49.402-6 Repurchase against contractor’s account
Source: FAR 49.402-6 on acquisition.gov
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.
(a) When the supplies or services are still required after termination, the contracting officer shall repurchase the same or similar supplies or services against the contractor’s account as soon as practicable. The contracting officer shall repurchase at as reasonable a price as practicable, considering the quality and delivery requirements. The contracting officer may repurchase a quantity in excess of the undelivered quantity terminated for default when the excess quantity is needed, but excess cost may not be charged against the defaulting contractor for more than the undelivered quantity terminated for default (including variations in quantity permitted by the terminated contract). Generally, the contracting officer will make a decision whether or not to repurchase before issuing the termination notice.
(b) If the repurchase is for a quantity not over the undelivered quantity terminated for default, the Default clause authorizes the contracting officer to use any terms and acquisition method deemed appropriate for the repurchase. However, the contracting officer shall obtain competition to the maximum extent practicable for the repurchase. The contracting officer shall cite the Default clause as the authority. If the repurchase is for a quantity over the undelivered quantity terminated for default, the contracting officer shall treat the entire quantity as a new acquisition.
(c) If repurchase is made at a price over the price of the supplies or services terminated, the contracting officer shall, after completion and final payment of the repurchase contract, make written demand on the contractor for the total amount of the excess, giving consideration to any increases or decreases in other costs such as transportation, discounts, etc. If the contractor fails to make payment, the contracting officer shall follow the procedures in subpart 32.6 for collecting contract debts due the Government.