FAR Termination for Default Clause & Termination for Cause (T4D Lawyers)

FAR Part 49 Government Contract Termination for Default Appeals/ FAR Termination for Cause – Nationwide Representation for Large Government Contractors and Small Businesses

Receiving a notice of government contract termination for default (T4D) under FAR Part 49, or termination for cause will surely develop stress and frustration within the company. Sometimes, a federal project is terminated before its normal completion for violating the provisions of the contract

In either event, appealing a termination for default decision is not only stressful but also a tricky endeavor. The ability to get future contracts because of bad past performance or CPARS rating is on the line. You sometimes have no choice but to appeal the T4D.

 AVOID COSTLY TERMINATION FOR DEFAULT APPEAL MISTAKES. DOWNLOAD YOUR FREE T4D CHECKLIST NOW

A Termination for Default is the complete or partial termination of a government contract because of a contractor’s actual or anticipated failure to meet its contractual obligations.  In other words, the federal government can terminate for default if you fail to meet a deadline, perform on time, or fail to comply with the contract clauses. If you do not satisfactorily respond to a show cause or provide assurances that you will complete the contract, the contracting officer may choose to terminate you contractor for default.  

FAR Subpart 49.4 allows the government to terminate the contract for valid termination reasons only. Unfortunately, the fight to appeal or overturn the T4D can be a frustrating and costly one. However, once you have been terminated for default, your past performance and reputation for future contracts are at risk.

What You Need to Know About T4Ds and the CO’s Decision

• The CO has certain hoops to jump over under the FAR before terminating for default.
• When the contracting officer makes a decision subject to the Contract Disputes Act, “[s]pecific findings of fact are not required,” and “[i]f made, specific findings of fact are not binding in any subsequent proceeding.” 41 U.S.C § 7103(e).
• The statute relating to a FAR termination for default expressly provides that if a contractor challenges that decision in the Court of Federal Claims (Claims Court), the action “shall proceed de novo” under the court’s rules. Id. § 7104(b)(4). The same is true when the challenge is brought to a Board of Contract Appeals:
• The case must proceed de novo, based on the evidentiary record before the Board and not the officer’s reasoning or findings of fact. See Wilner v. United States, 24 F.3d 1397, 1401–02 (Fed. Cir. 1994) (en banc) (“The plain language of the CDA and our decision in Assurance also make it clear that, in court litigation, a contractor is not entitled to the benefit of any presumption arising from the contracting officer’s decision. De novo review precludes reliance upon the presumed correctness of the decision.
• Once you appeal a contracting officer’s decision to terminate your government contract for default, the parties start in court or before the respective Board of Appeals with a clean slate.” See Assurance Co. v. United States, 813 F.2d 1202, 1206 (Fed. Cir. 1987).

Assess the Contracting Officer’s Decision Under the Mandatory FAR Language FAR 49.402-3 Procedure for default.

…

(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 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.

We help small businesses and terminate contractors nationwide to minimize getting their appeal cases thrown out.

 We help small businesses and large DOD contractors uncover legal errors by contracting officers. Sometimes, the facts could reveal a breach of contract by the government. Given the timing to appeal the default termination how you handle the breach of contract claim can be very tricky and even dangerous.  

Watson & Associates’ Government Termination of Contracts attorneys guide clients through all phases of a FAR termination for default (T4D meaning).

(T4D Meaning) Termination for Default Vs Cause

A FAR 49 Termination for Default vs FAR termination for cause focuses on a  complete or partial termination of a government contract because the government alleges the contractor’s actual or anticipated failure to meet its obligations under the contract. In contrast, a FAR Termination for Cause occurs when a contract default is issued under FAR ParT 12 termination for cause vs default contract for the acquisition of commercial items.

We help from the notice to cure process all the way to show cause and ultimate contract default termination decisions under FAR 49.4. Whether the contracting officer issues a FAR termination for cause under FAR Part 12 or default termination under FAR Part 49, we can help you assess the merits before filing an appeal to the various boards of contract appeal or the United States Court of Federal Claims (COFC)

When the federal government terminates your contract for default, it can still recover unliquidated progress payments, re-procurement costs for the same or similar items, services, or work, and any other damages resulting from your failure to perform according to the contract terms.

Watch this video to add critical information to succeed in the T4D appeal process under FAR Part 49

Sometimes, a project is terminated before its normal completion. However, in government contracting, a default termination occurs primarily because of allegations and a final decision from the government that such a termination is the contractor’s fault.

• You Should Not Ask for Breach of Contract Damages on Appeal Before Alleging Breach at the Contracting Officer Level.
• Generally, Under the FAR default clause,  Appellate Courts Only Have the Remedy of Converting Your Default Termination into a Termination for Convenience.

Tip: The courts look at the Government’s termination for default clause as a harsh penalty. Contracting officers should look at this measure only as a last resort and not as a threat or retaliation to put companies out of business. Furthermore, the impact of a default termination has serious consequences for the company’s past performance when bidding on future government projects.

Having a government contract termination lawyer is essential to make sure that the agency follows are statutory requirements before issuing a notice of contract default.

The Watson law firm represents government contractors of all sizes, including some of the largest defense contractors. Some of our staff have worked for federal contracting agencies and understand the frequent mistakes made.

What is Government Contract Termination for Default? T4D Meaning

 When the Contracting Officer (CO) issues a termination for default on your federal contract, it means a complete or partial termination for default.

T4D Meaning: Government contract default termination is the exercise of the Government’s contractual right to completely or partially terminate a contract because of the contractor’s actual or anticipated failure to perform its contractual obligations. These are all fact-driven situations. When the agency defaults the contractor, the company is left in a tough situation and has to defend itself. The company’s future is at risk.

If your company can establish, or it is otherwise determined that your company was not in default or that the failure to perform is excusable, i.e., arose out of causes beyond the control and without the fault or negligence of your company, the default clauses prescribed in FAR 49.503 and located at FAR 52.249 provide that a default termination will be considered to have been a termination for the convenience of the Government, and the rights and obligations of the parties governed accordingly.

Appellate courts look at a government contract default and termination as a drastic sanction from the government and look at these decisions very carefully. The contracting officer will more than likely state that the default decision was due to your actual or anticipated failure to meet your contractual obligations.

What are The Consequences of a Termination for Default?

Tip: If you are unsuccessful in getting your termination for default overturned or converted to a termination for convenience, the consequences can cripple your company. It will severely impact your past performance scores on future bids, you can also face suspension and debarment. Last but not least, the government can collect additional costs to procure the goods or services. 

FAR Termination for Default Attorney Services

As FAR termination for cause government contract attorneys, we help clients throughout the United States and overseas to navigate through the termination for default and appeal process and with the following:

• Appealing the contract termination for default action to the respective Board of Contract Appeals or Court of Federal Claims
• Litigation and negotiations to have defaults turned to termination for convenience
• Consulting and preventive guidance with default and termination matters
• Termination for cause vs default
• FAR compliance and outside counsel services
• Help with default terminations that lead to investigations and suspension and debarments.

Challenging T4D Litigation and Appeals

When the contracting officer issues a notice of contract termination, you can appeal the decision to the Civilian Board of Contract Appeals, Armed Services Board of Contract Appeals (ASBCA) or United States Court of Federal Claims (COFC). In either case, you must act promptly. Each court has its own rules that you must follow.

Be mindful that appealing government contract  T4D default decisions to the U.S. Court of Appeals for the Federal Circuit also have certain deadlines and court rules to follow. Our government contract termination for default appeal attorneys can explain and represent you in these matters.

Other Termination for Default Relief on Appeal

The general rule is that appellate courts rule that termination for default clauses provide that an unlawful default termination will be converted to a termination for convenience. See FAR 52.249-8(g); FAR 52.249-10(c); FAR 52.249-6(b); ALKAI Consultants, LLC, ASBCA 56792, 10-2 BCA ¶ 34,493 (converted Termination for Default to T4C based on unanticipated conditions and government failure to cooperate).

However, if you proved that the government acted in bad faith while terminating a contract for default, courts of appeals and boards of contract appeals can award common law breach damages rather than the usual termination for convenience costs. See Apex Int’l Mgmt. Servs., Inc., ASBCA No. 38087, 94-2 BCA ¶ 26,842 (finding 20 breaches ASBCA holds Navy liable for breach damages); Sigal Constr. Corp., CBCA No. 508, 10-1 BCA ¶ 34,442 (finding T4C to be in bad faith where GSA deleted work from a construction contract to have that work performed by another contractor at a lower price).

Tip: Proving bad faith termination for default is tough to show. However, if your facts are convincing, it can be done.

Converting a FAR Termination for Default Into a Termination for Convenience

If a FAAR termination for default appeals court agrees that the termination default was unlawful, the court only has the authority to convert the T4D default into a termination for convenience. Litigation and appeals practice are very expensive. However, the future of doing business with the federal government and having a better past performance record may be worth the effort.

The Federal Government agency usually has two options for terminating government contracts: a termination for default (T4D) under the FAR and a termination for convenience (T4C). You should keep in mind that the FAR contains various default clauses that may incorporated into your contract.   See e.g., FAR 52.249-8 and FAR 52.249-9. The clauses contain not only different bases for termination but also different notice requirements. For example, the Fixed-Price Supply and Service clause FAR 52.249-8 is different from the Fixed-Price Construction clause FAR 52.249-10.

 AVOID COSTLY TERMINATION FOR DEFAULT APPEAL MISTAKES. DOWNLOAD YOUR FREE T4D CHECKLIST NOW

Were You Terminated for Default on a Contract? Call Our T4D Appellate Lawyers 

If your company is facing default and termination of a government contract, Watson & Associates’ FAR Part 49 contract T4D termination for default appeal lawyers frequently litigate adverse contractor termination cases before the various government contracting courts. Call our government contract appellate lawyers for immediate help with Federal Acquisition Regulations FAR 49.4 Cases if you have been terminated for default.  Call Toll Free 1.866.601.5518. Speak to Theodore P. Watson