Convenience Termination Settlements
Government contracting is a well-respected and profitable industry, however working with the government within the Federal Acquisitions Regulations System (FARS) can be particularly complex. In some cases, mandatory requirements for engaging in the system may seem to run counter to an individual’s instincts or their experiences in the private markets. However, a company’s ability to succeed in the government contracting space is closely tied to how well it understands FAR and its ability to apply the rules and regulations of the program.
One particular clause of a federal acquisition contract that can cause confusion regarding rights and responsibilities is a termination for convenience clause. Companies with personnel holding a firm grasp of the principles of convenience termination clauses can often use this knowledge to guide the process and maximize the contractual value in light of the termination. The experienced and strategic government contracting attorneys of Meredith & Narine can provide insights and guidance as to how maximize recovery after the federal government invokes a convenience termination clause.
Understanding a Termination for Convenience of the Government Clause in a Government Contract
Nearly all government contracts contain a convenience termination provision. A convenience termination clause permits the government to terminate a contractual relationship for nearly any reason. In recent years typically these reasons are unrelated the performance or professionalism of the contractor and are more related to the cuts in government spending and the government’s current policy of reducing costs. However, the government retains the right to terminate the contract for an array of reasons including the mere convenience of the government. However, there are some limited situations where the contract or the provision may be invalid. While limited, there is a possibility for breach of contract when the government invokes convenience termination.
Your Company’s Duties After Receiving a Termination Letter
When your business receives a contract termination letter, it must take certain steps to remain compliant with the rules of the federal contracting system. Your company must immediately stop work o the contract. If this is not possible to stop work, you must immediately provide justification as to why a stoppage is not possible. If subcontracts exist, these must be terminated. If any portion of the contract is to be continued, your company should continue performing this portion of the contract. An equitable adjustment of pricing and other conditions may be possible if an equitable adjustment request is submitted in a timely manner.
Your Company’s Right to Compensation After a Convenience Termination
Unfortunately, many contractors are confused by a convenience termination and do not understand that they have certain rights and are entitled to certain compensation. Furthermore, many companies may have incomplete understandings of how to appeal decisions of this type. Some contractors are still unaware that a failure to provide a complete record of facts can waive the right to appeal. Some contractors may believe that they can ask a government employee for advice on how to proceed. Unfortunately, this approach creates a conflict for the government employee and is unlikely to have a positive impact on the contractor’s relationship with the government or agency. Still others may not realize that filing an appeal too early, such as in the case of a CO who appears non-responsive, will have their appeal dismissed for a lack of jurisdiction. Thus, it is also essential to know when it is appropriate and timely to file an appeal.
Furthermore, many contractors also do not make claims for all of the allowable costs they are entitled to receive. Settlement proposals should be meticulously drafted and account for all allowable claims. Contractors should not settle for improper disallowances of their claims. For contracts executed under FAR Part 12 for commercial goods or services the government typically agrees to pay a percentage of the contract based on progress and termination expenses. Under a standard contract, certain costs and continuing expenses can be covered.
Rely on Our Contractual Guidance When Facing a Convenience Termination
The experienced and strategic attorneys of Meredith & Narine can guide your business through a convenience termination. We propose a settlement that accurately reflects the costs your business has incurred and the continuing costs that will impact your bottom-line. To schedule a confidential legal consultation call 215-995-2769 or contact us online.