49.502
Termination for convenience of the Government
FAR 49.502 mandates specific termination for convenience clauses based on contract type and value, requiring careful selection and inclusion to ensure compliance and fair settlements.
Overview
FAR 49.502 prescribes the required contract clauses for termination for convenience of the Government in various types of fixed-price and research and development contracts. It details which clauses contracting officers must include in solicitations and contracts based on contract type, value, and specific circumstances, ensuring that both the Government and contractors understand their rights and obligations if a contract is terminated for convenience.
Key Rules
- Fixed-Price Contracts ≤ Simplified Acquisition Threshold
- Use clause 52.249-1 (Short Form), unless the contract is for services (use 52.249-4), R&D with nonprofits/educational institutions, architect-engineer services, or other specified exceptions.
- Fixed-Price Contracts > Simplified Acquisition Threshold
- Use clause 52.249-2, except for dismantling/demolition (use 52.249-3), R&D with nonprofits/educational institutions, architect-engineer services, or where other clauses are more appropriate. Alternate versions apply for construction and certain government contracts.
- Service Contracts (Short Form)
- Use clause 52.249-4 for services where minimal termination costs are expected.
- R&D Contracts with Nonprofits/Educational Institutions
- Use clause 52.249-5 for both fixed-price and cost-reimbursement contracts on a no-profit or no-fee basis.
- Subcontracts
- Prime contractors may use the appropriate termination clauses in subcontracts, with modifications for timing and cost principles, especially for R&D with nonprofits/educational institutions.
Responsibilities
- Contracting Officers: Must select and insert the correct termination clause and alternates based on contract type, value, and circumstances.
- Contractors: Must comply with the applicable termination clause and ensure subcontracts reflect appropriate terms.
- Agencies: Oversee proper clause inclusion and ensure compliance with FAR requirements.
Practical Implications
- Ensures contracts contain clear procedures for termination for convenience, reducing disputes and facilitating fair settlements.
- Impacts daily contracting by requiring careful clause selection and documentation.
- Common pitfalls include inserting the wrong clause or failing to use required alternates, leading to compliance issues or disputes.