49.607 Delinquency notices
Source: FAR 49.607 on acquisition.gov
FAR 49.607 mandates specific procedures and formats for delinquency notices to ensure contractors are properly notified and given a fair opportunity to respond before termination for default.
Overview
FAR 49.607 provides guidance and sample formats for issuing delinquency notices—specifically Cure Notices and Show Cause Notices—when a contractor is at risk of default. These notices are essential steps in the contract termination process for default and are designed to ensure due process and clear communication between the government and contractors. The section outlines when each notice should be used, the required content, and procedural requirements such as proof of delivery.
Key Rules
- Cure Notice
- Must be issued if termination for default is considered before the contract delivery date and there is sufficient time (at least 10 days) for the contractor to remedy the failure.
- Show Cause Notice
- Used when there is not enough time left in the delivery schedule for a cure period; issued immediately after the delivery period expires.
- Proof of Delivery
- All delinquency notices must be sent with proof of delivery requested to ensure receipt and documentation.
Responsibilities
- Contracting Officers: Must determine which notice is appropriate, ensure proper timing, use the prescribed formats, and send notices with proof of delivery.
- Contractors: Must respond to notices within specified timeframes (typically 10 days), providing explanations or corrective actions as required.
- Agencies: Must maintain documentation of notices and responses for potential termination actions and legal compliance.
Practical Implications
This section ensures contractors are given fair warning and an opportunity to cure or explain performance failures before termination for default. Proper use of these notices protects both the government’s interests and contractor rights, and failure to follow these procedures can jeopardize termination actions or lead to disputes. Common pitfalls include issuing a Cure Notice when insufficient time remains or failing to document delivery and responses.
The formats of the delinquency notices in this section may be used to satisfy the requirements of 49.402-3. All notices will be sent with proof of delivery requested. (See subpart 42.13 for stop-work orders.)
(a) Cure notice. If a contract is to be terminated for default before the delivery date, a "Cure Notice" is required by the Default clause. Before using this notice, it must be ascertained that an amount of time equal to or greater than the period of "cure" remains in the contract delivery schedule or any extension to it. If the time remaining in the contract delivery schedule is not sufficient to permit a realistic "cure" period of 10 days or more, the "Cure Notice" should not be issued. The "Cure Notice" may be in the following format:
Cure Notice
You are notified that the Government considers your ____ [specify the contractor’s failure or failures] a condition that is endangering performance of the contract. Therefore, unless this condition is cured within 10 days after receipt of this notice [or insert any longer time that the Contracting Officer may consider reasonably necessary], the Government may terminate for default under the terms and conditions of the _______ [insert clause title] clause of this contract.
(End of notice)
(b) Show cause notice. If the time remaining in the contract delivery schedule is not sufficient to permit a realistic "cure" period of 10 days or more, the following "Show Cause Notice" may be used. It should be sent immediately upon expiration of the delivery period.
Show Cause Notice
Since you have failed to ____ [insert "perform Contract No. ___ within the time required by its terms," or "cure the conditions endangering performance under Contract No _____ as described to you in the Government’s letter of _____ (date)"], the Government is considering terminating the contract under the provisions for default of this contract. Pending a final decision in this matter, it will be necessary to determine whether your failure to perform arose from causes beyond your control and without fault or negligence on your part. Accordingly, you are given the opportunity to present, in writing, any facts bearing on the question to ____ [insert the name and complete address of the contracting officer], within 10 days after receipt of this notice. Your failure to present any excuses within this time may be considered as an admission that none exist. Your attention is invited to the respective rights of the Contractor and the Government and the liabilities that may be invoked if a decision is made to terminate for default.
Any assistance given to you on this contract or any acceptance by the Government of delinquent goods or services will be solely for the purpose of mitigating damages, and it is not the intention of the Government to condone any delinquency or to waive any rights the Government has under the contract.
(End of notice)