Maximize T4C Government Contract Termination for Convenience Costs Recoverable.
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Although the federal government has a unilateral right to terminate the contract for convenience (T4C government contract termination clause), sometimes the agency’s rationale for canceling the contract could be unlawful. In addition, few government contractors are aware of the allowable damages when the government terminates the contract for convenience.
- Know what you are entitled to versus what you may think is owed
- Get a detailed assessment of how to maximize your termination damages
- Understand that the CO cannot just use the contract termination clause for any reason
- Over 30 years of experience in government contracts law
- Prepare termination settlement proposal in a way that preserves any rights you may have on appeal
- Develop termination settlement proposals to meet Contract Disputes Act requirements in the event that the government opts to not pay.
- Nationwide help for
You have 90 days from the date of the CO’s denial to file an appeal to the Agency Board.
We help federal contractors regardless of location
With law offices in Washington, D.C. and Colorado, the FAR attorneys at Watson & Associates, LLC help small and large businesses to diligently identify statutory entitlements and to maximize their claims under the FAR 52.249 2 termination by convenience clause.
- All of your claims and damages may not be allowable.
- Get an assessment of whether the government actually breached the contract (most contractors miss this critical step.)
FAR Part 49 Termination for Convenience Services
Utilizing our 30 years of experience of actually working for federal contracting agencies, and litigating disputes under the FAR Termination for Convenience Clause, we are in a unique position to help clients to maximize settlement proposal claims. We help with:
- Termination for convenience settlement proposal preparation
- Legal advice when the contracting officer issues notice of t4c government contracts
- Assessment of termination for convenience damages
- Responding to notice of contract termination
- Termination settlement proposal consulting
- Termination of contract negotiations
- Liquidated damages and contract disputes
- Litigation and appeals for services and construction contracts
Clients: Our FAR part 49 attorneys and contract termination claims consultants work with small businesses and large DOD contractors across the country from various industry groups including construction, Information Technology (IT), Aerospace and defense, professional services, manufacturers, medical services, engineering, and other service contractors.
FAR 52.249 2 TERMINATION FOR CONVENIENCE DAMAGES AND COMPENSATION
As a general proposition, the contracting agency’s assessment of liquidated contract termination by convenience compensation is a government claim against a contractor, Sun Eagle Corp. v.United States, 23 Cl. Ct. 465, 480 (1991). The government’s claims for liquidated damages can be directly appealed to the Court of Federal Claims, Garrett v. Gen. Elec. Co., 987 F.2d 747, 749 (Fed. Cir. 1993).
TIPS FOR FEDERAL GOVERNMENT CONTRACTORS
- Do not wait more than a year to submit your settlement proposal after the contracting officer terminates the contract for convenience.
- A court will deny an appeal if the contract convenience termination claim shows that you did not perform any percentage of the contract work prior to the termination.
- You must at least have performed or deliver something to the government to get paid.
- Knowing what the government can and cannot do is everything when you are trying to get paid.
WHEN CAN THE GOVERNMENT ISSUE A CONVENIENCE TERMINATION?
FAR 52.249 contract termination clause states that the agency can terminate the contract for convenience when it is in the “Government’s interest.” FAR 52.249 has no expressed definition of what is the government’s interest. Federal courts recognize certain instances where the agency has a valid interest. Reasons for termination for convenience (T4C) include:
- The government no longer needs the contracted supplies or services
- The contractor refuses to accept a contract modification under the provisions of the contract
- There are questions about the propriety of the award, or about continued performance of the contract
- The contracted firm is not eligible for award (bid protest)
- Deteriorated business relationships between the contractors and the government
- The government restructures its arrangements to perform the work in-house.
- The contracted work seems to be too costly or impossible
- Lack of funds
- Mission changes
OTHER T4C REQUIREMENT FOR THE PRIME CONTRACTOR
Notify the Contracting Officer of all pending legal proceedings that are based on subcontracts or purchase orders under the contract, or in which a lien has been or may be placed against termination inventory to be reported to the Government.
Promptly notify the Contracting Officer of any such proceedings that are filed after receipt of the Termination Notice
T4C TERMINATION INVENTORY
The FAR termination for convenience clause requires you to transfer title and deliver to the Government all termination inventory of the various types or classes, including subcontractor termination inventory that you have the right to take. Follow the contracting officer’s instructions or ask for them.
- To settle your proposal, it will be necessary to establish that all prime and subcontractor termination inventory has been properly accounted for. For detailed information, see Part 45.
- Note that you can only receive compensation for the terminate portion of the contract
Additional T4C Contract 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 Termination for Default Converted to Convenience Termination
- Avoid Unnecessary Audits of Your Government Contract Termination for Convenience Settlement Proposal: How to Make the Most of the New $750,000 Audit Limit.
FAR Subpart 49.2 — Additional Principles for Fixed-Price Contracts Terminated for Convenience
(a) A settlement should compensate the contractor fairly for the work done and the preparations made for the terminated portions of the contract, including a reasonable allowance for profit. Fair compensation is a matter of judgment and cannot be measured exactly. In a given case, various methods may be equally appropriate for arriving at fair compensation. The use of business judgment, as distinguished from strict accounting principles, is the heart of a settlement.
(b) The primary objective is to negotiate a settlement by agreement. The parties may agree upon a total amount to be paid the contractor without agreeing on or segregating the particular elements of costs or profit comprising this amount.
(c) Cost and accounting data may provide guides, but are not rigid measures, for ascertaining fair compensation. In appropriate cases, costs may be estimated, differences compromised, and doubtful questions settled by agreement. Other types of data, criteria, or standards may furnish equally reliable guides to fair compensation. The amount of recordkeeping, reporting, and accounting related to the settlement of terminated contracts should be kept to a minimum compatible with the reasonable protection of the public interest.
FAR 49.202 Profit
(a) The TCO shall allow profit on preparations made and work done by the contractor for the terminated portion of the contract but not on the settlement expenses. Anticipatory profits and consequential damages shall not be allowed (but see 49.108-5). Profit for the contractor’s efforts in settling subcontractor proposals shall not be based on the dollar amount of the subcontract settlement agreements but the contractor’s efforts will be considered in determining the overall rate of profit allowed the contractor. Profit shall not be allowed the contractor for material or services that, as of the effective date of termination, have not been delivered by a subcontractor, regardless of the percentage of completion. The TCO may use any reasonable method to arrive at a fair profit.
Call Our Government Contract Termination for Convenience Clause Lawyers
If you have received a notice of contract termination, a final decision from the contracting officer, or are trying to maximize your T4C government contract claims and settlement agreement under FAR 52.249-2, need help with contract termination for convenience damages, contract termination settlement proposals or need help with litigation and appeals, call our FAR T4C government contracts law attorneys at 1-866-601-5518 for a FREE Initial Consultation.