Overview
FAR 49.401 defines the Government’s right to terminate a contract for default due to a contractor's actual or anticipated failure to perform and establishes the framework for converting such terminations or reinstating contracts.
Key Rules
- Definition: Termination for default (T4D) is the exercise of a contractual right to end a contract, in whole or in part, because the contractor failed to meet its obligations.
- Conversion to Convenience: If a contractor proves that their failure to perform was "excusable" (beyond their control and without fault or negligence), a T4D is automatically converted to a Termination for the Convenience (T4C) of the Government.
- Supplementary Rights: The Government may exercise termination or cancellation rights beyond those found in standard contract clauses.
- FSS Applicability: Defaults involving Federal Supply Schedule (FSS) orders are governed by the specific procedures in FAR Subpart 8.4.
- Reinstatement: A Contracting Officer may reinstate a terminated contract via amendment if the contractor consents in writing and the Government determines the requirement still exists and reinstatement is advantageous.
Practical Implications
- The "excusable delay" provision creates a critical legal safeguard for contractors, as a T4D carries significant negative past performance consequences that a T4C does not.
- Contracting Officers have the flexibility to reverse a termination decision through reinstatement, providing a mechanism to resume work without the need for a entirely new procurement process.