Termination for Convenience Clause Lawyers

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

Served with a Government Contract Termination for Convenience (T4C) Notice Under FAR 52.249-2? Our Term for Convenience Government Contracts Lawyers Can Help You If You Stand to Risk Substantial Amounts. We Help Large and Small Businesses Nationwide.

Regulations primarily drive the convenience termination process and any damages resulting from the 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.

You wonder whether you can claim lost profits, whether you can claim 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.

Here’s What You Need to Know

Termination for convenience meaning? The Convenience Termination 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.

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

What You Need to Know – Your Obligations Under FAR Part 49 

When the contracting officer issues you a partial or full termination for convenience government contract notice, you MUST follow the requirements of FAR 49.104 Duties of prime contractor after receipt of notice of termination. It states

After receipt of the notice of termination, the contractor shall comply with the notice and the termination convenience clause of the contract, except as otherwise directed by the TCO. The notice and clause applicable to convenience terminations generally require that the contractor-

(a) Stop work immediately on the terminated portion of the contract and stop placing subcontracts thereunder;

(b) Terminate all subcontracts related to the terminated portion of the prime contract;

(c) Immediately advise the TCO of any special circumstances precluding the stoppage of work;

(d) Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price for the continued portion, supported by evidence of any increase in the cost, if the termination is partial;

(e) Take necessary or directed action to protect and preserve property in the contractor’s possession in which the Government has or may acquire an interest and, as directed by the TCO, deliver the property to the Government;

(f) Promptly notify the TCO in writing of any legal proceedings growing out of any subcontract or other commitment related to the terminated portion of the contract;

(g) Settle outstanding liabilities and proposals arising out of termination of subcontracts, obtaining any approvals or ratifications required by the TCO;

(h) Promptly submit the contractor’s own settlement proposal, supported by appropriate schedules; and

(i) Dispose of termination inventory, as directed or authorized by the TCO.

What You Need to Know About 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. Under FAR 31.205-42 Termination 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.

     (1) Settlement expenses, including the following, are generally allowable:

    (i) Accounting, legal, clerical, and similar costs reasonably necessary for-

    (A) The preparation and presentation, including supporting data, of settlement claims to the contracting officer; and

    (B) The termination and settlement of subcontracts.

    (ii) Reasonable costs for the storage, transportation, protection, and disposition of property acquired or produced for the contract.

    (iii) Indirect costs related to salary and wages incurred as settlement expenses in (i) and (ii); normally, such indirect costs shall be limited to payroll taxes, fringe benefits, occupancy costs, and immediate supervision costs.

    (2) If settlement expenses are significant, a cost account or work order shall be established to separately identify and accumulate them.

  • Subcontractor claims. Subcontractor claims, including the allocable portion of the claims common to the contract and to other work of the contractor, are generally allowable.

What Do I Need to Do After Receiving A Notice of Termination of the Contract? 

 After receipt of a Notice of a convenience termination of the contract, and except as directed by the Contracting Officer, the Contractor shall immediately proceed with the following obligations, regardless of any delay in determining or adjusting any amounts due under this clause:

(1) Stop work as specified in the notice.

(2) Place no further subcontracts or orders (referred to as subcontracts in this clause) for materials, services, or facilities, except as necessary to complete the continued portion of the contract.

(3) Terminate all subcontracts to the extent they relate to the work terminated.

(4) Assign to the Government, as directed by the Contracting Officer, all right, title, and interest of the Contractor under the subcontracts terminated, in which case the Government shall have the right to settle or to pay any termination settlement proposal arising out of those terminations.

(5) With approval or ratification to the extent required by the Contracting Officer, settle all outstanding liabilities and termination settlement proposals arising from the termination of subcontracts; the approval or ratification will be final for purposes of this clause.

See also  FAR 52.249-2 Termination for Convenience of the Government (Fixed-Price)

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

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 assesses the facts and makes sure that the  agency has not violated the law
  • Our T4C attorneys also help 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.

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 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.

Reasons Government to Use FAR Termination for Convenience Clause

Not every case is the same. However, popular reasons for the agency using the term for convenience clause include;

  • Changes in need after contract award
  • Changes or advancements in technology
  • Difficulty or impossibility of performance due to contract requirements ( improper specs, faulty drawings etc)
  • Lack of funding
  • Decisions in Bid protests
  • Mission has changed

GET HELP PREPARING YOUR TERMINATION SETTLEMENT PROPOSAL

Note: When Considering What is Term For Convenience of the Government, The Government Cannot Terminate the Contract simply to Get a Better Deal ( See Torncello v. United States, 231 Cl.Ct. 20, 681 F.2d 756 (1982) or to Avoid Liability Under Your Legitimate Contract Disputes Act Claim.

Bad Faith Termination for Convenience

A recent Civilian Board of Contract Appeals (CBCA) case, Sigal Construction Corp., 10-1 BCA ¶ 34442, CBCA 508 (May 13, 2010), provides a timely reminder that the government’s right to terminate a contract for its own convenience is not unlimited, and that the improper exercise of that power will result in the award of damages for lost profits.

What Are Your Rights as a Contractor

As a contractor, you have rights even when your contract is terminated for convenience. It’s important to know what compensation or damages you’re entitled to. This includes fair compensation for completed work and expenses incurred before the termination. Being aware of these rights helps in securing what you are rightfully owed.

What are the Risks of Term for Convenience?

When the contracting officer terminates your contract for convenience, you can expect a certain impact on the company. First, you can count on losing expected revenues that you may have counted on. Your efforts put forth for bidding, money for equipment, and resources can be lost if not allowed in your term for convenience settlement proposal.

What is the Difference Between T4D and T4C?

Termination of federal government contracts can be either a FAR termination for convenience (T4C) or a termination for default (T4D). The difference between a T4D and T4C is that under a T4C, the contracting officer can unilaterally decide to end the contract regardless of whether the contractor is at fault. Whereas, in a termination for default situation, the government alleges that the contractor is either at fault through a breach of contract or some other valid legal reason.  

T 4 C Appeal Attorneys

FAR 52.249-2 (j) allows government contractors the right to appeal FAR termination for convenience decisions under the Disputes Clause from any determination made by the Contracting Officer under paragraph FAR 52.249-2(e), (g), or (l) of this clause, except that if the Contractor failed to submit the termination settlement proposal or request for equitable adjustment within the time provided in paragraph (e) or (l), respectively, and failed to request a time extension, there is no right of appeal.

Common Mistakes to Avoid Post-Termination for Convenience

Post-termination, it’s crucial to avoid common mistakes such as hastily signing a contractor release of claims and settlement agreements without legal review, overlooking entitled compensation or allowable costs, quickly signing a contractor release of claims without an attorney reviewing, or misinterpreting contract terms. Government contractors must also be mindful not to appeal a case without first making sure that the issue is presented to the contracting officer. 

T4C Contract Termination for Convenience Attorneys

Government Contracts Attorney Denver COCheryl 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 T4C contract termination for convenience 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..

 

 

government contracts compliance lawyerMr. Scott Lovelock brings a wealth of proven knowledge and experience helping clients address issues of risk assessment, mitigation and regulatory compliance as well as a savvy level of business and military experience that gives him a unique perspective to help government contractors succeed and avoid most of the costly mistakes that are encountered when failing to understand and implement required compliance programs or understanding the nuances of working with government agencies. 

A retired Air Force officer, with extensive operational experience in both the field, Numbered Commands, Air Force Headquarters and the Joint Staff, he brings a unique and focused perspective of DoD operations in how he serves our clients.  In addition, he has been a Contractor Officer Representative, worked with major defense contractors on large weapon system acquisitions, and led multiple teams in support of the Planning, Programming, Budgeting, and Execution (PPBE) process within the Department of Defense (DoD). Read more…

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

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

A government contract termination 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 T4C 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 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.

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 termination for convenience 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

Call Our Government Contract Termination for Convenience Clause Lawyers

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