Duties of prime contractor after receipt of notice of termination
After receiving a termination notice, contractors must immediately stop work on the terminated portion, communicate with the TCO, and follow all procedures for settlement and property protection.
Overview
FAR 49.104 outlines the specific duties of a prime contractor after receiving a notice of termination, typically for the Government’s convenience. Upon receipt, the contractor must follow both the termination notice and the contract’s termination clause, unless otherwise directed by the Termination Contracting Officer (TCO). The section details immediate actions required, such as stopping work on the terminated portion, terminating related subcontracts, and protecting government property. It also covers obligations to communicate with the TCO regarding special circumstances, legal proceedings, and settlement proposals. For partial terminations, the contractor must continue work on the remaining contract portion and request equitable adjustments if costs increase. The contractor is also responsible for settling subcontractor claims and disposing of termination inventory as directed by the TCO.
Key Rules
- Immediate Work Stoppage
- Cease work and subcontracting on the terminated portion immediately.
- Subcontract Termination
- Terminate all subcontracts related to the terminated portion.
- TCO Communication
- Notify the TCO of any issues preventing work stoppage or legal proceedings.
- Partial Termination Duties
- Continue work on non-terminated portions and request price adjustments if needed.
- Property Protection
- Safeguard and, if directed, deliver government property.
- Settlement and Inventory
- Settle subcontractor claims, submit a settlement proposal, and dispose of inventory as directed.
Responsibilities
- Contracting Officers: Issue clear termination notices, provide direction, and approve settlements.
- Contractors: Follow all termination instructions, communicate promptly, protect property, and settle claims.
- Agencies: Oversee compliance and ensure proper settlement of terminated contracts.
Practical Implications
This section ensures an orderly and efficient process when contracts are terminated, minimizing government risk and contractor losses. Contractors must act quickly, maintain clear communication, and document all actions to avoid compliance issues or disputes.