49.503
Termination for convenience of the Government and default
FAR 49.503 mandates the use of specific termination clauses and alternates based on contract type and parties, ensuring proper procedures for contract termination.
Overview
FAR 49.503 prescribes the use of specific termination clauses for cost-reimbursement, construction, time-and-material, labor-hour, and architect-engineer contracts. It details which versions or alternates of the termination clauses must be inserted into solicitations and contracts, depending on contract type and the parties involved. The section also provides guidance for the use of these clauses in subcontracts, including necessary modifications to fit the subcontract relationship and reduce proposal submission periods.
Key Rules
- Cost-Reimbursement Contracts
- Use clause 52.249-6, with alternates as required for construction, partial payments, or time-and-material/labor-hour contracts.
- Construction Contracts
- Use clause 52.249-6 with Alternate I.
- Contracts with Governmental Entities
- Use Alternate II or III for partial payments if interest on excess partial payments is inappropriate.
- Time-and-Material/Labor-Hour Contracts
- Use Alternate IV or V as applicable.
- Fixed-Price Architect-Engineer Contracts
- Use clause 52.249-7.
- Subcontracts
- Prime contractors may use 52.249-6 in cost-reimbursement subcontracts, with modifications for relationship clarity and reduced settlement proposal periods.
Responsibilities
- Contracting Officers: Must ensure the correct termination clause and alternates are included in solicitations and contracts based on contract type and parties.
- Contractors: Should be aware of which termination clauses apply and ensure subcontracts reflect appropriate modifications.
- Agencies: Oversee compliance with clause inclusion and proper use of alternates.
Practical Implications
- Ensures contracts contain the correct termination provisions, protecting both government and contractor interests.
- Reduces disputes by clarifying procedures for termination and settlement.
- Common pitfalls include failing to use the correct alternate or not modifying subcontracts appropriately.