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Termination Scenarios – Maximizing Your Recovery and Protecting Your Business
Terminations represent some of the most serious government contract disputes contractors can face, and when Government contracts are Terminated – be it for Convenience or Default – it can instantly produce uncertainty.
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- Why did this happen?
- Is there anything I can do about it?
- What’s going to happen to my employees?
- What about all of the money I’ve spent so far on this project?
- What impacts can this have on my future business prospects?
These questions and more are likely racing through the minds of everyone involved on the contractor’s side, from Project Managers all the way up to Executive Leadership.
Benson Contract Law is here to answer all those questions and to guide you through the Termination process with the sole objectives of maximizing your recovery on the current project and protecting your ability to win future work.
But be warned, Termination scenarios are not all the same, and the classifications the Government chooses to use can carry substantial ramifications for you and your business. Below you’ll find more information about the types of Termination scenarios and the services Benson Contract Law offers to help guide contractors through the uncertainty and into calmer waters on the other side.
Terminations for Convenience (“T4C”)
Almost all Government contracts are subject to the Termination for Convenience clause. This clause allows the Government to terminate a contract whenever “it is in the Government’s interest.”
When the government executes a T4C, the relationship remains non-adversarial in theory. The government is essentially saying, “It’s not your fault, we just don’t need these supplies or services anymore.”
Essentially, the Government can terminate its contracts for just about any reason and at any time. However, that sword is made to cut both ways, and companies who have been awarded those contracts certainly do not have to suffer just because the Government has changed its mind.
Government contracts are terminated for convenience with surprising regularity and for just about limitless different reasons that are unrelated to a contractor’s performance. Some recent justifications we have seen from Government agencies for terminating a contract include:
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- Technological developments that make continued work on the contract outdated
- An unexpected lack of funding due to budgetary changes
- The work is simply no longer needed (i.e., military contracts tied to conflicts that come to an end)
However, the situations in which the Government invokes this right are not always “convenient” for all involved. After receiving a Termination for Convenience notice, the FAR requires the contractor to, among other things:
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- Immediately stop work,
- Terminate subcontracts, and
- Submit a settlement proposal to recover allowable costs incurred up to the termination date, plus the costs of winding down operations.
That last item is where SO MANY contractors fail to recover the full extent of funds due to them, but it’s also precisely where Benson Contract Law excels.
We prepare the full settlement proposal on behalf of the contractor, ensuring that the proposal is fully supported, easy for the Government to review and accept with minimal delay, and that it requests every dime rightfully due to the contractor under the situation, including some costs that contractors are hardly ever aware can even be recovered.
Additionally, under the Bill Strong v Shannon decision, administrative costs such as any fees paid to a firm, such as Benson Contract Law, for the purposes of preparing such a proposal, are fully recoverable in a T4C situation. Why waste your own organization’s time, money, and effort in preparing a settlement proposal when you can make use of our expert services at minimal to no cost to you!
Terminations for Default (“T4D”)
By far the more serious of the termination scenarios, a Termination for Default (sometimes called a “Termination for Cause”) is an unambiguous statement by the Government that it believes the contractor has failed to uphold its contractual duties and has thus Defaulted on the subject contract. In these cases, “failure” can mean a variety of things, such as failing to deliver on time, failing to make progress so as to endanger overall project performance, or failing to comply with any other material provision of the contract.
A T4D is highly adversarial and has enormous potential to impact a contractor both short-term and long-term. Defaults on a contractor’s performance record are a major black eye and can quickly lead to debarment from future Government contracts. Thus, Default situations need to be handled immediately and with expertise.
Benson Contract Law has extensive experience guiding contractors through a Default process and finding the best possible resolutions. This includes:
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- Countering the Government’s accusations of Contract Default/Breach of Contract,
- Communicating with the Government on behalf of the contractor during a time when all correspondence will be heavily scrutinized for any way it can be used against the contractor,
- Informing the contractor of all options available to them and the Government’s likely course of action under each, and
- Ensuring that the record of the contractor’s performance is completely accurate and truthful to avoid future impacts.
Make no mistake about it, if you have received a Termination for Default Notice (or it has been suggested that one may be forthcoming), you absolutely need expert guidance as both the present and future of your business may very well be at stake!
Benson Contract Law IS that expert guidance, and we are ready and able to discuss your specific situation FOR FREE at any time. Follow the links below to schedule a consultation and protect your business today!
Our Dispute Resolution Approach
Reach Out
The earlier we understand the dispute, the more options you have.
Verify the Record
We review contracts, modifications, correspondence, schedules, and cost data to reconstruct the true project story.
Apply Pressure Strategically
We pursue resolution through targeted communication, REAs, or claims before escalating further.
Back to Business
The dispute resolves, recovery is achieved, and your team moves forward with stronger processes and confidence.