Termination for Convenience Clause LawyersWatson & Associates’ termination for convenience lawyers provide detailed guidance and legal counsel to small business and large government contractors when the contracting officer terminates the contract for convenience. Our goal is to help our clients avoid the most costly mistakes seen.

When the federal government issues a termination for convenience letter, your company is devastated because it loses income for long-term contracts.  How you respond to the termination is critical.  

The FAR termination for convenience gives the contracting officer almost absolute power to unilaterally terminate the contractor through no fault of the contractor.  Reasons for termination can include mission changes, shortage of funds and other reasonable reasons. In response to the decision, contractors are entitled to record certain damages. The goal is to maximize termination damages such as incurred costs and certain continuing costs in a traditional Government contract.

 FAR 52.249-2 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.

If your contract is a contract for commercial items or services under Federal Acquisition Regulation Part 12, the contracting officer will pay your company the contractor the percentage of the contract price that corresponds to the percentage of completion and charges directly resulting from the termination.

Compared to a termination for default, knowing what are the respective termination for convenience damages can be problematic for both small and large businesses. The government I not obligated to maximize your damages recovery. Instead, the contracting officer’s job is to do the opposite – minimize payouts.

FAR 52.249-2 Termination for Convenience Attorney Services

After receiving a contract termination notice, the government contract lawyers at Watson & Associates, LLC can help you to:

  • Assess what damages you can receive
  • Help you to develop and submit a termination settlement proposal
  • Negotiate T4C proposals
  • Litigation and Appeals

Termination Settlement Proposals (TSP)

A termination settlement proposal in federal contracting allows for companies to submit a request for payment within one year of the notice of contract termination for convenience (T4C). The reason for the T4C settlement proposal is to allow your company to recover costs and profits already incurred up until the contract was terminated. Our contract termination lawyers and consultants can help your company to develop and prepare your proposal the contract is terminated.

What Must You Prove to the Government with Your Termination Settlement Proposal?

The first requirement is to submit your termination inventory. However, under the termination for convenience clause, you must mitigate damages by looking at materials that can be diverted to another contract.  Be aware that subcontractors also must submit their claims which then is included as part of your termination for convenience settlement proposal.

FAR 49.603 Termination for Convenience Settlement Agreement formats.

Per FAR 49.603, the formats to be used for termination for convenience settlement agreements should be substantially as shown in this section (see 49.109). Termination contracting officers (TCO’s) may, however, modify the contents of these agreements to conform with special termination clauses prescribed or authorized by their agencies.

What Happens If Your Subcontract Does Not Include a Termination for Convenience Clause?

A “Termination for Convenience” clause is incorporated in every federal government prime contract. If for some reason, the clause is not included, the courts will read it in as though it were there. Under the Christian doctrine, as set forth in G.L. Christian & Assocs. v. United States, a “Termination for Convenience” clause is read into Government prime contracts because it must be included by regulation. 

What are the Reasons Why the Government Cannot Termination for Convenience?

As a general matter, the regulations do not define what is in the ‘government’s best interest’. Courts have made it clear that the contracting officer should not terminate the contract for convenience simply to get a better deal. A prime example is when the government terminates the contract for convenience but then immediately issues a solicitation for the exact work. Another way to address the government’s decision to terminate is where there is concrete proof of bad faith. This is a high burden to prove. Many terminations for convenience lawyers fail in this effort.

What is the Potential for Profit When Contracts Are Terminated for Convenience?

Government contractors can only recover profit on the work that’s been already completed. You cannot recover future profits under a T4C as well as profits outside of the terminated contract.

What Must You Do When You Receive a T4C Termination Notice?

After receiving the contract termination notice, you must 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.

Can You Appeal Government Contract Termination for Convenience Decisions?

Appealing a termination for convenience decision is usually difficult to be successful.  To succeed wrongful termination claim on appeal, you must prove that the termination was either in bad faith or was an abuse of discretion. See Optimum Services, Inc. v. Dep’t of Interior, CBCA No. 4968 (July 1, 2019). Each case is very fact specific. If you believe that your case has the merits of an appeal, contact our attorneys today.

Additional T4C Termination Clause Information

Call Our Government Contract Termination for Convenience Clause Lawyers

If you have received a contract termination notice, 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, a termination settlement proposal consulting or need help with litigation and appeals, call our FAR T4C government contracts law attorneys and termination for convenience lawyers at 1-866-601-5518 for a FREE Initial Consultation.