice, a written ac- knowledgment is to be obtained from the contractor. Notices are to state: (1) the contract is being terminated for the convenience of the government (or for default) under the contract clause authorizing the termination; (2) the effective date of termina- tion; (3) the extent of termination; (4) any special instructions; and (5) the steps the contractor should take to minimize the impact on personnel if the termination, together with all other outstanding terminations, will signifcantly reduce the contractor’s workforce. (See paragraph (g) of the The best way to settle any termi- nation is to avoid one. Stay in touch with the contractor and address is- sues early. Both parties have respon- sibilities: Contractors should inform the government of any delays imme- diately, and the government should assist in resolving issues promptly. If a delivery is missed, immediate fol- low-up by the government is crucial. Delayed inquiries and responses can lead to the need for contract modif- cations and new delivery schedules. notice in FAR 49.601-2.) Communications
Of all the types of terminations, the best is the one that never happens. Unfortunately, terminations do hap- pen. However, some can be averted by staying focused on the contract and having open communication. When terminations do happen, the govern- ment needs to be fully aware of its rights and the formal process required to carry out the termination. Failure to practice due diligence by either the government or contractor will refect negatively in the courtroom. WOODS is a graduating senior at Alabama Ag- riculture and Mechanical University where she is receiving her B.S. in Business Admin- istration with a concentration in Manage- ment Information Systems. She is passion- ate about using technology and data to support efficient, transparent, and impactful public sector operations, and hopes to pur- sue a career in government contracts upon graduation. PEARSON is a Professor of Services Contract- ing at DAU. His career includes more than 39 years in the acquisition field. Prior to joining DAU eight years ago, he served as director of the Aviation Maintenance Directorate, Army Contracting Command-Redstone Arsenal, Ala. Pearson holds an M.P.A. from the Univer- sity of West Florida. The authors can be contacted through rodger.pearson@dau.edu . The views expressed in this article are those of the authors alone and not the Department of Defense. Reproduction or reposting of articles from Defense Acquisition magazine should credit the authors and the magazine.
Termination for Cause A government employee often hears only of terminations for default or for convenience. Termination for cause is used in the commercial world and applied to eforts for commercial items purchased under Part 12 of the FAR, Acquisition of Commercial Prod- ucts and Commercial Services. The clause for commercial contracting is somewhat diferent than those found referenced in FAR Part 49, Termina- tion of Contracts. The FAR clause at 52.212-4, Con- tract Terms and Conditions—Com- mercial Products and Commercial Services, covers a host of topics. Two primary paragraphs in the clause re- lated to our topic are the termination for the government’s convenience paragraph and the termination for cause paragraph. In many ways, these paragraphs have the same intent as the noncommercial terminations. However, the rules applied are some- what diferent. For example, the ter- mination for convenience paragraph does not require compliance with cost accounting standards and does not give the government the right to audit the contractor’s records. The processes also differ, although the FAR states that Part 49 processes should be used if they do not confict with those in FAR Part 12.
DAU Resources • CMC 1500 Introduction to Terminations (Online Training) • Contract Termination for the Acquisition Workforce (Playlist) • CLC 006 Contract Terminations (Course) • Contract Termination ( ACQuipedia Article)
28 | DEFENSE ACQUISITION | September-October 2025
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