Termination of Federal Government Contracts Before Fully Performed

Learn how to be prepared for, and how to make the best out of, the termination of a federal government contract.

Failing to know how to effect, or respond to, a termination of a federal government contract before performance is complete can have serious adverse impacts on all parties involved. Like commercial contracts, federal government contracts can be terminated for default or for cause for the limited reasons stated in the default clause contained in the contract. Unlike commercial contracts, a termination clause will be read into, every federal prime contract even if the parties failed to include a termination clause in the prime federal government contract by accident, or on purpose (including by negotiation). In addition, unique to federal government contracting is the government's unilateral right to terminate a federal prime contract in whole, or in part, for the convenience of the government. Many federal and private contractor procurement professionals are not familiar with the very specific, limited grounds for a default termination; the seven factors that must be considered before a federal prime contract can be terminated for default; the necessary notice requirements and cure opportunities; effective contractor defenses against a default termination; or the consequences of an improper default termination. Similarly, often federal and private contractor procurement professionals are not familiar with the bases for a termination for the convenience of the government or the contractor's opportunity to be made whole when a termination for convenience occurs through the submission of a well prepared termination settlement proposal. This topic helps private sector contractor and federal government program managers, contract administrators, contracting officers, contract specialists, and the attorneys and other professionals supporting them to understand each parties' rights and obligations when deciding to, or when on the receiving end of a termination for default, termination for cause or a termination for the convenience of the government. You will gain an understanding of the federal government contract termination process and the key fundamental legal concepts and considerations.