Government Contract Termination for Convenience Clause Lawyers

FAR Termination for Convenience Clause & Settlement Proposal Lawyer FAR 52.249-2

Served with a Termination for Convenience of the Government (T4C contract) Notice Under FAR 52.249-2? Our Termination for Convenience Government Contract Lawyers Can Help You If You Stand to Risk Substantial Amounts. We Help Large and Small Businesses Nationwide to Avoid Common T for C Pitfalls and To Stand a Chance of Getting Paid Statutory Damages.

We Work With Small Businesses and Large Contractors Facing Possible Loss of Substantial Amounts

For convenience, you have received a notice of termination of your government contract. It is a substantial blow to your company. However, the FAR T4C clauses still give you the option to recoup statutory damages directly caused by the convenience termination.

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The regulations can be confusing and tricky. There could be a chance that you can miss out on tens of thousands of dollars. In the alternative, you may think that you are entitled to termination damages when you are not. Usually, the risk is extremely high when you expect your FAR termination for convenience settlement proposal to yield $250K or more.

Here’s What You Need to Know

FAR Termination for convenience of the government meaning? The Termination for Convenience Clause in a Government contract gives almost broad rights to the contracting officer to terminate your contract when it is in the Government’s best interest.

The Government may cancel the contract simply because it needs to change regardless of the contractor’s fault (termination for convenience of the government). See FAR 52.249-2.

“The effect of [a] termination for convenience [is] to convert [a] contract from a. fixed-price type, as awarded, into a cost-reimbursable type permitting the contractor to recover its allowable costs incurred in the performance of the contract.” Anlagen-und Sanierungstechnik GmbH, ASBCA 37878, 91-3 BCA ¶ 24,128, at 120,753 (citing SevenScience Industries, ASBCA 23337, 80-2 BCA ¶ 14,518, at 71,555).

Fixed Price Contract Termination Recovery: A contractor whose fixed-price contract is terminated for the convenience of the Government is entitled to recover (a) allowable costs incurred in the performance of the work, (b) a reasonable profit for work performed, (c) reasonable settlement expenses, and (d) certain ‘continuing’ (post-termination) costs,” Paul J. Seidman & Robert D. Banfield, Maximizing Termination for Convenience Settlements, 95-5 Briefing Papers 2 (Apr. 1995), with performance cost recovery being “limited to the total contract price.” CTA I, 22-1 BCA at 184,947 (citation and italics omitted).

Who proves the cost incurred in a T4C? The contractor bears the burden of establishing the costs that it incurred in performing its contract. See Trinity Installers, Inc., AGBCA 2004-139-1, 05-1 BCA ¶ 32,868, at 162,890 n.2 (“The general burden of proof on a termination for convenience settlement is the contractor’s.”); Hospital Healthcare Systems, Inc. v. Department of the Treasury, GSBCA 14442-TD, 98-2 BCA ¶ 29,986, at 148,312 (“Appellant has the burden of establishing its entitlement to disputed items of quantum in termination for convenience settlement appeals.”)

Tip: The government contract termination for convenience process can be very time-consuming and tedious. You should always have your account ready to work with our T4C contract attorneys to make sure that your accounting costs and evidence is supportive of your termination claims and costs.

Tip: A certification made by the prime contractor sponsoring its subcontractor’s termination for convenience claim must be CDA compliant. See Group Health Incorporated on Behalf of Douglas Consulting & Computer Services, Inc.,

Tip: When filing termination for convenience appeals, you cannot raise new arguments for the first time on appeal.

Legal Concerns

Regulations and FAR T4C clauses primarily drive the convenience termination process and any damages resulting from the contract termination. Many large defense contractors and small businesses (construction and services) often find themselves confused about what compensation is allowable when the contract is terminated for convenience.

When it comes to the FAR termination of convenience clause rules, you wonder whether you can claim lost profits, whether you can claim Termination for Convenience subcontractor damages in your settlement proposal, or even if the government breached the contract.

Contractors and sometimes their attorneys confuse themselves about whether an actual impasse caused the termination for convenience settlement proposal to convert over to a Contract Disputes Act (CDA) claim. When the risks and possibility of missing out on allowable convenience damages, we bring over two decades of government contract termination for convenience experience to the table.

Tip: Can the contracting officer simply claim on appeal in its affirmative defenses that your failure to pay subcontractors amounts to a “prior breach of contract [that] bars your recovery” of any termination settlement costs? No. The Civilian Board of Contract Appeal stated in WILLIAMS BUILDING COMPANY, INC., CBCA 7147 in March, 2024. CBCA stated that once the agency terminates your company for convenience, your company then becomes entitled to recover the allowable costs that it can show it incurred in performing the contract. Id citing, Seven Science, 80-2 BCA at 71,555. If the agency want to hold this over your head, then it would have terminated you for default.

Who We Are and What We Do

Watson & Associates is a boutique-size federal government contract and business law firm. We have law offices in Washington, DC, and in Denver, Colorado.  Our government contract FAR termination for convenience clause lawyers provides detailed guidance and legal counsel to small businesses and large government contractors when the contracting officer terminates the contract for convenience (T4C) under FAR 52.212-4 and FAR 52.249-2. Our goal is to help our clients avoid the most costly mistakes when providing terms for convenient legal representation and developing settlement proposals.

• Our legal team helps you to assess the facts and makes sure that the  agency has not violated the law
• Our Termination for Convenience contract attorneys also helps you analyze each case and guide you to maximize your damages.
• We help you to avoid some of the most costly mistakes seen in government contract termination cases.
• If there are grounds to appeal a convenience termination, our appellate lawyers can help.
• Help with FAR termination for convenience cost-reimbursement matters

Tip: If your contract has a minimum guarantee and that amount has not been paid when the contract is terminated for convenience, the government may be in breach of contract. Our contract termination for convenience attorneys can help.

The lawyers at Watson & Associates bring more than 30 years of federal procurement experience and can help your company plan and assess your T for C recovery and aim to secure all statutory compensation. Our T for C attorneys are seasoned government contract termination lawyers and understand the procurement process from convenience termination settlement proposal submission to appeal the contracting officer’s decision to terminate for convenience.

T for C Government Contract Termination for Convenience Meaning?

A government contract termination convenience clause is almost always found in government contracts. This provision allows the government to unilaterally terminate a contract in whole or in part when it’s in the government’s best interest. This is different from when the contractor breaches the contract and is terminated for default. FAR 52.249 -2 develops a process for terminating a contract for convenience.

Our government contract attorneys help small businesses and larger DOD contractors to prepare termination for convenience settlement proposals, assess the compensation resulting from the convenience termination and assess whether the contracting offer has also breached the contract, or acted in bad faith.

What are T4C Contract Termination Costs You Can Recoup (FAR 31.205-42 )

Government Contract convenience terminations generally give rise to the payment of contractor costs or the need for special treatment of costs that would not have arisen had the contract not been terminated for convenience . Under FAR 31.205-42  Termination for Convenience costs, in most cases, and depending on your specific facts, you can usually get the following:

• Common items. The costs of items reasonably usable on the contractor’s other work shall not be allowable unless the contractor submits evidence that the items could not be retained at cost without sustaining a loss. 
• Costs continuing after termination. Despite all reasonable efforts by the contractor, costs which cannot be discontinued immediately after the effective date of termination are generally allowable. 
• Initial costs. Initial costs, including starting load and preparatory costs, are allowable – certain conditions apply
• Loss of useful value. Loss of useful value of special tooling, and special machinery and equipment is generally allowable – certain conditions
• Rental under unexpired leases. Rental costs under unexpired leases, less the residual value of such leases, are generally allowable
•  Alterations of leased property. The cost of alterations and reasonable restorations required by the lease may be allowed when the alterations were necessary for performing the contract.

• Settlement expenses.

Tip: Do Not Automatically Sign Contract Releases Simply Because the Contract Was Terminated for Convenience – Speak to an Attorney.

Watch This Video to Grasp More Important Information that May Apply to You If the CO Decides to Terminate for Convenience

T for C Termination for Convenience Government Contract Attorneys

Cheryl E. Adams is an Associate Attorney with Watson and Associates, LLC.  She is a former federal Contracting Officer with years of hands-on experience with all phases of federal procurement.  She brings to clients an intimate understanding of the Federal Acquisition Regulation (FAR) and T for C contract FAR termination for convenience government contract clauses as an insider perspective on the procurement processes of a federal government headquarters. 

When giving termination for convenience legal representation, she understands the government’s relationships with small businesses and subcontractors, as well as relationships with Fortune 500 corporations.  She has worked side by side with government auditors, and personally conducted government property audits.  She has handled all sizes of contract award from micropurchases through major systems. Read more..

Note to Contractors: Do Not Sign a Release of Claims Unless You Speak to a T4C Contract Termination for Convenience Government Contract Lawyer.

Government Contract Termination for Convenience Settlement Proposals Deadlines ( Prime and Sub) (TSP)

A government contract termination for convenience settlement proposal in federal contracting allows for companies to submit a request for payment within one year of the effective date of the termination or notice of contract FAR termination for convenience (T4C contract – whenever the contractor received notice first). The reason for the Termination for Convenience settlement proposal is to allow your company to recover costs and profits already incurred up until the contract was terminated. Our government contract termination for convenience clause and FAR lawyers and consultants can help your company develop and prepare your proposal once the contract is terminated.

Per FAR 52.249-2, After termination, the Contractor shall submit a final termination settlement proposal to the Contracting Officer in the form and with the certification prescribed by the Contracting Officer. The Contractor shall submit the proposal promptly, but no later than 1 year from the effective date of termination, unless extended in writing by the Contracting Officer upon written request of the Contractor within this 1-year period.

However, if the Contracting Officer determines that the facts justify it, a termination for convenience government contract settlement proposal may be received and acted on after 1 year or any extension. If the Contractor fails to submit the proposal within the time allowed, the Contracting Officer may determine, on the basis of information available, the amount, if any, due the Contractor because of the termination and shall pay the amount determined.

Tip: When a court considers your termination for convenience settlement proposal, “it is necessary to ascertain the extent to which appellant incurred costs in the performance of the terminated contract but it is not relevant to assign such costs to changes, delays, or ‘damages’ which might be recoverable absent a Termination for Convenience clause.” Seven Science, 80-2 BCA at 71,555; see Worsham Construction Co., ASBCA 25907, 85-2 BCA ¶ 18,016, at 90,369.

Tip: When you appeal a termination for convenience denial of your settlement proposal, the government may try to use the fact on appeal that your settlement proposal was an act of fraud under the False Claims Act. Can the government do this?

They often do. However, the Armed Services Board of Contract Appeals in  Nexus Construction Co., ASBCA 51004, 98-1 BCA ¶ 29,375, at 146,017 (1997) stated that, “..despite the Government’s allegations that the contractor’s TSP was fraudulent, “[w]e clearly have jurisdiction under the [CDA] to decide the dispute concerning appellant’s entitlement to termination costs under the Termination for the Convenience of the Government clause.” See also, Anlagen-und Sanierungstechnik GmbH, 91-3 BCA at 120,753 (“That fraud may have been practiced in the course of negotiations for settlement of those costs . . .does not deprive us of jurisdiction under the CDA” to “decide the dispute concerning appellant’s entitlement to [convenience] termination costs under the contract clause.”); see also Environmental Systems, 03-1 BCA at 159,053 (finding jurisdiction “to determine whether appellant submitted falsified progress payment requests, in violation of the standard payment clauses,” without regard to whether those falsifications, if intentional, might also violate the False Claims Act, 31 U.S.C. § 3729 (2000)). 

The above are also issues that our government contract convenience termination appeal lawyers can help you with.

Avoid Common Issues When Termination for Default Appeal Decisions are Converted to Termination

In the absence of a final contracting officer decision regarding FAR termination for convenience costs or other monetary damages related to the default termination, whether premised on a contractor claim or on a government claim, you first have to give the contracting officer notice that you seek these costs.  See The Hanover Insurance Co., et al. v. United States, No. (May 27, 2014).  However, the Hanover ruling does not foreclose contractors from pursuing contract FAR 52.249-2 termination for convenience government contract claims after termination for default has been converted. 

• A termination for convenience settlement proposal is not a Contract Disputes Act claim until the parties reach an impasse.

Additional T4C Contract  FAR Termination Clause Information

• Termination settlement damages,
• Difference between termination of contract for convenience and termination for default,
• Contract termination notice – a CEO’s biggest fear.
• Find out When is A Default Converted to Convenience Termination
• Avoid Unnecessary Audits of Your Settlement Proposal:  How to Make the Most of the New $750,000 Audit Limit.

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Call Our Government Contract Termination for Convenience Clause Lawyers

Immediate Government contract convenience termination legal representation: If you have received a contract termination for convenience clause notice, a final decision from the contracting officer, or are trying to maximize your T for C contract claims and settlement agreement under FAR 52.249-2, need help with contract damages, a government contract termination for convenience settlement proposal consulting or need help with litigation and appeals, call our FAR Termination for Convenience government contracts law attorneys and FAR termination clause lawyers at 1-866-601-5518 for a FREE Initial Consultation.