49.402-1
The Government’s right
The Government can terminate a fixed-price contract for default if the contractor fails to deliver, comply with contract terms, or make sufficient progress, provided proper notice is given.
Overview
FAR 49.402-1 outlines the Government’s right to terminate a contract for default under the Default clause (FAR 52.249-8) in fixed-price contracts. This right is triggered if the contractor fails to deliver supplies or perform services on time, fails to comply with any other contract provision, or fails to make sufficient progress, thereby endangering contract performance. The Government must adhere to the notice requirements specified in the Default clause before exercising this right. This provision is a critical enforcement tool to ensure contractor accountability and timely performance.
Key Rules
- Timely Delivery or Performance
- Contractors must deliver supplies or perform services within the contractually specified timeframe.
- Compliance with Contract Provisions
- Contractors must adhere to all provisions of the contract, not just delivery or performance timelines.
- Progress Toward Completion
- Contractors must make adequate progress; failure to do so, if it endangers contract performance, can trigger default termination.
- Notice Requirement
- The Government must provide notice as required by the Default clause before terminating for default.
Responsibilities
- Contracting Officers: Must monitor contractor performance, provide required notices, and document reasons for default termination.
- Contractors: Must meet all delivery, performance, and progress requirements and comply with all contract provisions.
- Agencies: Must ensure due process and proper documentation when exercising default termination rights.
Practical Implications
- This section exists to protect the Government’s interests and ensure contract performance.
- Contractors risk default termination for late delivery, non-compliance, or lack of progress.
- Common pitfalls include missing deadlines, failing to comply with contract terms, or not communicating progress issues early.