Termination for cause
FAR 8.406-4 establishes strict procedures and documentation requirements for terminating Federal Supply Schedule orders for cause, including notification, repurchase, and reporting obligations.
Overview
FAR 8.406-4 outlines the procedures and requirements for terminating individual orders for cause under Federal Supply Schedule (FSS) contracts. It details the authority of ordering activity contracting officers to terminate orders, the need to comply with FAR 12.403, and the process for charging contractors with excess costs due to repurchase. The section also mandates notification to the schedule contracting office in cases of termination or suspected fraud, and provides specific steps for handling excusable failures, repurchase procedures, and reporting requirements. Only the schedule contracting officer can terminate supplies or services at the contract level, and all terminations and related actions must be properly documented and reported.
Key Rules
- Termination Authority and Process
- Ordering activity contracting officers may terminate individual orders for cause, following FAR 12.403, and may charge excess repurchase costs to the contractor.
- Notification Requirements
- The schedule contracting office must be notified of all terminations for cause and suspected fraud.
- Excusable Failure Procedures
- If the contractor claims excusable failure, procedures in FAR 8.406-6 must be followed.
- Repurchase and Excess Costs
- Repurchases must be at a reasonable price, and excess costs may be withheld or set off. Detailed documentation and notification are required if excess costs cannot be collected.
- Contract-Level Termination
- Only the schedule contracting officer can terminate supplies or services at the contract level, and no further orders may be placed for terminated items.
- Reporting
- All terminations for cause and subsequent amendments or conversions must be reported per agency procedures and FAR 42.1503(h).
Responsibilities
- Contracting Officers: Must follow proper procedures for termination, notification, repurchase, and reporting; ensure compliance with FAR 12.403 and 8.406-6; and coordinate with the schedule contracting office.
- Contractors: Must respond to terminations, may assert excusable failure, and are liable for excess costs if applicable.
- Agencies: Must ensure oversight, proper reporting, and adherence to documentation requirements.
Practical Implications
- This section ensures that terminations for cause are handled consistently, fairly, and with proper documentation, protecting government interests and providing due process for contractors. It impacts daily contracting by requiring strict adherence to notification, documentation, and reporting procedures, and by clarifying liability for excess costs. Common pitfalls include failure to notify the schedule contracting office, improper documentation, or not following required procedures for excusable failures or repurchases.