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Termination for Default

Your government contract is in trouble. You have been given a cure or show cause notice. There is a contractual requirement for a quick response. If the response is not supportable or sufficient, you may be issued a Termination for Default. This is going to be very costly for you over a long period of time. The question is... how much?

Government Contract Process and Termination for Default Clause

As a contractor, if the Government believes you have shown a lack of compliance with contractual obligations, you can be sure they will hold you to strict accountability.

A Termination by Default, which is viewed as a "forfeiture clause" in a government contract, has serious, immediate and long lasting consequences for a contractor. The Courts do not favor a forfeiture action because it has a negative effect on the industrial base. The Government and contractor, therefore, have strict administration requirements in this process.

Termination for Default For background, the Federal Acquisition Regulation governs Termination by Default. The strict regulatory process is broken out as:

  • Procedures;

  • Rights; and

  • Remedies

of the parties in the event that a contractor fails to perform the contract. These factors must be analyzed in any review of the Termination for Default process.

While similar to a commercial breach of contract, the Termination for Default clause provides that the Government must take specific administrative actions to obtain regulatory remedies for a contractor's failure to perform. The Termination for Default is a substitute for common law breach damages.

The Good News: There Are Alternatives to a Termination for Default

A Termination for Default is not a mandatory event. Even if the Government strictly adheres to the regulatory process, the Government has the option to use discretion in making a default determination. In most cases, other resolution avenues are considered to avoid the serious consequences of a Termination for Default for both parties.

Termination for Default This is good news! Do not panic when you receive a cure or show cause notice. You must be concerned. When you retain Mr. Busch, an ethical, experienced contracts attorney, you will quickly see that there are possible solutions.

In the work we do at the Busch Law Firm, we first educate you on the Termination for Default process, alternatives and then dig deep to find all verifiable background facts. This information is used to avoid a default by termination and seek a Termination for Convenience.

While the Government's process is strenuous, administration of a Termination for Default does not favor the Government.

Once you understand every aspect of the circumstances that lead to the Termination for Default process, Mr. Busch can help you seek alternatives to resolve the situation. Many times there are avenues that benefit or at least minimize potential consequences for you.

Conversion of a Termination for Default

The Government contract process will require the Termination for Default be converted into a Termination for Convenience if a default is not supported. A Termination for Convenience is an administrative action based on the best interests of the Government. Unlike a Termination for Default, a Termination for Convenience is not based on the actions of the contractor. Unlike a Termination for Default, it will not adversely affect a government contractor's past performance history or reputation.

The Busch Law Firm has successfully converted Terminations for Default into Terminations for Convenience on many occasions. Contact us on 303-904-9439 to see if that's a possibility for you.

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