49.401
General
FAR 49.401 establishes the Government’s right to terminate contracts for default, outlines exceptions for excusable failures, and provides for possible contract reinstatement with proper justification.
Overview
- FAR 49.401 outlines the general principles and procedures for termination for default, which is the Government’s right to end a contract due to a contractor’s failure or anticipated failure to meet contractual obligations. It also addresses circumstances where a default termination may be converted to a termination for convenience, additional Government rights, special rules for Federal Supply Schedule orders, and the possibility of reinstating a terminated contract.
Key Rules
- Termination for Default
- The Government may terminate a contract, in whole or in part, if the contractor fails or is expected to fail to perform as required.
- Excusable Failure
- If the contractor proves the failure was beyond their control and not due to their fault or negligence, the termination is treated as a termination for convenience, not default.
- Additional Government Rights
- The Government may exercise other termination or cancellation rights as specified in contract clauses, such as those in 52.249-8.
- Federal Supply Schedule Orders
- Special procedures apply for default terminations under Federal Supply Schedule contracts (see Subpart 8.4).
- Reinstatement of Contract
- With written consent and determination of continued need, a terminated contract may be reinstated by amending the notice of termination.
Responsibilities
- Contracting Officers: Must determine the basis for termination, ensure proper notice, consider excusable causes, and document reinstatement decisions.
- Contractors: Must demonstrate excusable failure if applicable and comply with all notice and documentation requirements.
- Agencies: Oversee compliance with termination procedures and ensure proper application of rights and remedies.
Practical Implications
- This section ensures both parties understand the grounds and process for termination for default, as well as the possibility of conversion to convenience or reinstatement. It impacts contract management, risk assessment, and dispute resolution. Common pitfalls include failing to document excusable causes or misunderstanding the conversion to convenience.