49.402-6
Repurchase against contractor’s account
When a contract is terminated for default, the government must promptly repurchase needed items and may recover excess costs from the defaulting contractor for the terminated quantity.
Overview
FAR 49.402-6 outlines the procedures for repurchasing supplies or services when a fixed-price contract is terminated for default and the government still requires the items. The contracting officer must act promptly to repurchase the same or similar items, ensuring reasonable pricing and adherence to quality and delivery needs. The regulation details how to handle repurchases, including limitations on charging excess costs to the defaulting contractor and requirements for competition and acquisition methods.
Key Rules
- Repurchase Requirement
- If supplies or services are still needed after termination for default, the contracting officer must repurchase them as soon as practicable, at a reasonable price, and only charge excess costs to the contractor for the terminated quantity.
- Acquisition Methods and Competition
- For repurchases not exceeding the terminated quantity, any acquisition method may be used, but competition must be maximized and the Default clause cited as authority. Quantities above the terminated amount are treated as new acquisitions.
- Excess Cost Recovery
- If the repurchase price exceeds the original contract price, the contracting officer must demand the excess from the contractor after final payment, considering all related costs, and follow debt collection procedures if unpaid.
Responsibilities
- Contracting Officers: Must promptly repurchase needed items, ensure reasonable pricing, maximize competition, cite the Default clause, and recover excess costs.
- Contractors: May be liable for excess repurchase costs up to the terminated quantity.
- Agencies: Must oversee compliance with repurchase and debt collection procedures.
Practical Implications
- Ensures government needs are met after a default while holding contractors accountable for additional costs. Contracting officers must carefully document repurchase actions and cost calculations. Failure to follow procedures can result in disputes or uncollected government debts.