52.249-7 Termination (Fixed-Price Architect-Engineer)
Source: FAR 52.249-7 on acquisition.gov
FAR 52.249-7 establishes clear procedures and financial consequences for terminating fixed-price architect-engineer contracts, requiring immediate contractor action and delivery of all work products.
Overview
FAR 52.249-7 outlines the procedures and requirements for terminating fixed-price architect-engineer contracts, either for the Government’s convenience or due to contractor default. The clause details the steps the Government and contractor must follow upon termination, including immediate cessation of affected services and delivery of all work products to the Contracting Officer. It also specifies the financial implications, such as equitable adjustments for convenience terminations (excluding profit on unperformed work) and contractor liability for excess costs in default situations. The clause ensures both parties understand their rights and obligations in the event of contract termination, providing a clear framework for managing such situations.
Key Rules
- Termination for Convenience or Default
- The Government may terminate the contract in whole or in part for its convenience or if the contractor fails to meet obligations.
- Notice of Termination
- The Contracting Officer must provide a written Notice of Termination specifying the nature, extent, and effective date.
- Contractor Actions Upon Termination
- Contractors must immediately stop affected services and deliver all accumulated work products to the Government.
- Equitable Adjustment (Convenience)
- If terminated for convenience, the contractor is entitled to an equitable adjustment, but not for anticipated profit on unperformed services.
- Liability for Default
- If terminated for default, the contractor is liable for any additional costs incurred by the Government to complete the work.
- Reversal of Default Termination
- If it’s later determined the contractor was not at fault, the termination is treated as one for convenience.
- Government Remedies
- The Government’s rights under this clause are in addition to other legal or contractual remedies.
Responsibilities
- Contracting Officers: Issue clear termination notices, determine equitable adjustments, and enforce delivery of work products.
- Contractors: Cease affected work immediately, deliver all contract-related materials, and comply with financial and liability provisions.
- Agencies: Oversee compliance with termination procedures and ensure proper documentation.
Practical Implications
- This clause provides a structured process for ending architect-engineer contracts, protecting both parties’ interests.
- Contractors must be prepared to promptly halt work and transfer all deliverables if terminated.
- Understanding the financial consequences of different termination types is critical to managing risk and compliance.
As prescribed in 49.503(b), insert the following clause in solicitations and contracts for architect-engineer services when a fixed-price contract is contemplated:
Termination (Fixed-Price Architect-Engineer) (Apr 1984)
(a) The Government may terminate this contract in whole or, from time to time, in part, for the Government’s convenience or because of the failure of the Contractor to fulfill the contract obligations. The Contracting Officer shall terminate by delivering to the Contractor a Notice of Termination specifying the nature, extent, and effective date of the termination. Upon receipt of the notice, the Contractor shall-
(1) Immediately discontinue all services affected (unless the notice directs otherwise); and
(2) Deliver to the Contracting Officer all data, drawings, specifications, reports, estimates, summaries, and other information and materials accumulated in performing this contract, whether completed or in process.
(b) If the termination is for the convenience of the Government, the Contracting Officer shall make an equitable adjustment in the contract price but shall allow no anticipated profit on unperformed services.
(c) If the termination is for failure of the Contractor to fulfill the contract obligations, the Government may complete the work by contract or otherwise and the Contractor shall be liable for any additional cost incurred by the Government.
(d) If, after termination for failure to fulfill contract obligations, it is determined that the Contractor had not failed, the rights and obligations of the parties shall be the same as if the termination had been issued for the convenience of the Government.
(e) The rights and remedies of the Government provided in this clause are in addition to any other rights and remedies provided by law or under this contract.
(End of clause)