Termination of fixed-price contracts for default
Contracting officers must include the appropriate default termination clauses in fixed-price contracts based on contract type, value, and specific circumstances to ensure proper remedies in case of contractor default.
Overview
FAR 49.504 prescribes the required contract clauses for termination of fixed-price contracts for default. It directs contracting officers to include specific default clauses in solicitations and contracts for supplies, services, research and development, construction, and dismantling/demolition, depending on the contract type and value. The section also provides guidance on when to use alternate versions of these clauses, such as for transportation contracts or contracts awarded during national emergencies. The use of these clauses is generally mandatory for contracts exceeding the simplified acquisition threshold, but may also be used for lower-value contracts if circumstances warrant (e.g., history of poor performance, essential completion dates, or key personnel concerns).