52.249-8
Default (Fixed-Price Supply and Service)
FAR 52.249-8 gives the Government broad authority to terminate fixed-price supply and service contracts for default, making contractors liable for excess costs unless the failure is excusable.
Overview
FAR 52.249-8, Default (Fixed-Price Supply and Service), establishes the Government’s rights and procedures for terminating fixed-price supply and service contracts due to contractor default. The clause outlines the conditions under which the Government may terminate a contract, the contractor’s liability for excess costs, exceptions for excusable delays, and the handling of completed and partially completed supplies. It also addresses the contractor’s obligations to protect Government property and the process for resolving disputes over payments. An Alternate I version modifies the clause for transportation-related contracts.
Key Rules
- Grounds for Default Termination
- The Government may terminate the contract if the contractor fails to deliver on time, make sufficient progress, or comply with contract provisions, after a 10-day cure period (unless extended).
- Liability for Excess Costs
- If terminated, the contractor is liable for any excess costs incurred by the Government to obtain similar supplies or services, unless the failure was excusable.
- Excusable Delays
- Contractors are not liable for excess costs if failure to perform was due to causes beyond their control (e.g., acts of God, government actions, strikes, severe weather).
- Handling of Government Property
- Upon termination, contractors must transfer completed and partially completed supplies and protect Government property as directed.
- Payment and Disputes
- The Government pays for accepted completed supplies and negotiates payment for materials and preservation; disputes are resolved under the Disputes clause.
- Alternate I for Transportation Contracts
- Modifies the clause for transportation services, focusing on the protection and preservation of Government goods.
Responsibilities
- Contracting Officers: Issue written notice of default, determine excess costs, direct transfer/protection of property, negotiate payments, and resolve disputes.
- Contractors: Cure failures within specified time, continue non-terminated work, transfer and protect Government property, and negotiate payments for materials and preservation.
- Agencies: Oversee compliance, ensure proper documentation, and enforce remedies.
Practical Implications
- This clause protects the Government’s interests by providing clear remedies for contractor nonperformance and specifying contractor liabilities. Contractors must closely monitor performance, respond promptly to cure notices, and maintain documentation to support excusable delays. Failure to comply can result in significant financial liability and loss of future contracting opportunities.