Contract Termination for Convenience
Termination for Convenience Lawyers – Maximize Your Damages
Call Our Washington DC Lawyers 202-827-9750 for a Free Initial Consultation.
Having your project shut down under the “Termination for Convenience” clause causes immediate stress and anxiety because your anticipated profits have now taken away. Not understanding your legal obligations can further complicate the problem. If you are not well supported with experience legal advice from an experienced government contract law attorney, you can easily miss out on damages allowed by statute, fall prey to agency’s tactics at the negotiation phase or find out that your rights on appeal have been waived.
Watson & Associates’ government contract termination attorneys bring decades of diverse procurement expertise that guides large and small businesses to securing more favorable outcomes in claims submission and appeal level. Our unique posture involves our actual experience on the other side. Knowing how the agency thinks, plus our legal experience strengthens your ability to get a better result. See sample results achieved.
Contract Termination Services
- Preparation of partial or complete Termination for Convenience
- Direct representation on your behalf with the government
- Complete analysis of relevant and allowable recovery
- Post-termination costs
- Settlement proposal and contract termination agreement expenses
- Handling subcontracting claims when there is a termination for convenience
- Mitigation of contract damages
- Representation in termination for default cases
- Resolving matters pertaining to costs of performance incurred up until the time of contract termination
- Costs for any reasonable efforts in preparation for future work
- Proving legal requirements of liability, causation, and price adjustment
- Developing and preparing settlement proposals
- Appeals to the Armed Services Board of Contract Appeals (ASBCA)
First Understand the Agency’s Authority
Determination of a valid termination or breach of contract is the first step.
Federal procurement law allows the government to cancel the contract without fault to your company. Labeled a “termination for convenience”cancellation reasons within the government’s best interest. Lawyers must be able to assess this commonly missed question early in the termination process.
Valid reasons include (1) lack of available funds, (2) change in mission requirements or similar legal justifications. A contract termination should not be for the agency to secure a better deal elsewhere. Having a skilled government contracts attorney can impact the amount of damages you ultimately receive.
Comply With Your Legal Obligations in Termination for Convenience Cases
Failure to comply may significantly reduce your claim.
When a government contracting agency issues a termination for convenience letter, there are certain steps you must take. They include:
- Stop work immediately.
- Terminate all subcontracts related to the terminated portion of the contract.
- Take any action necessary to protect property in your possession in which the government has or may acquire an interest.
- Immediately notify the Contracting Officer of any legal proceedings resulting from any subcontract or other commitment related to the terminated contract.
- Settle subcontractor Claims
- Submit a settlement proposal within one year from the effective date of the termination.
- Dispose of termination inventory, as directed by the TCO.
Ways to Maximize Termination for Convenience Damages
Knowing what the law allows is critical to your payment.
After a contract termination for convenience, you can generally recover (1) cost incurred up until the time or termination, (2) continuing cost (after termination – ensure that you notify the agency ahead of time), (3) settlement expenses and (4) profits for work completed.
File a Timely Settlement Proposal
The Contract Disputes Act requires file a timely termination for convenience settlement proposal within one year of receipt of notice of termination. The only way to overcome this is to request an extension directly to the Contracting Officer. Until the request is granted, the one-year rule still applies. See Appeal of The Swanson Group, Inc., ASBCA No. 54863.
A common mistake when asserting your rights is to submit a claim without proof of damages. Do not attach excel spreadsheets as your method of proving damages. The agency will reject them or try to negotiate down your claim. You must also show:
- Causation; and
Keep the government informed as to your every step you make after you receive notice – before you take actions that incur additional cost. Even if you are in good faith trying to meet obligations, court can smack you with a reduction of claims because you did not notify the government. See Appeal of Insul-Glass., G.S.B.C.A. No. 8223, 89-1 B.C.A (CCH) 21361.
The Rule on Interest Claims
The CDA provides in 41 U.S.C. § 611: Interest on amounts found due contractors on claims shall be paid to the contractor from the date the contracting officer receives the claim pursuant to § 605(a) of this title from the contractor until payment thereof. The interest provided for in this section shall be paid at the rate established by the Secretary of the Treasury pursuant to Public Law 92-41 (85 Stat. 97) for the Renegotiation Board.
Note: You can only collect interest on funds you have actually spent.
Be Aware of the Difference in Termination Clauses
The paragraphs in 52.212-4 entitled “Termination for the Government’s Convenience” and “Termination for Cause” contain concepts which differ from those contained in the termination clauses prescribed in Part 49. Consequently, the requirements of Part 49 do not apply when terminating contracts for commercial items and contracting officers shall follow the procedures in this section. Contracting officers may continue to use Part 49 as guidance to the extent that Part 49 does not conflict with this section and the language of the terminations paragraphs in 52.212-4.
The conceptual basis of the commercial item clause is wholly different from the FAR 52.249-2 non-commercial item termination for convenience clause, which effectively converts fixed-price contracts to cost-reimbursable contracts for purposes of termination costs. Under the commercial item provision the contractor receives a percentage of the price regardless of costs (plus reasonable charges resulting from the termination).
Can Your Recover Termination Settlement and Attorney Fees?
Attorneys’ fees incurred in connection with preparation of a termination settlement proposal may be allowable as settlement expenses. Fees claimed in pursuing an appeal, however, can be recoverable under the Equal Access to Justice Act, 5 U.S.C. § 504.
Tips for Minimizing Contract Termination Loss
Always keep documentation to support your contract termination agreement damages. This is often a problem that can be a significant factor when submitting a settlement proposal.
Never rely on what the government tells you after notice of contract termination. Contractors tend to rely on the government for help. This approach can be a fatal mistake simply because there is potentially a conflict of interest problem, or the person giving you advice may often be the COTR/COR. For example, in a construction case, the COTR generally cannot bind the federal government.
You may now be faced with a situation where the contracting officer’s decision is contrary. Never attempt to handle a termination for convenience settlement on your own. These are issues that having the right government contracts attorney can make the difference between settling for minimal amounts versus the full amount owed to you. Download FREE T4C information
Handle Construction Subcontractor Claims in Terminations for Convenience
You can incorporate subcontractor claims in your termination settlement proposal. Ensure that you give the sample of scrutiny to subcontractor claims. The government contracting agencies will if you don’t. Mistakes will simply delay the process.
Note: as a proactive measure, always have your contracts attorney include a termination for convenience clause in your subcontract. Spell it out so that there is no confusion. Failure to include this clause will leave you exposed to a subcontractor’s lost profits.
Be familiar with the Christian Doctrine When you sign a government contract, a Termination for Convenience clause is read into every contract, even if the agency fails to include it. You cannot simply win your case because the required clause was omitted. See G.L. Christian & Associates vs. United States.
Conversion of Improper Default Termination
If the government has erroneously terminated your contract for default, courts will usually convert the default termination to convenience termination. This still limits recovery to avoid anticipated profits.
Watson Services Washington DC, Virginia, Maryland and All States
Federal law allows our government contract termination lawyers to represent construction and service contract clients that need Termination for Convenience assistance regardless of their resident state. Watson & Associates can represent businesses in Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, U.S. Virgin Islands, Utah, Vermont, Virginia, Washington, Washington, DC, West Virginia, Wisconsin, and Wyoming.
Cities in which our
attorneys handle federal contract terminations include Anchorage, AK; Atlanta, GA; Austin, TX; Chicago, IL; Colorado Springs, CO; Dallas, TX; Denver, CO; Indianapolis, IN; Las Vegas, NV; Los Angeles, CA; Miami, FL; Philadelphia, PA; San Antonio, TX; San Diego, CA; San Francisco, CA; San Jose, CA; Santa Clara, CA; and Tampa, FL.
Contact Our Washington DC Contract Termination Attorneys Today
If you are a prime contractor, subcontractor, or construction surety facing a termination for default or Termination for Convenience, contact our attorneys online or call 202-827-9750 in Washington DC.